Commentary on “The ROI of Executive Coaching” Article
Mary Beth O’Neill, MA
Since this article came out in 2005, I further honed the information and added it to two chapters of the second edition of my book, Executive Coaching with Backbone and Heart, due to come out in July. The model, the Three Key Factors, is incorporated into the chapter on contracting for executive coaching so you can see how to use the methodology within a larger piece of coaching work. There are two other client examples of Three Key Factors work in the book besides this example with Anne. One example includes how to work with the client’s boss during contracting to establish the Three Key Factors for the client.
The chapter on ROI in my book is updated in a couple of ways and I want to include an important one here in this commentary. It gives you a further suggestion on working with calculating ROI with clients in a way that adds even more credibility to your work in the client system.
You will see in this article that I use the formula —
business results x % impact of executive coaching
cost of executive coaching
What are defined as the “business results” need to be customized to the client and their situation. In this article I talk about the business results that the client has the most control over and what they have a mandate to accomplish in their system for that year. It is also important, however, to prepare your client for what the executives above them may want in terms of calculating ROI on business results. While upper management may in fact give your client the task of increasing revenue (as is the case with Anne, my client in the article), they may not calculate ROI based on revenue generation. Most top level executives track net contribution for ROI rather than revenue, cost savings, or increase in market share. If that is what they value, then you need to give your client a heads-up that your client may need to show ROI based on that as well. Educating your client to the interests of top management can only help them when it comes to choosing the right level of business result to calculate their ROI formula. Your client still has the responsibility to choose the metric they work toward for calculating ROI. As was the case with my client, Anne, revenue was such an overriding business goal for the company that year that top level management was following it as keenly as net contribution. Therefore, the ROI calculation used in this article had enough credibility to stand on its own. It is important not to assume that credibility, however, without first checking it out within the client system.
Download Article 1K Club
