If leadership is tested in times of crisis, it would be a gross understatement to say that the past two years have put a strain on leaders. The pandemic has revealed some major gaps in leadership – but for most organizations that have invested in their leaders – they are reaping the rewards. Executive coaching proves to be an asset, and companies are retaining coaches even as they cut other costs.
According to a global, snapshot survey conducted by the International Coaching Federation (ICF) at the beginning of 2021, there is an increased percentage of coaches who say the pandemic had a positive impact on their businesses. Coaching clients found that leaders needed support more than ever as they navigated a new, complex workplace environment.
Leadership development is a rewarding undertaking, but the interpersonal nature of coaching makes it hard for companies to measure a tangible return on investment (ROI). Trying to put a dollar amount on the benefits of coaching for your employees may be difficult, but the proof is there:
- A Fortune 500 company studying the ROI of executive coaching concluded that it produced a 529% ROI and significant benefits such as overall productivity and employee satisfaction. When you factor in employee retention, the ROI jumps to 788%.
- A survey of 100 executives, most from Fortune 1000 companies, found that an investment in executive coaching realized an average ROI of almost six times the cost of the coaching.
- Harvard Business Review documented that companies that spend aggressively on employee development each outperformed the S&P 500 by 17%-35%.
Tangible vs Intangible Benefits
There are other ways to measure success besides comparing financial gains compared to costs paid, including both tangible and intangible factors.
Tangible Benefits of Executive Coaching Include:
- Increased productivity,
- Higher levels of performance,
- Reduced costs,
- Growth in revenue and sales,
- Higher employee retention, and
- Higher engagement of employees.
Intangible Benefits of Executive Coaching Include:
- Increased emotional intelligence,
- Increased confidence,
- Strengthening of executive presence,
- Improved communication,
- Improved situational leadership skills,
- Embracing accountability, and
- Stronger work relationships.
Why is Coaching Difficult to Measure?
If all these positives come from executive coaching, why is it so difficult to measure? There are actually a multitude of factors, from not having a controlled environment to different peoples’ perception of what change actually is.
I recently completed a 360 review for an executive coaching client and interviewed 15 stakeholders, both prior to our coaching engagement and after it was completed eight months later. When I asked whether they had perceived change/improvement in this individual, everyone answered with a resounding, “Yes!” except for one person. This stakeholder said he didn’t observe any change at all. However, when I referred back to my initial interview of this stakeholder and read back to him his observations, it was apparent the client had indeed changed – in fact, quite dramatically. The stakeholder, taken aback, commented, “His behavior changed so much, I completely forgot how he was before!” Stakeholder subjectivity is another area that makes results hard to measure.
People also come into the situation already having perceived beliefs about change itself. If you have a belief that people don’t change, you are going to have a difficult time perceiving change in anyone. People tend to base their perspectives on opinions, not facts, and they can also over-index on certain factors. A coach may speak with someone who interacts with the client daily as well as someone who only collaborates with them quarterly. The problem is that these stakeholder perspectives are often equally weighted.
Measurement Tools
Executive coaching cultivates leadership competencies, which is most accurately measured by 360-degree assessments, administered pre- and post- engagement. There’s a self-assessment component, but the assessment is also given to 8 to 20 stakeholders to get their opinions of the leader. The more assessments, the greater the accuracy of the cumulative scores. My coaches and I evaluate 32 leadership competencies, from decisiveness to delegation, active listening to effective feedback.
Measuring on Tactics or Change?
So, how can HR leaders ensure they measure the effectiveness of executive coaching? One way is to focus on the type of coach you are engaging. A tactical coach versus a transformational coach who will work on systemic change will likely elicit very different results.
Let’s take the example of a senior leader who doesn’t reach out cross functionally to build relationships. A tactical coach could structure an assignment for the client to measure (check off) every time they reach out cross functionally to stakeholders. At the end of six months, you could have a very long list of checkmarks that shows the client addressed the issue a certain number of times. A lot of executives would be happy with those results, but here’s why they may be shortsighted. The client could just be checking the box because it’s required of them during coaching. It doesn’t mean the behavior has been learned systemically, and when you revisit a year later, the executive is back to their old behavior because no deep transformative change occurred. Or, they may have built the habit and are still doing it, but it’s transactional in nature – not meaningfully building the relationship.
A different coach may choose to address an underlying fear that addresses the root cause – discomfort with intimacy or lack of self-esteem, etc. Once you address the root of the problem, you will see the behavioral results, you are less likely to see a “rubber band effect” back to old behavior and you are also likely to see a domino effect where the learning translates to other domains resulting in a bigger ROI for the organization.
Leaders should also factor into their consideration:
- A coach that has measurement protocols built into their coaching,
- Knowing the exact behavioral change you are looking to impact, and
- Ensuring that the same coach who will be coaching the client will be the coach conducting the pre- and post- interviews with stakeholders.
