The role of executive coaching is now firmly established in the modern business world, with many companies opting to hire either an internal or external executive coach for their employees. In fact, one study by HR consulting firm Hay Group estimated that between 25 and 40% of Fortune 500 companies use executive coaches. The 2016 ICF Global Coaching Study calculates that there are approximately 10,900 managers/leaders using coaching skills – a number that is expected to grow.
When hiring an executive coach, it’s important to do the research to find the right coach for your professional needs and, naturally, the coach’s hourly fees are going to be factored into your decision. Companies who are familiar with executive coaching services typically set aside budget for their top layer executives and directors to be coached and have a grasp of how much they will to pay for executive coaching services. However, those organizations who are new to the coaching realm may not know the average prices and what to look for in an executive coach.
Reliable information about executive coaching, especially regarding pricing, is scarce because the coaching industry is relatively new compared to more established professions such as law and accounting. While the International Coach Federation (ICF) has standards for certification, it doesn’t have any guidelines for coaching rates.
The cost of hiring an executive coach can vary greatly depending on the coach’s level of experience, the length of the coaching engagement and who is being coached. Let’s take a look at how these different factors affect the price of executive coaching.
Coach specific experience & training
As mentioned, the coaching industry is not regulated, meaning coaches can have varying degrees of training from a long list of training institutes and online programs. When looking at an executive coach’s rates, their level of training is an important factor to consider.
In the 2016 ICF Global Coaching Study, which surveyed 15,380 respondents from 137 countries, a majority of coaches reported having taken formal training (99% of coach practitioners received some form of coach-specific training), with 89% receiving training that was accredited or approved by a professional coaching organization.
While this number is encouraging, there is a difference between having executive coach training and having coaching experience. Those looking to hire an executive coach should take into consideration, not only the coach’s training, but their professional paid coaching hours. That is one benefit of hiring an ICF certified coach – they require coaches to have a specific number of coaching hours to qualify for the different levels of credential.
The ICF has three levels of credentials:
- the Associate Certified Coach (ACC)
- the Professional Certified Coach (PCC)
- the Master Certified Coach (MCC)
While it is not specified, it is likely that an ICF Master Certified Coach (MCC) will charge quite a bit more than an Associate Certified Coach (ACC) because of their level of training and experience (200+ training hours and 2,500+ hours of coaching experience).
According to the 2017 executive coaching industry review from Sherpa Coaching, a majority of executive coaches surveyed came in below the $500 per hour mark. The review shows that 14% of executive coaches reported hourly earnings at $500 or above per hour while 35% charge between $150- $299 per hour and 43% $300-$500 per hour
When it comes to how much companies are willing to pay for executive coaching services, a survey conducted by the Conference Board Council on Executive Coaching, shows that the hourly rates companies pay for coaching services can range for services at all levels of an organization.
The rates typically increase along with the management level of the coachee – meaning coaching for a C-suite executive will come with a higher cost per hour compared to coaching for a mid-level manager. In general, the hourly rate of an executive coach will increase as the executive being coached reaches the higher levels of an organization and as a company’s revenues increase.
When it comes to coaching the top layer of executives, companies pay a wide range of fees—anywhere from under $200 per hour to more than $500 per hour—with a majority spending in the higher price ranges. In 2008, organizations report paying on average between $301 and $400 dollars for coaching services at the C-suite level, with a median rate of $425.50.
And for lower-level executives, about 70% of the survey respondents report spending between $201 and $400 in 2008 per hour to have executives who are two to five levels below the CEO be coached.
The reason companies pay more for C-suite executive coaches is not just because they like spending more money per hour for the same service. Companies pay more because CEOs will typically want to work with coaches with more senior executive coaching experience. For example, you may have two coaches with the exact same number of coaching hours and credentialing but one brings 20 years of CEO experience in multinational companies while the other brings 10 years of HR management experience in smaller, local companies. The coach with greater senior executive experience is more likely to be selected for a C-suite coaching engagement and will rightfully charge more for their services.
Another interesting discovery made by Sherpa Coaching through its 2017 executive coaching survey was that coaches who favored a strengths-based approach – where the coaching is focused on building up strengths opposed to improving weaknesses – charge less on average than coaches who work with clients on their weaknesses (referred to as deficit coaching).
The report outlines two basic schools of thought on coaching approaches: a strengths-based approach and an approach that focuses on weaknesses. In the past, coaching was mainly focused on identifying and correcting weaknesses, but over the years, the purpose of coaching has shifted from problem solving toward proactive leadership development.
The chart below shows the differences in average rates between what Sherpa Coaching call Appreciative Inquiry (focusing on strengths) and the Deficits Approach (focusing on weaknesses):
There are thousands of professional coaches around the globe, with the majority located in North America and Europe as of last year. The 2016 ICF Global Coaching Study chart below shows the estimated number of coaches by world region:
According to the Conference Board, companies that use coaches outside the United States generally pay at or below US rates, except for Europe.
The median pay rate for both the United States and Europe in their 2008 survey was $425.50, which was also the average pay rate in Europe. The most commonly stated fee for coaching a company’s top tier of executives in Europe, however, is greater than $500 per hour, same as in the United States. More than three quarters report matching the US at this rate of pay and an additional 17% report paying a quarter more than the US benchmark.
In summary: what executive coaching costs
Therefore, when looking to hire an external executive coach for an upper level executive at your company (or for yourself), you can expect to pay somewhere between $300 to $500 per hour. For coaching mid-level management, you are looking at a rate between $200 and $400 per hour.
If you are looking to roll out an internal executive coaching program for a number of executives at your company, you want to factor in the number of coachees, the expected length of the coaching engagements and the coach’s hourly rate(s).
By Stephan Wiedner