Now we can plug Anne’s numbers into the formula (the coaching costs of the contract were $76,025):
Benefit/Cost Ratio: $14,690,000 x .25 = 48:1
$76,025
The benefit to cost ratio is 48 to 1 — Anne received 48 times the financial benefit that she paid out for the coaching effort.
The client is aware that we do not include all the benefits they actually receive, which further reinforces the worth of the coaching investment. I also personally enjoy knowing that the beneficial waves of the coaching effort will continue to break on the beach after my work with the client is done. The leadership, team, and process skills gained through coaching were transferred to other business issues but were not counted in the analysis. Another benefit not calculated includes the contributions that Anne and members of her team make to groups elsewhere in the company as they join other teams.
CONCLUSION
As I mentioned in the introduction, as an experienced practitioner you can use this practical analysis with your clients so they convince themselves of the value of their executive coaching investments. Figure 5 outlines the entire process. It requires a subset of the analogous skills that you use as an executive coach to develop your clients: deep listening to uncover crucial facts, striving for concrete behaviors over accepting generalities, and understanding how organizational components interact with the external environment in order to recognize critical areas for development.
The rewards of using this approach are many. Leaders are more likely to remember to use the behaviors they know give them results. They are more likely to expect their teams to interact in specific ways that create results. Executives are more likely to invest in using you as a coach in the future when they have a new team or more challenging set of results to achieve. Clients are happy to be strong references for your executive coaching practice if it specializes in linking leader development to business results. This set of rewards for using the Benefit/Cost Ratio strategy builds a healthy portfolio for executive coaches who consider themselves business partners with their clients.
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