Another study of ROI conducted by Manchester Consulting of 100 executives supported the Stroud findings on benefits, citing average ROI of nearly $100,000 or 5.7 times the initial investment in coaching. [22] While it appears these studies may have been conducted by firms that had an interest in the outcome, they do agree with the Boston study that executives found a positive correlation between coaching and improved results in their organization. The Manchester Consulting Study did use an independent advisor for the methodology of their study, ROI guru, Jack Phillips. In addition, two independent contractors were recruited to gather the data. Although the executives in the study came from 56 different companies ranging in size from large to small, the end results were very similar. To help standardize the executives’ estimates of the value of coaching, the study developed a total value scale that was compared with the ROI results. It was found that those executives who were able to quantify the benefits of coaching also scored higher on their total value score. [23]
One reason quantifying return on investment has been difficult is the lack of a validated instrument to assess coaching and the feedback process in organizations. With their research, Steelman, Levy, and Snell validate an instrument that assesses the multifaceted feedback environment. They note there has been surprisingly little empirical research in this area and conclude by saying “Use of this instrument is an ideal way to diagnose organizations and to improve the ‘coaching of coaches’ that is instrumental to employee success and development.” [24]
Jack Phillips, improving on the 4-level evaluation model (reaction, learning, behavior, and results) developed by Donald Kirkpatrick which has been the standard evaluation framework for over forty years, added ROI as a fifth level to allow organizations to analyze the costs of the program under evaluation. Phillips stated he would “like to see more people shifting towards a more proactive posture regarding evaluation. Try to understand what your … program might add to the business by starting to think about results and RO[I) up front.” [25]
Donald Kirkpatrick provides an example from his work at Intel that shows how they used the model. “Let’s take your four levels, start with the last one, and work backwards. What results are we looking for? What behaviors are needed to accomplish those results? What knowledge, skills, and attitudes do people need in order to behave in that way? And how can we do it in such a way that they’ll react favorably?” [26] “At level 1, participants’ satisfaction with the program is measured … At level 2, measurements focus on what participants learned during training. At level 3, the measures assess how participants applied learning on the job. At level 4, the measures focus on the business results achieved by participants when the training objectives are met. The fifth, and ultimate, level of evaluation is the return on investment. It compares the monetary benefits with the costs.” [27]
Phillips and Phillips warn that resources are required and barriers exist to calculating ROI. They advise only implementing level 5 evaluation when the coaching program is of a long-term duration, has visibility within the organization, impacts strategic objectives, involves a significant cost, and has management’s interest. In addition, a needs assessment should be conducted and a link established between the business need, the objectives of the coaching engagement, and the metrics chosen for the ROI analysis. “This approach ma[kes] the evaluation much easier because the data were clearly defined with the objectives.” [28] Phillips notes that the cost of an ROI evaluation can run between 5 and 10 percent of the total project costs. [29]
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