[This article first appeared in the International Journal of Coaching in Organizations, 2005, 3(1), 39-52. Reprinted with permission of Mary Beth O’Neill, IJCO and Professional Coaching Publications, Inc.]
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After reviewing typical dilemmas executive coaches face to identify the ROI for their services, I provide a practical plan for integrating ROI analysis into the coaching relationship. I use a case example to illustrate the method, and show how this practice preserves the client’s responsibility, not only for results, but for providing the link between their developmental strides and the increased success of their business. The article concludes with a 5-step summary of the process.
INTRODUCTION
Although executive coaching is a well established practice in the corporate environment, its benefits are likely to be more obvious to clients than to the accounting department. This article presents practitioners with a method for demonstrating a quantifiable return on investment (ROI) for their work with clients. This article addresses the needs of executive coaches working in the field rather than those of researchers and academics regarding research methodology. I welcome researchers to bring their considerable expertise to this strategy.
The main focus of the article is a ‘how-to’ method for an executive coach or consultant to not only address the issue of ROI but also to directly involve the client in evaluating the bottom line benefits of coaching. An experienced practitioner who understands how organizations work can successfully implement this ROI strategy.
A word about the use of the term “ROI”. I use ROI as it is colloquially applied in our culture, generally to refer to the financial gains that business executives want to see compared to the costs they pay. There is a conversation in the training, organization development, and executive coaching fields about what formula is more useful to use with clients, ROI percentages or Benefit/Cost ratios. Each of these terms has a specific meaning and formula. I prefer the Benefit/Cost ratio because I think it is more accessible to both coaches and clients, particularly those who are just beginning to apply fiscal thinking to coaching interventions. But when referring to the general discussion of measuring coaching’s effect on bottom line results, I use the term, ROI, because that is the language most frequently used in conversations and the media.
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