Why Invest in Coaching?

The following comments from a variety of business leaders and authors point up the soundness of investing in coaching . . .

What is Executive Coaching?
Executive coaches work with senior level executives who have fiduciary responsibility to multiple stakeholders; stewardship of human, financial, intellectual, capital and social resources; and economic, social and environmental well-being of entire communities.

The Executive Coach working with such individuals serves as strategic partner to the executive leader and his/her team. The Executive Coach's skills include business acumen and financial management, leadership and organizational skills, analytic and innovative thinking as well as an ability to inspire trust and commitment to action.
-- www.mscoaching.com

Accelerating Growth of a Leader
"A good executive coach works with the natural style of the leader, but then discovers their ambitions and fears," says John Hamm, a venture partner at Redpoint Ventures, a Menlo Park-based VC firm. "CEO coaching, in particular, is really about accelerating the natural growth curve of a person who wants to be a leader."

Benefits of Executive Coaching
Executive coaching produced a 529% return on investment and significant intangible benefits to the business (including increased employee and customer satisfaction).
-- Case Study on the Return on Investment of Executive Coaching, Dr. Merrill C. Anderson, Metrix Global, LLC

Average ROI Six Times Cost of Coaching
A recent study of Fortune 1000 companies that used coaching with their executives realized improvements in productivity, quality, organizational strength, customer service, and shareholder value. They received fewer customer complaints, and were more likely to retain executives who had been coached. In addition, a company's investment in providing coaching to its executives realized an average return on investment (ROI) of almost six times the cost of the coaching. - Business Wire, Jacksonville Florida, Jan. 4, 2001

Over 70 executives were coached in a global communications organization in five countries. A survey of 43 participants showed that executive coaching produced 529% ROI.

When employee retention was included, the overall ROI shot to 788%.

Coaching was found to be a very effective developmental tool for the leadership development participants, producing financial and intangible benefits for the business. Decision-making, team performance and the motivation of others were enhanced.
-- Merrill Anderson; www.metrixglobal.net

Multiple Benefits from Executive Coaching
"Among the benefits to companies that provided coaching to executives were improvements in:
Productivity (reported by 53% of executives)
Quality (48%)
Organizational strength (48%)
Customer service (39%)
Reducing customer complaints (34%)
Retaining executives who received coaching (32%)
Cost reductions (23%)
Bottom-line profitability (22%)
-- From Manchester Study

"Among the benefits to executives who received coaching were improved: Working relationships with direct reports (reported by 77% of executives) Working relationships with immediate supervisors (71%)
Teamwork (67%)
Working relationships with peers (63%)
Job satisfaction (61%)
Conflict reduction (52%)
Organizational commitment (44%)
Working relationships with clients (37%)

Size of the Executive Coaching Industry:
-- Excerpted from Jeffrey Auerbach's Seeing the Light:
What Organizations Need to Know About Executive Coaching

(This is copyrighted material and permission has been granted to display on this website by the author, Jeffrey E. Auerbach. No further reproduction or publication is permitted.)

The Umbrella of Management Consulting is a $62 Billion Dollar Industry
The industry of executive coaching fits under the umbrella of management consulting. Most management consulting firms assist other firms in areas such as large-scale strategy, tax advising, IT assistance, or supply chain management consultation; however, executive coaching is a specialized service delivered on a smaller scale. Even though executive coaching has grown considerably, and many organizations are now building a "coaching culture" where they infuse a coaching philosophy with their management and leadership style, the size of the executive coaching industry is still a relatively small subset of the management consulting field.
-- Kennedy Information Research Group, 2001

Executive Coaching is a $1 Billion Dollar Industry
Little reliable data is available on the size of the executive coaching industry, but the Harvard Business Review reported that actual expenditures on executive coaching worldwide is in the range of $1 billion.
-- Harvard Business Review, 2004

Most Companies Use Coaches
70% to 88% of Companies report they utilize coaching.

-- Chartered Institute of Personnel and Development, 2005; and the Australian Institute of Management -- Reported by Society of Human Resource Management Executive Coaching Brief Reports

Eighty-eight percent of European companies report using coaching in some manner and 70% of Australian companies report using executive coaching. Moreover, a recent survey of 170 Human Resource professionals determined that more than 50% set up a coaching program in the past 18 months (The Hay Group) and a random survey of 248 Human Resource Managers demonstrated that 55% of their organizations use formal coaching as an employee development method (Society of Human Resource Management, 2005).

However, the term "coaching" is used rather loosely. Managers state that part of their management approach involves coaching their employees - usually for higher performance - and in this sense, coaching is often seen as one of several people-management methods. However, most internal or external executive coaching professionals are characterized as not having any direct authority over the coaching client, which helps the employee be more open with their coach and speeds learning and results.

Growth of Coaching in Organizations
Dramatic increase in utilization of executive coaching in the past five years as evidenced by:
58% of Respondents Say Coaching Utilization has Increased in Their Organizations in the Past Year
95% Say Coaching has Increased in Past Five Years
0% Say Coaching Utilization has Declined in Past Five Years

The use of executive coaching is widely reported to be growing rapidly. Our survey results bear this out. Ninety-five percent of organizations that use coaching have increased their utilization of coaching over the past five years and none of them have decreased their utilization of coaching. This impressive finding suggests that organizations that have utilized coaching find it so valuable that they continually increase its usage, even though executive coaching can be an initially expensive service.

Why is the Use of Executive Coaching Increasing?
A 2004 study attributes these nine factors as the principle forces driving the increasing use of executive coaching:

1. Rapidly evolving business environment
2. Individual responsibility for development
3. Financial costs of poor performance
4. Popular development strategy
5. Supports other learning
6. Employees request coaching
7. Need for lifelong learning
8. Improves decision-making
9. Targeted, just-in-time development

-- Chartered Institute of Personnel Development, 2004

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