The ROI of Executive Coaching for Operational Leaders

Over the past decade, I have worked with many operational leaders as an executive coach. On reflection, it appears that I have fulfilled one or more of these three roles.

  1. As a skills coach – firstly in understanding the gap in the operational leaders skills, and behaviours and working through to a solution to bridge that gap.
  2. As an executive coach – holding a space for the exploration of strategies and ideas that could make a difference to the organisation. Usually, these ideas are not formed enough for wider conversation in the organisation, and often some of the ideas do not materialise.
  3. As a curious critical friend – this is an unusual role and is slightly outside of pure coaching. Clients often ask for opinion, or thoughts on how an idea has landed – as well as a critique on merits and disadvantages. It is in this place of high trust and confidence that we often see innovation and new concepts develop.

But, engaging an executive coach is likely to require some justification. To this purpose, this blog is written to explore several compelling return on investment (ROI) arguments that can be used to justify the hiring an executive coach

Here are some examples of outcomes and indicative returns that can be used to make the business case for executive coaching.

Improved Performance and Efficiency

Executive coaching can help individuals to improve their performance and efficiency, by addressing individual challenges and opportunities. By improving performance and efficiency, executive coaching can help to increase productivity, reduce costs, and drive innovation.

Indicative return:

A study by the Manchester Consulting Group found that coaching produced an average return on investment of almost six times the cost of coaching (Whitmore, 2017).

In another study, researchers found that executive coaching resulted in a 53% improvement in productivity and a 48% improvement in quality of work (McGovern et al., 2001).

Enhanced Decision-Making Skills

Making timely and effective decisions is an important aspect of any leader. An executive coach can help operational leaders to develop their decision-making skills, which can have a positive impact on the organization’s operations. In turn,  this can help to reduce errors and improve operational efficiency.

Indicative return:

A study by the International Coach Federation found that 70% of individuals who received coaching improved their work performance, while 86% of companies reported that they recouped their investment in coaching and more (International Coach Federation, 2009).

Another study found that executive coaching resulted in a 57% improvement in decision-making skills (McGovern et al., 2001).

Improved Team Performance (or Workgroup Performance)

This is a large area and something that is often explore in this context.

We often talk about teams working together and we often motivate and engage a group of people as a team – although they are in fact working individually towards different goals. The latter, is not by true definition a team, but is a workgroup. By understanding this, we can motivate, set appropriate goals and develop coherence leading to improved performance.

Executive coaching can help operational leaders to improve their leadership and communication skills, which can have a positive impact on team and workgroup performance. By improving team and/or workgroup performance, we can help to increase productivity, reduce costs, and drive innovation.

Indicative return

A study by BlessingWhite found that companies with highly engaged employees had a 19% increase in operating income compared to companies with lower engagement levels (BlessingWhite, 2011).

Another study found that executive coaching resulted in a 77% improvement in relationships with direct reports and a 71% improvement in relationships with peers (McGovern et al., 2001).

Enhanced Innovation and Creativity

Because of the very nature of operational leadership, we often find that detail obstructs strategy, innovation and creativity. By providing a space for this exploration, executive coaching for operational leaders can put this back on the agenda by enhancing creativity and innovation skills.

This can thenlead to new and improved products, services, and processes leading to an increase in competitiveness and profitability.

Indicative return

A study by the Boston Consulting Group found that companies that emphasized creativity and innovation had 50% higher revenue growth than their peers (Boston Consulting Group, 2018).

Another study found that executive coaching resulted in a 61% improvement in creativity and a 46% improvement in innovation (McGovern et al., 2001).

Improved Succession Planning

Executive coaching can help C-suite individuals to identify and develop their potential successors, ensuring a smooth transition of leadership and minimizing disruptions to the organization. By working with the successors, we find that executive coaching can can create a pipeline of capable leaders and reduce the risk of leadership gaps.

Indicative return

A report by the Harvard Business Review found that companies with a strong succession planning program had at least a 20% higher return on investment than companies with a weak succession planning program (Harvard Business Review , 2021).

Better Risk Management

This is a top table number. Risk and attitude to risk defines safe cost resilience and sustainability in terms of economical and environmental impact. We find that executive coaching helps to improve risk management skills, which can help to mitigate risks and avoid costly mistakes.

Indicative return:

A study by the Harvard Business Review found that companies that invested in coaching had a 9% higher return on assets (ROA) than companies that did not (HBR, 2019).

By using these return on investment arguments, operational leaders can make a strong business case for executive coaching and demonstrate the potential benefits for the organization. Executive coaching can help C-suite individuals to achieve their full potential, drive greater results, and create a positive and productive work environment that leads to higher engagement, retention, and profitability.

First Steps

The first step for any coaching engagement is to organise a conversation with a coaching provider – we would of course recommend Wheresmylunch. Contact us in the first instance by dropping a short email to me, Simon.

Further Details

Here is a detailed list of references for the return on investment arguments used to justify the expenditure of hiring an executive coach:

  1. Whitmore, J. (2017). Coaching for performance: The principles and practice of coaching and leadership (5th ed.). Nicholas Brealey Publishing.
  2. McGovern, J., Lindemann, M., Vergara, M., Murphy, S., Barker, L., & Warrenfeltz, R. (2001). Maximizing the impact of executive coaching: Behavioral change, organizational outcomes, and return on investment. Manchester Review, 6(1), 1-9.
  3. International Coach Federation (2009). ICF global coaching client study..
  4. BlessingWhite (2011). Employee engagement report. Retrieved from http://www.digitalopinion.co.uk/files/documents/Employee_Engagement_Report_Blessing_White_%202011.pdf
  5. Boston Consulting Group (2018). The most innovative companies 2018: Innovators go all in on digital. Retrieved from https://www.bcg.com/publications/collections/most-innovative-companies-2018
  6. Harvard Business Review (2021). The High Cost of Poor Succession Planning. Retrieved from https://hbr.org/2021/05/the-high-cost-of-poor-succession-planning
  7. Harvard Business Review (2019). Executive coaching can help you and your business. Retrieved from https://hbr.org/2009/01/what-can-coaches-do-for-you
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