Updated: Oct 22, 2020
Optimising your organisation through leadership team coaching is now common practice.
Coaching is a commonly justified investment, but is the ROI clear?
The 2020 International Coach Federation (ICF) research indicates that globally $2,8 billion was generated in revenue by coaches in 2019, a 21% increase from 2015.
COVID-19 had a heavy impact on the coaching industry, but there has been a quick return and a substantial uptake to continue coaching activities online.
Coaching is not new to the virtual world and has proven to be effective over telephone, skype and now zoom and teams.
The rationale for measuring ROI for coaching initiatives is again top of mind as everyone faces increasingly challenging times. So let us look at how it should be part of the planning and execution phases of the coaching journey.
Without some ROI measures, there is the risk that coaching can seem less valuable than it truly is, as well as be more vulnerable to criticisms for being “soft” rather than measurable and effective in business optimisation.
But how effective is measuring ROI for coaching? What should be measured, and what is impossible to measure? Can all the improvements delivered through coaching be quantified?
Much to the possible annoyance of some CFOs there will be areas that are difficult to measure, they are however still essential in bringing business optimisation.
It is also important to consider that not all coaching in organisations is done by external coaches. Many coaches frequently enable managers and leaders to do the coaching internally, and so the longer term impact can be tracked over time.
Leaders, however, don't always immediately make the best coaches due to the performance pressure they constantly hold and are accountable for. Without the necessary support, many leaders tend to think they are great coaches, however, the right tools and support are paramount to creating a culture of coaching.
In the ICF 2020, executive summary, survey respondents were asked what they perceive to be the top three potential obstacles to building a strong coaching culture inside an organisation.
These top three obstacles were identified:
Limited support from senior leaders (50%).
Inability to measure the impact of coaching (42%).
Lack of budget for coaching activities (38%).
Looking at these points the importance of building a strong and meaningful partnership with the senior leaders is paramount. It is also important to providing the leadership team with team coaching support and assisting them in measuring and justifying their investment in coaching.
What can and should be measured?
Coaching is done in a myriad of business contexts, industries and organisational setting while supporting an infinite array of challenges, so there will never be one set of metrics that fit all situations.
The first engagements and contract discussions with the organisation need to include the topic about what should be measured.
This conversation itself is essential and will strengthen the partnership between leadership and their coach. The process of defining possible measures provides the coach and business leaders with great systemic insight into how the issues that the coach is commissioned to assist with, will impact the organisation’s bottom line. Or only partially? Or not at all?
The ability to form a collaborative partnership between coach and the organisational sponsor is key to finding the right metrics for ROI.
What is important here is alignment about which outcomes will be measured and why. With disengagement levels being high in most organisations, as well as dysfunctional conflict being common, the ability to measure these will require commitment from everyone around the table.
Leadership teams are often made up of functional HODs and so when coaching the leadership team one could conclude that it should be felt everywhere in the organisation. While that sounds attractive, it’s not a realistic conclusion and being more considerate in the approach will help everyone involved steer in the right direction.
Here are some key areas to look at:
What metrics are measured already that are straightforward to link to the behavioural changes made through the coaching intervention? Does it need to be more complicated than this?
360 Degree feedback measures at the start and at the end of the coaching journey are very helpful measures to assess improvement for critical behavioural changes. The subjective opinions and/or dissatisfaction of stakeholders and/or employees is what most likely initiated the request for coaching in the first place. Getting their input during and post the coaching is an important measure to assess if the necessary changes have been made.
Often the impact of the problem being addressed doesn’t sit in the most obvious places! Holding interviews with partners along the end to end value chain will help the leadership team get a better understanding of where they are having an unintentional negative measurable impact.
In many organisations retention rates of talent are a critical measure, and for good reason. Improved talent retention points towards a greater employee experience and a rise in engagement levels. Both are essential metrics that also promise improved productivity as well as quality and speed of delivery.
In the context of leadership team coaching, the most robust approaches of measurement correlate to business unit performance. That is, how does the coaching support the team’s ability to perform as a unit?
Measuring the unit’s performance could be the result of the leader getting coaching, but is more powerfully impacted through systemic team coaching in which the team as a unit receives coaching.
This makes the unit more skillful in working better together, and with that brings improvement to their overall performance indicators, but also to collaboration across the end to end value chain. .
“Not Finance. Not Strategy. Not Technology. It is teamwork that remains the ultimate competitive advantage, both because it is so powerful and so rare”
— Patrick Lencioni
What is hard to measure, but matters?
Even when the discussions around finding the right ROI metric end up in a dead end, the interpretation should not be that coaching is not impacting the leadership teams effectiveness. !
As mentioned above, establishing a partnership on this journey of value add is vital.
Alignment is important here, and a possible conclusion that there are only limited business-specific metrics that can be expected to increase provides the coaching journey with important context to ROI.
Specifically for leadership teams which are made up of a mix of functional experts, the coaching focus is often on their ability to work better together so that they can improve their ability to be a high performing leadership team with strong interpersonal relationships.
This invisible but vital relationship dynamic that makes up a high performance team is hard to measure, yet critical.
Here are some common blockers to high performing leadership teams:
lack of tolerance for diverse and diverging views and,
poor problem solving or innovation skills.
All of these challenges are perfectly aligned to benefit from team coaching.
What is hard to measure empirically, but matters immensely to leadership teams, is their ability to take a systemic approach to solving core organisational challenges. To become more aware and skilful at impacting and navigating the larger organisational system as a leadership team.
This systemic web of interlinking relationships that enables delivery of organisational success through leadership team provides rational for ongoing coaching and learning.
Senior teams have a big impact on the essence of the organisation’s culture and require coaching support to improve their awareness and skill at leading systemically through right relationships.
The “feel of the place” is not a metric, but an essential measurement to improved resilience, talent retention, innovation and sustained high performance.
Globally organisations are struggling with an 85% disengagement rate.
Leadership team coaching has a direct impact on those numbers.
It will, however, take some investment and time. We should therefore not be focussed on short or medium term metrics.
Leadership team coaching provides an essential competitive advantage for any organisation, and with the economic pressures on the rise, the conversation about providing coaching for the leadership team and measuring ROI must come together early on in the coaching planning engagements.
Spending time up front to discuss this strengthens the partnership for the coaching journey and is an essential component to the success of team coaching.
There is little value in over-investing time in finding measures vs acknowledging and experiencing the upsides of team coaching through the lift in culture and people’s morale.
And there is always the question, what is the cost of the status quo? Can the organisation afford to continue with its current challenges?