In that way, you control the variable of the coach to some degree. That coach can then compare the stakeholders’ opinions and easily see when the change is authentic. As mentioned before, sometimes the person going through coaching has changed so much that the stakeholders don’t even remember the “before” person, because they’ve been interacting with the “after” person.
I recently worked with someone who was sent to me because her supervisor called her behavior unprofessional. She was observed saying flirtatious things to coworkers and acting inappropriately. After I met with this client, I realized that the supervisor was only seeing the symptom of the problem, but the real issue was her insecurity. Whenever this client felt insecure, she turned toward flirtatious behavior. It’s something she had been doing all of her life, and it worked for her. It had become automatic, so just telling her to stop being a flirt certainly wasn’t going to be effective.
The real work became breaking down the behavior and creating mindfulness. By practicing self-awareness and working through the discomfort, we were able to break this cycle so that when she started to feel insecure, she was aware of it and was eventually able to not allow the next step to occur. The result was that the client was able to change her mindset and her reaction so that she no longer made her coworkers uncomfortable. Now, her inappropriate flirting is a distant memory.
When contemplating working with a coach, consider a coach who is well trained in developing emotional intelligence and psychology to competently handle more complex issues.
A Team Effort
Stronger leadership leads to ROI extending far beyond the individual level. There is a domino effect – the benefits of executive coaching will trickle down the organization to other employees and ultimately have a positive impact on the company’s bottom line.
Think of the leader as an orchestra conductor. At the most basic level, the conductor keeps the orchestra in time and together. But a conductor also translates the composer’s message. With their lead, the musicians can then create a unified vision of the music to play to the audience’s delight.
Just like a conductor, a leader is responsible for driving focused alignment and keeping his/her team in tune with each other to get the desired results. For example, a coach can work with a leader to be more effective at delegation or better develop cross-functional relationships in order to develop and deliver operational excellence. But the impact doesn’t stop at the leader’s level. Now that the leader can improve performance and achieve sustainable results, they are in a better position to be able to pass along their knowledge to their direct reports.
Let’s look at a leader who has an issue with delegation. He will be coached to ensure he doesn’t become a bottleneck in the chain of command by trying to hold onto too many tasks himself. Once he learns to let go, other team members will develop and level up in their leadership because they are being given stretch assignments for the first time. Perhaps they are highlighted in higher-level meetings which they were not attending before. Perhaps they are involved in cross-functional projects that were previously only handled by the leader. By being given more responsibility, they begin to grow, learn and become more accountable, under the leader’s direction.
When you have a team with a leader who is working to drive more effective results, you will start to see greater ownership and accountability by every person on the team. There will be more clarity in what the expectations are, as everyone will be very clear about their roles and responsibilities, as well as the level of performance that is expected of them. The direct reports are now having development and coaching conversations with their leader rather than just directive dumping of assignments on them. That’s a perfect example of how you will see behavior that is not only changed for the leader, but for every person on the team. And when you have high-performing teams, you have a more profitable company.
Through coaching, the leader can become more of an orchestra conductor who is responsible for the results driven by the entire team rather than just his own personal results. The leader’s new role becomes building and nurturing this high-performing team. This transition has a huge impact for the leader, team members and organization. It illustrates how executive coaching builds leadership capacity that translates into a return on investment in a myriad of ways.
Related: The Power of Team Coaching
How to Hire a Coach
In addition to the standards of an executive coach already discussed, there are some other factors that separate quality coaches from the rest.
- Qualifications: Unfortunately, the coaching industry is not regulated which means anyone can call themselves a coach. Vet your coaches’ experience carefully by inquiring into what types of coaching experience they have (corporate is a must), training, credentials (the International Coaching Federation is respected worldwide), level of credentials (an indication of hours of experience), and psychology background.
- Methodology: Look for a coach who has developed their own methodology over time and be wary of coaches who sell a “one size fits all” approach to coaching.
- Coaching Engagement: In addition to asking about the length of the coaching engagement, find out how often the sessions will occur. Some coaches only meet with clients monthly, even ad hoc. I have found that meeting weekly yields the greatest returns in terms of deep transformative change.
- Personality Fit: It’s a good idea to meet with prospective coaches before engaging in an agreement to ensure someone is a good personality fit for the client.
Making an Impact
Leaders should start off a coaching engagement by being consistent in what factors they are measuring and how they want to measure those factors from engagement to engagement.
Here are some ways you can set up a coaching engagement in order to be measured for success:
- Establish the business results you want the leader to achieve,
- Outline the leadership behaviors they need to exhibit and sustain, and
- Identify the corresponding results that you want to show up within the leader’s team.
These three factors should be integrated into the choices a leader makes on a daily basis. With the help of an executive coach, repeated refinements and clear goals will help you track the progress of your coaching investment. When you can provide proof of development efforts, you will be able to attract, grow and retain your employees. And whether you have an effective leader at the helm of a 10- or 1000-person team, the benefits will be clear.
Learn more about executive coaching
This article was originally published in TD Magazine, ATD’s flagship monthly magazine.