Measuring Coaching ROI
Moderator (Linda): How do you measure return-on-investment (ROI) for your work with a corporate client or your work as an executive coach?
Mary Beth: This is one of my favorite topics. I track three things. One is what I call the three factors for leader effectiveness. The three factors are (a) what’s the business result and what are the measures, (b) what are very specific leader behaviors that they have to exhibit that they’re not exhibiting now and (c) what are team interaction skills that they need from their team to produce those results? I also help my client become aware of other influencing variables. I ask the leader: “What are the variables in your business — inside and outside — that are going to impact your results–your success?” These are positives and negatives, so they say everything from, “You know the economy was going down from the year 2000 and we’ve been really struggling with that” to “We just lost ten percent of our market share” to “You know what, I have the right people on my team.” So, we identify the variables and then at the end we cycle back, reconfirm with the three factors how much were they able to bring those home, look at the variables again and then know that the coaching contract is one of the variables. So, I ask my client what percentage of impact–was the coaching variable as opposed to the other variables on getting the ROI? It’s a subjective answer from the leader who I have found is always giving an unrealistically high percentage to the coaching variable. It’s my job to be more hard-nosed and business-minded about this than they are. I’m always skeptical about it and knocking down the percentage by saying, ‘You know there were other variables—so prove to me that the percentage you’re giving to coaching is valid.” Over time, what I have found is a typical adjusted percentage of impact that clients give after dealing with my skepticism is anything from 20 to 33 percent.
Bob: When I sit down with an executive and they say: “How are you going to measure this?” And what I say to them is: “Tell me what the key issues you have in your organization that you’d like to see shift.” Whenever they identify those issues I’ll ask, “How do you measure them” and they typically tell me “I can’t.” So, I say: “Ok we’ve got a task to look at so how are we going to figure out a way to measure this?” One of the ways we do that quite often is just to identify those key things that they just listed and then we review them using a one to ten scale. I ask the executive “If one is as poor as it could ever be and ten for this indicator walks on water, where do you think you are as an individual or an organization right now-and we pick a number. Then I would say to them: “At the end of six months if we were to measure success what would be a number that you would pick?” And we lay that out as the connector for what we measure. So, set it up in the beginning, take a look at it along the way and measure it in the end. But make sure that they’re the ones who are identifying the key indicators and they are also picking the starting point number.
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