The Contentious ROI of Coaching

Introduction

In our work delivering coaching culture and driving coaching operations for clients around the world, we’re often asked to implement ROI measures, or ‘return on coaching investment’ metrics. This is a term brought across from finance where a monetary investment can be assessed in terms of the income it generates in returns over time. This straight math allows a company to keep track of whether their spending is effective in relation to their business goals.

The Growing Interest in Coaching ROI

As companies start to mature and become more savvy about their strategic spend on coaching, they naturally want to ensure they’re impacting retention, performance, engagement, innovation, and team culture with these coaching interventions. A simple Google Analytics search will show how much interest in coaching ROI has increased in recent years, and we agree that companies should be tracking the effectiveness of their coaching programs in relation to business goals.

However, despite the corporate trend, there’s great contention in academic circles around this urge to calculate the ROI of coaching. As an industry, coaching is still young, and the academic study of coaching psychology is, of course, even younger, so we’re still in the very early days of establishing our research base. Despite a general consensus from companies and coachees alike (and coaches!) that ‘coaching works’ in terms of accelerating professional development and deepening self-awareness and vocational alignment, we’re still establishing our cornerstone research hypotheses and trying to repeat our findings to show ‘why’ or ‘how’ it works.

The Corporate Urge to Measure ROI

In a sense, the corporate urge to measure coaching ROI also demonstrates the need to prove that coaching is doing what we all say it’s doing. So why are coaching psychologists concerned about ROI? For a few good reasons.

Firstly, most coaching outcomes are qualitative. They’re felt and observed differences in thinking and behaviour, and these changes can take time to manifest. In trying to assign an ROI to coaching, we need to assign numeric values to qualitative experiences, and this requires a lot of assumption.

For example, if you and I are both receiving coaching, and we’re asked before, during, and after the coaching engagement: “on a scale of 1-5, one being the lowest and five being the highest, how would you rate your job performance?” on the surface it might seem like we’re collecting quantitative data about the impact of coaching on performance. However, our answers might be impacted by how harsh or favourable we are as self-raters, who we were being coached by, other team or product or market changes during this period, and the potential variables go on and on. So even though we’re both being asked the same question with a numeric score, and we’re both receiving coaching, we’re not necessarily calibrated raters making fair quantitative assessments on the impact of our coaching.

Bias in Ratings

And on this point, a lot of bias is introduced into the ratings by nature of 1) the coachee wanting to please the coach and company, by showing that the spend allocated to them was worth it lest they not receive personalised investment again, and 2) the coach having a vested interest in performing to get high metric scores. Sometimes a coach needs to make a coachee uncomfortable, ask hard questions, or give tough feedback - this tension, where appropriate, can be part of getting great development results. However, if a coach is delivering to get a certain ‘satisfaction’ score to show ROI for a client, then they might hold back, either consciously or unconsciously, from creating these frictions. In essence, we create a bind for coaches and coachees to give genuine feedback on their progress when we impose certain ROI measures.

Complexity of Coaching Goals

In addition, coaching is about finding solutions and a way forward in complex work situations. It’s about setting goals for development and building resources to track and achieve those goals. So by its nature, coaching is solution and goal-oriented, but not every goal or solution is equal. Their contextual, and related to the role and personal motivations of the coachee. My goal may be complex and layered and audacious and extrinsically motivated, while yours may be tactical and time-bound but very intrinsically motivated and connected to your identity. Mine isn't more or less important than yours - they’re both no doubt very dear to each of us - so even if we both achieve our goals through coaching, how can we possibly assign an ROI that compares the two? It’s like measuring an apple against an orange, simply because they’re both round. Would the company assume a numeric value for our goal complexity? Or is every goal equal to ‘1 ROI point’ and we get a 1 or 0 based on our self-assessed achievement of the goal, no matter how complex it is?

You see the point - not all goals and therefore not all development is equal, and huge leaps in logic need to be made to bring the nuanced outcomes of coaching into this kind of metric. So instead of asking the coach and coachee for their biased input, can we just observe behaviour changes objectively across the organisation? Yes - lots of companies build their retention and engagement data, or 360 feedback into an ROI measure, however, the challenge again becomes how we attribute the effects of coaching on those results, amongst other confounding influences such as leadership communication, market conditions, product enhancements, changes in the personal lives of the coachees, and etc. We can correlate coaching with engagement and retention, but we can’t 100% say coaching causes those things.

Limitations in Academic Literature

In the academic literature, there are few papers that attempt to measure coaching ROI. Those that do are in low-impact journals, and are removed from credible meta-analysis of the coaching industry for this reason, because the leap from qualitative impact to assigning quantitative measures is too far. Despite this, most major coaching organisations are having a go for their clients, and marketing quotes everything from x2 to x5 to even x8 ROI.

Our Approach to Measuring ROI

Our stance is to measure ROI within a client organisation only, using their metrics and benchmarks measured at quarterly intervals, to see change over time. For this reason, we don’t publish ROI and we don’t ‘boil down’ the value of coaching to one number only. While it’s appealing and talks immediately to a C-suite mindset, it’s a compromise to represent coaching so simplistically. It’s almost impossible in our view for a company to benchmark themselves against another business in terms of return on coaching spend unless they had huge swathes of reliable data, and agreed to consistent measures inter-company.

Conclusion

While our clients definitely see the impact of coaching year on year, and we can qualitatively demonstrate the return on their investment, we caution the market from adopting simplistic ROI measures without reviewing ‘how’ it’s being done, and considering the call-out from the academic world. The research is coming, but it's not there yet!

If you're interested in learning more about how BOLDLY can help your organisation, we invite you to explore our website or write to us at connect@boldly.app.

To review more on this topic:

A systematic review of executive coaching outcomes: Is it the journey or the destination that matters the most?

Author: Athanasopoulou, Andromachi ; Dopson, Sue

Journal Title: The Leadership quarterly

ISSN: 10489843

Publication Date: 2018-02

Volume: 29

Issue: 1

Start page: 70 End page: 88

About the Author:

Alexandra Lamb is an accomplished organisational development practitioner, with experience across APAC, North America, and MENA. With 20+ years in professional practice, conglomerates, and startups, she has collaborated with rapid-growth companies and industry innovators to develop leaders and high-performance teams. She is particularly experienced in talent strategy as a driver for business growth. Drawing from her experience in the fields of talent management, psychology, coaching, product development, and human-centred design, Alex prides herself on using commercial acumen to design talent solutions with true impact.