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Studies Show Up to 700% ROI from Executive Coaching

Leadership development firm from Perth reveals how executive coaching leads to more customer satisfaction and long-term profits.

Perth, WA, April 23, 2013 - Many studies have been conducted in an attempt to determine a definitive ROI gained from executive coaching. While the studies seek objective data, the process by which the data is captured contains a subjective element. This has made it extremely difficult to quantify the results. Consequently, many observers perceive any attempt to reach a consensus has been invalid due to a faulty model.

However, most studies, no matter what criteria and metrics are employed, arrive at the same conclusion: executive coaching produces an ROI between 500% and 600%. Many different studies have been conducted since 1999, from sources such as Fortune Magazine, Chemistry Business Magazine, the International Coach Federation, and Linkage, Inc. Despite dissimilar methodologies, the studies yielded strikingly similar numbers. They all reported an average ROI between five and seven times the amount of the initial investment.

The study that is still considered to be the definitive study in the field, even today was conducted by MetrixGlobal in 2001. MetrixGlobal surveyed 100 executives of Fortune 1000 companies who had received executive coaching for a period between six months and one year. The survey questioned the executives about a wide range of different metrics concerning the ROI of executive coaching.

The executives reported that their companies benefited from improvement in customer service, development of potential successors, improved individual performance, and better bottom line results. The executives also reported individual benefits, citing improvements in their working relationships with direct reports, immediate supervisors, peers, and clients. They also reported improvements in job satisfaction and teamwork.

In a recent blog post, Integral Development, an executive coaching and management consulting firm in Perth, revealed a reliable method to estimate the ROI on executive coaching. The first step is to calculate how much value the company has obtained as a result of solving the problem they were attempting to mitigate through executive coaching. Both tangible and intangible benefits are given an estimated monetised value.

The next step is to determine the immediate value, which is defined as the percentage of the total value which was a direct result of receiving executive coaching. Then, the cost of the executive coaching is subtracted from the immediate value; this determines the net ROI. The direct ROI is then determined by dividing the net ROI by the coaching cost.

Dr Ron Cacioppe, Managing Director at Integral Development, offers his own unique perspective: “Every study that has been conducted in an attempt to determine the ROI of executive coaching has been criticised because many see them as an attempt to compile objective data through subjective means. While the critics have a good point, it certainly doesn’t invalidate the data that has been collected since 1999.”

Dr Cacioppe continued, “While there is no methodology in place to assemble irrefutable data, the similarities between the results of every divergent methodology used in studies trying to determine a definitive ROI for executive coaching cannot be trivialised. On the surface, the data may appear anecdotal, but every path leads to the same conclusion: an ROI of 5 to 7 times the original investment.”

Dr Cacioppe concluded: “We have received extensive feedback from our leadership development and executive coaching clients in the Perth area, and that feedback, though anecdotal, also closely mirrors the results of most industry studies: executive coaching produces an exceptional ROI.”

Integral Development is an executive coaching and leadership development firm based in Perth. For more information on their world class executive education programs, please call (08) 9242 8122 or visit their website: http://www.integral.org.au/.