Coaching ROI

My attention in the last year working in the South African market has been drawn repeatedly to the focus on change and the lack of investment in getting people through the necessary transitions.  The formal processes may be in place, however, helping people to move on and transform requires so much more.

I have also been surprised to find that business is slow to adopt coaching as a powerful method of supporting transition.  Coaching is still seen as way of correcting bad behaviour or lack of performance.  If the Harvard Business Review is anything to go by, we seem to be lagging behind our US and EU counterparts:

“Ten years ago, most companies engaged a coach to help fix toxic behavior at the top.  Today, most coaching is about developing the capabilities of high-potential performers.  The top three reasons for engaging a coach are:

Develop high potentials or facilitate transition - 48%
Act as a sounding board – 26%
Address derailing behaviour – 12%”
Harvard Business Review

Studies over the last ten years report the following return on investment (ROI) from coaching:

  • Companies that offer training alone experience 22.4% increase in productivity, but when combined with coaching that figure rises to 88%.  Gerald Olivero, Denise Bane & Richard Kopelman, Public Personnel Management.
  • A conservative estimate of the monetary payoff from coaching, according to Fortune magazine, is that managers describe an average return of more than six times the cost of coaching.
  • Companies who combine coaching with training increase employee productivity over 80%.  Bureau of Justice statistics, June 2001.
  • A Manchester, Inc. study in 2001 demonstrated a 7-fold return on investment from coaching.

I was having dinner with a friend in London recently and talking to him about his perception of South African business leaders.  He is head of trading for a global investment bank.  He said two things:  “entrepreneurial and risk takers”.  I can’t help but agree with him.  Now we need to focus on helping our leaders to bring others along with them.  To use their impact in business to instill common values and behaviours, to drive corporate culture, and to create a forthright, engaged and robust employee brand for the next wave of change.

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