When it comes to supporting employee growth and leadership development, coaching has transformed from novelty to necessity. A successful coaching relationship starts with identifying desired outcomes and defining success. The same is true for an organization’s coaching program, yet executing this step is often overlooked by many organizations trying to develop a robust coaching culture. In fact, in the International Coaching Federation’s 2020 Global Coaching Study more than half (52%) of respondents ranked the inability to measure the impact of coaching as the top challenge to creating a strong coaching culture within an organization.
While many leaders focus on the return on investment (ROI) to determine if coaching is working, a more effective approach is to identify and measure an alternate metric: return on expectations (ROE). ROE can be a more useful tool for showcasing the value of coaching. Here’s how to use it in your organization:
Identify Meaningful Metrics
Coaching may appear as a budget line item fixture, but it cannot exist in a vacuum. As companies continue to scrutinize expenditures during the ongoing COVID-19 pandemic, learning and development (L&D) and human resources (HR) department leaders need to be able to articulate the value of coaching in supporting employee and leadership growth, along with an enhanced capacity for change.
The process starts with identifying the individual metrics and strategic goals that matter to each company. Often, they are more than revenue or growth, though they may be directly linked to these outcomes. Perhaps an organization wishes to improve talent retention, empower leaders to be more confident or increase intra-team communication. The key performance indicators (KPIs) will be different in each organization, but they will help define the effect coaching has on reaching these objectives and reinforcing values and the overall mission.
Measure and Analyze
Measuring the ROE of coaching includes a self-assessment for each participant to rate their ability to achieve identified goals, such as work performance, communication and adaptability. The results serve as a baseline for comparison with an identical assessment that follows the completion of the individual or team coaching engagement. This follow-up survey captures improvement in the identified metrics.
CareSource, one of the nation’s top nonprofit managed health care providers, is an example. The Ohio-based organization launched a coaching program to optimize new leader onboarding as the organization expanded from hundreds of employees to thousands. CareSource used a before-and-after survey to measure how coaching helped new leaders accelerate their development on the key ROE metrics of managing the transition and boosting confidence. The survey also helped CareSource calculate the retention rate for all coaching participants, along with the overall return on investment.
CareSource found a direct positive correlation between coaching and its desired metrics. Confidence for leaders who worked with a coach increased by an average of 85%. Coaching also received high marks from the 80% of respondents who said that the experience helped accelerate their transition. A similar percentage credited coaching with either their or their team members’ decision to stay with the company.
CareSource took its measurement a step further by calculating cost and time savings as well as cost avoidance. A thorough analysis found that the nonprofit retained nearly 70 leaders and employees, saved nearly $5 million, and earned a 528% return on investment from 2009 to 2019. Nearly 70% of new leaders also transitioned to CareSource in part because of the organizational coaching program.
Cracking the Coaching Code
Retaining high-level talent and nurturing an accommodating and inclusive culture are hallmarks of high-performing organizations. The presence of a coaching culture is also a mainstay in such organizations. Showcasing how coaching can advance an organization’s mission helps sustain such essential attributes.
Coaching is not a magic solution to address all of an organization’s challenges at once. Similarly, measuring its impact also cannot use a one-size-fits-all approach. Companies that wish to achieve their cultural and business objectives can do so with a roadmap of how coaching not only helps them survive but thrive. Using ROE in lieu of or in addition to ROI ensures they accurately quantify those results.