The Business Case for Executive Coaching – The ICF Coaching ROI Global Study
One of the most powerful questions you can ask is “Does providing executive coaching for company leaders have a direct effect on the company bottom line?” Emotionally intelligent and socially intelligent organizations provide executive coaching and leadership development for authentic leaders at all levels of the organization.
Approximately 25 to 40 percent of Fortune 500 companies use executive coaches, according to the Hay Group, an international human-resources consultancy. According to a survey by Manchester, Inc., a Jacksonville, Florida, career management consulting firm; about six out of ten organizations currently offer coaching or other developmental counseling to their managers and executives. Another 20 percent of companies said they plan to offer coaching within the next year.
Although it was once used as an intervention with troubled staff, coaching is now part of the standard leadership development training for executives in such companies as IBM, Motorola, J.P. Morgan Chase, Hewlett-Packard and many others.Brokerage firms and other sales-based organizations such as insurance companies use coaches to bolster performance of people in high-pressure, stressful jobs.
The 2009 International Coach Federation (ICF) Global Coaching Client Study reported the median coaching ROI to be 700%. The results of the study is rather dramatic providing much needed metrics for this popular leadership development strategy.
The International Coach Federation conducted a qualitative and quantitative global client survey and interview research project between May to December 2008. The full research report was made available to the public on June 11, 2009. Highlights related to the return on investment from coaching are reported here. This is a crucial research topic -- what do coaching clients say is the value of coaching?
The design phase of the research consisted of three components: First, fourteen in-depth interviews were conducted with an international sample of coaches to assist with the design of the questions to be utilized in the qualitative and quantitative study. Second, the qualitative research phase consisted of five focus groups with a total of 41 clients participating. The focus groups allowed for in-depth probing of qualitative issues.Third, the quantitative research component consisted of 2,165 coaching clients from 64 countries participating in a 20 minute online survey.
What do clients say motivates them to begin coaching? The clients cited career opportunities and business management as their most important reasons for seeking coaching services.
Both coaches and consumers of coaching services are interested in Return on Investment (ROI) studies on coaching. An often cited ROI study of executive coaching, Coaching for Increased Profitability: How to Deliver and Demonstrate Tangible Results to the Bottom Line by Merrill C. Anderson, Ph.D. MetrixGlobal (2003) had reported an ROI from coaching of 788%.
In an apparent confirmation of that finding, the ICF Global Coaching Client Study Executive Summary (April 2009) reports, "The vast majority (86%) of those able to provide figures to calculate company ROI indicated that their company had at least made their investment back. In fact, almost one fifth (19%) indicated an ROI of at least 50 (5000%) times the initial investment while a further 28% saw an ROI of 10 to 49 times the investment.The median company return is 700% indicating that typically a company can expect a return of seven times the initial investment."
Source: ICF Global Coaching Client Study, Executive Summary, April 2009, in consultation with PricewaterhouseCoopers LLP, and Association Resource Centre inc.