November 2003 Leadership Coaching Newsletter
This Month's Topic: The ROI for Leadership Coaching

It's not only how much you know that will determine your success as a leader, but how well you relate to others in your organization.

Research by the Center for Creative Leadership has found that the primary causes of derailment in executives involve deficits in emotional competence. The three primary areas are:

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1. Difficulty in handling change,

2. Not being able to work well in a team, and

3. Poor interpersonal relations.

Effective leadership coaching works with executives to develop their proficiency in working with change. It also paves the way for decision makers to create higher levels of organizational effectiveness through dialogue, inquiry and positive interactions.

Between 25 and 40 percent of Fortune 500 companies use executive coaches, according to the Hay Group, an international human resources consultancy. Although it was once used as an intervention with troubled staff, coaching is now part of the standard leadership development training for executives in such companies as IBM, Motorola, J.P. Morgan Chase, Hewlett-Packard, and many others. Companies such as Merrill Lynch, and sales-based organizations such as insurance firms use coaches to bolster performance of people in high-pressure stressful jobs.

Michigan-based Triad performance Technologies, Inc. studied and evaluated the effects of a coaching intervention on a group of regional and district sales managers within a large telecom organization. The third party research study cites a 10:1 return on investment in less than one year. The following business outcomes were directly attributed to the coaching interventions:

  • Top performing staff were retained, resulting in reduced turnover, increased revenue, and improved customer satisfaction.

  • A positive work environment was created, focusing on strategic account development and achieving higher sales volume.

  • Customer revenues and customer satisfaction were improved due to fully staffed and fully functioning territories.

  • Revenues were increased, due to managers improving their performance and exceeding their goals.

    Another study measured the business impact of executive coaching of 100 executives, mostly from Fortune 1000 companies and was reported in the January 4, 2001 issue of Business Wire. Half of the executives in the study held positions of vice president or higher. Almost six out of 10 executives who received coaching were ages 40-49 and one third earned $200,000 or more per year. The coaching programs, lasting six months to one year, were both growth-oriented-which is aimed at sharpening performance and change-oriented-which is aimed at changing certain behaviors or skills. The coaching programs delivered an average return on investment of 5.7 times the initial investment. Among the benefits to the executives who received coaching was:

  • Over a 60% increase in working relationships with direct reports, peers, and executive management.

  • Over a 50% increase in teamwork, job satisfaction, and conflict resolution.

    Executives in organizations must continually focus on how to leverage their business results as well as their effectiveness as leaders. Focusing on both areas will produce higher personal and professional success and create greater organizational value.

    Leadership Coaching Newsletter is written and produced by Wendy Capland. If you have any questions or comments, please send them to: wcapland@visionquestconsulting.com. We'd love to hear from you.

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    Copyright Wendy Capland 2000, 2001, 2002, 2003. All rights reserved.