Growing studies reveal how executive coaching maximizes ROI for organizations. The Institute of Coaching (an affiliate of Harvard Medical School), indicates that 86% percent of companies reported receiving a full return on their investment and more.
Still, I’m often approached by savvy HR professionals and top executives who ask: when do companies invest in executive coaching instead of leaving it to the existing leadership development and performance management processes?
It’s a relevant question with several answers depending on the organization’s needs. Regardless of the response, they frequently follow with the question: but does it work?
While coaching can’t guarantee success for every individual, I can confidently say that most professionals I work with make notable strides and many reach a high level of achievement and satisfaction in their professional and personal lives. Executive coaching maximizes ROI by expanding emotional intelligence, leadership skills, and other growth points that directly impact the organization’s success.
Key Factors for Successful Outcomes
Leadership development through executive coaching is a targeted approach that elicits heightened performance from a well-compensated leader.
Successful executive outcomes depend on four key contributors:
· Clear communication of objectives
· Chemistry between coach and client
· Client commitment to the process
· Skill and experience of the coach
For the organization, it comes down to this principle: when a company invests in its leaders and rising leaders, it’s investing in its greatest assets. And all companies want to see a return on that investment – and rightfully so.
A target, personalized approach is perhaps the biggest reason executive coaching maximizes ROI more than an in-house training program. Typically, in-house coaches include senior management or other professionals with additional primary responsibilities. This means that the time, energy, and focus required for optimized outcomes aren’t invested. When this is the case, it’s nearly impossible for each leader to receive the personalized program or attention necessary for successful results.
The top 6 reasons to hire an executive coach for your company:
1. Support leaders in stressful positions.
Leadership can be lonely, and isolation turns people inward. This is when self-doubt, second-guessing, and anxiety kick in. What many leaders need, whether they’re up-and-coming or seasoned, is a thinking partner, someone who will listen as they talk over the decisions they’re making and the professional relationships they’re navigating.
While a skillful coach won’t offer specific business advice, he will remind your leader of the abilities and skills that equip her to lead in these situations. He will also help her identify and assess emotional reactions that might influence her thought process. This helps professionals focus on the present issues and reclaim confidence in themselves and their decision-making abilities. And of course, when they’re making the best possible decisions in their leadership role, it boosts the company’s bottom line, generating a return on investment.
2. Target specific challenges in each leader.
Personalized solutions are critical to ensuring that executive coaching maximizes ROI for your organization. When your company works with an experienced and skilled professional, both the organization and the individual determine specific issues to address. In other words, the coaching is customized according to specific company and individual goals. Typically, when a coach and leader work towards achieving these objectives, the company realizes its biggest benefit both in terms of enhanced leadership ability and return on investment.
For instance, your organization might hesitate to promote a candidate for the position of manager because his communication skills are lacking. In this case, we would work to enhance emotional intelligence and focus on developing the necessary skill sets to satisfy objectives.
3. Retain promising leaders.
Executive coaching maximizes ROI by reducing employee turnover rate and retaining promising professionals, which is especially important at the leadership levels.
In reference to the above example, consider the outcome if your company didn’t hire an executive coach? More than likely, this gentleman would have been passed over for the promotion again and again. Since the problem wasn’t addressed, he feels like his career is going nowhere with your company. So, he takes a job with a competitor who lures him by using keywords like “management potential”. Ouch.
On the other hand, your company might have promoted him anyway and suffered the consequences of his now more apparent Achilles heel that will likely lead to his eventual termination. Both are undesirable scenarios for your organization.
Imagine the effects on a company when this happens frequently. The truth? No one has it all together professionally and personally. You might pass over one candidate for promotion only to find that the supposed better option has his own set of less obvious problems. This creates a revolving-door atmosphere that negatively impacts your organization’s turnover rate at the leadership level.
4. Attract Top Talent
Not only is it important to retain your company’s most promising leaders, but you also want to attract top talent to your organization. When executed effectively, executive coaching maximizes ROI through bolstering your organization’s reputation with emerging talent. How? As your company invests in a personalized approach to developing leaders, it also builds a “coaching culture.”
In a coaching culture, rather than focusing on managing and controlling subordinates and their performances, the company concentrates on equipping individuals with the power to navigate complex situations, issues, and decisions. In other words, the primary goals are to develop a leader’s strengths and encourage him or her to achieve.
A reputation for successful leadership development is considered a tremendous asset to highly motivated professionals with leadership goals. When you build this type of reputation, it places your company ahead of the competition and directly impacts the organization's direction.
5. Facilitate transitions.
When it comes to onboarding new leadership, efficiency is key. Executive coaching maximizes ROI by streamlining transitions to leadership positions. This reduces transition time, minimizes additional operating expenses, and prevents turnovers that happen when general onboarding programs are lacking. Additionally, a shorter and more effective transition period often increases new employee productivity.
Transitions and onboarding will always require an investment, and so the question becomes: which method is the most cost-effective, result-driven approach?
6. Facilitate goal attainment.
Executive coaching maximizes ROI by shaping behaviors and motivating leaders toward achieving goals. A 2016 study indicates that coaching is effective in enhancing executive performance and facilitating goal attainment.
When an organization invests in executive coaching, leaders become adept at clearly identifying and outlining their goals as related to their role in the organization. When combined with a process that addresses issues of low-confidence, anxieties, and lacking assertiveness, (which vary in intensity from one individual to the next), these leaders frequently develop sustained confidence that propels them toward greater goal attainment. Leaders who successfully and routinely attain goals will ensure the company recoups its coaching investment and more.
Not all executive coaches are indeed equipped to effectively handle your company’s needs, which means you’ll need to carefully consider your options. Do your research, initiate consultations, get references and recommendations, and ensure that you and those who will receive the coaching are comfortable with whoever is chosen.
Additionally, not every leader is willing to cooperate with an executive coach or face the personal and professional challenges required for success. So, choose to invest in leaders who have the most potential, are committed to their career, and exhibit a willingness to grow. That’s where you’ll realize the best ROI - both for your company and the individual.