Since then a ton of admirable corporations such as IBM, GE, Hewlett-Packard and Goldman Sachs have invested in executive coaching for their employees. According to Hay Group, a major human-resources consultancy, between 25 to 40% of Fortune 500 companies use executive coaching. US-based Global 100 companies are also big advocates of executive coaching, with approximately 93% using coaches. And a huge percentage of Australian (72%) and UK-based (88%) companies have also reported using coaching for their business leaders and senior managers.
At present the industry is bringing in an annual revenue of around $1.5 billion US – a number that is expected to grow.
These companies can obviously see the value in executive and leadership coaching, but what are the specific benefits of executive coaching – both for the individual and the organization?
Benefits Experienced by the Individual
The benefits experienced by the executives vary depending on the focus of the coaching engagement. Some of the common benefits experienced by the individual include:
- Enhanced strategic planning
- Presentation skills
- Executive management team building
- Leadership development
- Better communication with team members
- Increased confidence
- Better work-life balance
- Quicker decision making
- Better time-management
- Greater productivity
Benefits Experienced by the Company
The benefits of coaching depends on the type of organization and the desired outcome of the coaching. In the case of executive coaching, the company benefits if the executive’s performance is improved by more than the cost of the coaching PLUS any additional improvements experienced throughout the organization based on the executives performance.
Let’s say for example, an executive earns $100,000 and the company invests $10,000 per year for their coaching. Can the coaching improve the executive’s performance by 10%, an amount equal to the investment? And what’s the multiple effect? If the executive manages 10 people, how much of their performance is affected by the executive coaching? Ideally, there will be benefits throughout the organization and the return on investment will be much greater than 100%.
According to the International Coach Federation Global Coaching Study performed in 2009, the median company return was reported to be 700% with almost one fifth of respondents reporting an ROI of at least 50 times (5000%) the initial investment.
There are various ways to calculate the benefits of executive coaching, such as 360 reviews, climate surveys, customer surveys and surveys of sales, costs, employee turnover and other business results.
Of course, some results are more “tangible” than others and are easier to translate into a monetary value or bottom-line impact. Of course, that doesn’t mean that the tangible benefits outweigh the intangible in terms of importance. In fact, intangible changes in the client’s behavior can often have a wider-ranging impact than, or may actually lead to, the more tangible benefits of coaching.
- Increased sales
- More customers called on
- More new accounts opened
- Decreased costs
- Decreased employee turnover
- Decreased absenteeism
- Shorter time to market
- Improved productivity
- Fewer customer/employee complaints
Are you interested in hiring an executive coach for yourself or someone in your organization? Set up a time to talk with one of our corporate coaching experts today and we will help you find the perfect match!
By Kristen Moran