The ROI of coaching: A holistic view

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Written by CoachHub on 25 May 2021 in Features
Features

In an excerpt from TJ's latest white paper, coaching experts CoachHub talk about the importance of a holistic approach.

The return on coaching investment

Coaching is becoming an institution in organizations. Businesses face a multitude of challenges, from large-scale transformations to attracting, developing and engaging their workforce, to ensuring the overall wellbeing of their employees. Increasingly, coaching is recognized as a powerful development tool that addresses both, specific individual learning needs and strategic, organizational transformations.

With the evolution of coaching, from being a performance management device to being a tool for the development of integrative coaching cultures across organizations, it is set to only increase in importance from here on out. And with the digitalization of coaching, it has become more accessible to the wider workforce.

Coaching is no longer an elite offer, serving only as executive coaching, but is becoming democratized.

With coaching’s rising importance, it is indispensable to understand how both the quality of coaching and the outcomes of coaching can be evaluated and ensured. How can we know that coaching worked and measure the coaching outcomes on our workforce and organization?

What do we know about the ROI and impact of coaching?

The ROI of coaching has been on the minds of business leaders and researchers alike, for a long time. There have been a plethora of approaches to estimating ROI, ranging from ‘guesstimates’ to attribution modeling with perceived and observed coaching outcomes as well as coaching’s direct and indirect costs.

Coaching is no longer an elite offer, serving only as executive coaching, but is becoming democratized.

The results of the ROI of coaching have ranged from 37% to 570% or even 689%. Although the upper end of those estimates seems rather exaggerated, renowned coaching researcher, Prof. Dr. Carsten Schermuly, has pointed out: even at the lowest estimate of 37% ROI, coaching would be well worth its investment.

A positive impact on the individual

The impact on the individual is the most well researched area. It has been confirmed that coaching has a positive impact on affective outcomes, these are changes of the individual on the attitudinal and motivational level for topics such as self-awareness, self-efficacy, reduced stress, increased job satisfaction, wellbeing and general attitudes.

Furthermore, coaching supports cognitive outcomes, which refer to the acquisition of new conceptual, procedural or declarative knowledge and cognitive strategies. This kind of knowledge is acquired through self-directed learning and problem solving which are both supported throughout the coaching and its goal-directed process.

Coaching therefore enhances self-regulation, self-management, encourages new perspectives, problem-solving skills and methodical skills.

As coaching is a process directly applicable to work-based contexts, individuals engage in development exercises which result in the growth of work-based skills, such as communication, leadership and other workrelated skills. And in fact, coaching has the strongest positive impact on setting and reaching your goals which positively impacts the individual’s performance in their organization. 

A positive impact on the team and the organization

Research indicates that coaching does not only positively impact the individual as outlined above, but it is also positive for the people around the individual being coached (O’Connor & Cavanagh, 2013). This makes intuitive sense as individuals who have heightened self-awareness and work on improving their behaviors would be better team players.

 

And there is in fact also research that shows the positive dissemination of coaching: O’Connor and Cavanagh (2013) have found that close colleagues of individuals who are being coached have seen an increase in their wellbeing. They have termed this the coaching 'ripple effect': the positive outcomes of coaching ripple beyond the coached individual.

Furthermore, the outcomes of coaching on an organizational level are assessed in ways of performance and wider impact on the organization. In their meta-analytic findings, Jones and colleagues (2016) found that coaching has the strongest, positive impact for individual level results which refers to individual performance.

That of course, serves as a key indicator of coaching success for organizations. To date, the field of coaching still warrants more research on cognitive, team- and organizational-level outcomes but there are some great scientifically validated insights already to confirm coaching’s positive impact on teams and organizations as a whole.

Thus we know that coaching does not only serve individuals to reflect their attitudes, enhance their learning and facilitate behavior change, but it also positively impacts the wider team and organization. 

How can we measure the impact of coaching?

As the importance of HR within the business is ever increasing, the need to make HR’s business impact more visible, is more important than ever. Training especially, has had major shortcomings in terms of evaluation and business relevant measures such as transfer of learning.

This is most strongly showcased by Ebbinghaus’s forgetting curve that states that we forget 75% of learning within six days if we don’t use it. And coaching evaluation in the past has seen similar challenges.

We often hear our partners describe prior experiences of coaching as a black box: after matching coach and coachee, usually through intensive manual efforts, there is little to no reporting back on progress or outcomes.

When we talk about the return on coaching investment we need to take a holistic approach. 

And this is somewhat comprehensible. Coaching is a highly individualized learning intervention, where the coaching process supports the development of the individual’s awareness, attitudes, mindsets and behaviors.

This is a very powerful, but also personal process and for this reason the coaching relationship must adhere to confidentiality principles. This of course, makes it difficult to measure coaching outcomes in depth.

Scientifically speaking, there have been similar measurement challenges: coaching outcomes, such as affective and cognitive changes are internal and difficult to see. Thus coaching relies heavily on self-measurements and while these still give us valuable insights, measurement is always better from a multitude of sources.

Furthermore, coaching is relatively heterogeneous in its approaches and there are, of course, many factors influencing our people at work next to a coaching program. This makes the causal relationship between coaching and positive outcomes difficult to measure. In addition, longitudinal outcome research is still scarce but very important, as coaching aims to facilitate long term behavior changes.

For these reasons, changes are often not attributable to coaching measures in direct terms.

Considering all of the above, we need to go beyond an ROI of coaching as a number. When we talk about the return on coaching investment we need to take a holistic approach. 

 

This is an excerpt from our latest download in the resources section. To get all the insight from CoachHub's new white paper click here.

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