This month’s feature: Cost Benefits of Coaching: Productivity and intangible gains of coaching interventions …B

A Fortune 500 company recently published a report on business benefits and the return on investment for an executive coaching program. Bottom line: Coaching produced a 529% return on investment and significant benefits to the business. 

“..what is believed to be the first major study to quantify the business impact of executive coaching. The study included 100 executives, mostly from Fortune 1000 companies, who received coaching…Half of the executives in the study held positions of vice president or higher (including division president, general manager, chief executive officer, chief financial officer, chief information officer, partner, principal, and practice leader). Almost six out of 10 (57%) executives who received coaching were ages 40 to 49, and one-third earned $200,000 or more per year

Among the results of the study: The coaching programs delivered an average return on investment of 5.7 times the initial investment in a typical executive coaching assignment — or a return of more than $100,000 — according to executives who estimated the monetary value of the results achieved through 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%) 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%).

The Xerox Corporation carried out several studies, one of which showed that in the absence of follow-up coaching 87% of the skills change brought about by the program was lost.  That’s 87 cents in the skills dollar.  However good your skills training in the classroom, unless it’s followed up on the job, most of its effectiveness is lost without follow-up coaching.  For example: Most sales people try out the new skills for a few calls, find that they feel awkward and the new method isn’t bringing instant results, so they go back to their old ways.” – (BUSINESS WIRE) -July 30, 2001

A study featured in Public Personnel Management Journal reports that managers (31) that underwent a managerial training program showed an increased productivity of 22.4%. However, a second group was provided coaching following the training process and their productivity increased by 88%. Research does demonstrate that one-on-one executive coaching is of value.” .” – by F. Turner, Ph.D. CEO Refresher 2001

Accenture’s Alastair Robertson, manager of worldwide leadership development practice in Boston, says employers are shocked at how high their ROI numbers are for coaching. He recalls a large employer in the hospitality industry saved between $30 million and $60 million by coaching its top 200 executives. -Asian News 2002

business coaching, a trend that’s exploding among small businesses and entrepreneurs nationwide. It’s estimated that up to 20% of American small businesses are using them, up from 4% just four years ago.” – Chicago Business 2002

For years, CEOs of some of the most successful and largest companies have relied on executive coaches. Henry McKinnell, CEO of Pfizer, Meg Whitman, CEO of eBay, and David Pottruck, CEO of Charles Schwab & Co., are just a few who rely on a “trusted adviser.” -The Business Journal. Nov. 2002

According to NASA: –
“In every field of human endeavor in which performance is key, coaching is integral to helping shift an individual’s mindset, approaches, and behaviors to ensure more effective action and greater business success. It’s all about company and employee strengthening and growth. In their new groundbreaking text book, Zeus and Skiffington outline some of the key benefits of organizational coaching ..and the types of executive coaching.” -Your Strengths are the Paths to Excellence. National Aeronautics and Space Administration -Report. Issue 24. Dec 2002. -E. Saxinger (NASA Work/Life Program Manager)

“The leaders of organizations such as Alcoa, American Red Cross, AT&T, Ford, Northwestern Mutual Life, 3M, UPS, American Standard, the federal governments of the United States and Canada are convinced that coaching works to develop people and increase productivity.” – Consulting to Management (Sept.2001)

Between 25 percent and 40 percent of Fortune 500 companies use executive coaches” – according to a recent survey

A CASE STUDY: SALES PERFORMANCE BEHAVIORAL COACHING

Background:
In a continually changing market, regularly evaluating and improving employee performance and productivity has become more than an administrative detail – it is now a key business strategy. Today most businesses (large and small) first exposure to ‘bottom-line’ coaching (other than executive coaching for senior management) is the introduction of performance coaching in their sales departments. Performance sales coaching is relatively easy to introduce, control and monitor, and generates immediate measurable results

A new breed of performance coaching development systems promises to solve many of the problems of training-based review systems and support best practices that result in greater productivity and employee satisfaction. These systems lead managers through the performance review process of measuring key behavioral aspects that critically impact upon the successful execution of professional skills. Importantly, it helps them with the most difficult part of a review – putting their assessments and action plans into a development vehicle that works. This just-in-time approach via regular one-to-one or small group coaching/learning is widely regarded as more effective than traditional occasional “classroom” training. It ultimately results in greater productivity because managers become coaches as they work with employees on developing the skill sets most in need of growing. By giving managers HR expertise and coaching tools to help them track and evaluate performance, the coaching-based performance management system removes many of the barriers that have traditionally undermined the ongoing development of their people. Coaching based development programmes also enable organizations to: audit their human capital base; measure operational performance to provide the platform for ongoing improvement; and gain an understanding of employee value for ongoing strategic modeling and planning

Example: 
Premium Insurance, a leading player in the motor insurance market, needed to improve its internal processes, skills and service levels in order to compete  effectively. Premium wanted results that would be lasting and realized quickly. Working closely to the brief as co-developed with the in-house project management team, an external Coaching Group devised an innovative approach that resulted in the complete redesign of Premium’s Customer Strategy. It introduced a Sales Agent Performance Management Development schedule. The group’s programme of consultation with management and the agents themselves resulted in a system which automatically produced weekly agent skills reports, and which summarised individual performance on an agreed set of defined performance indicators. Team leaders and agents alike could now see on a weekly basis not only how they performed on key outcome measurements, such as sales calls handled, schedule adherence, policies sold, sales conversion rate, cross-selling of other products – but more significantly, the Team leaders could now easily identify and monitor the behavioral strengths and weaknesses of each agent in the execution of their sales skills and use this as a basis for individual behavioral coaching. The system also facilitated the introduction of a fair and motivating performance-based reward system based on the Weekly Skills Report. The experience so far with the system has been that: staff morale has improved as agents have more visibility and control over their performance; sales performance has radically improved – with average weekly sales up by 50%.

Note: One of the first published case studies (1958) on the effect of coaching was on individual sales performance enhancement. The case study involved the coach working with the Sales Training Director and included the sales staff receiving regular group coaching sessions focusing on team building. The program objectives of higher sales, greater team motivation and reduced staff turnover were all met.

EVALUATING COACHING INITIATIVES (Introduction to Chapter from the book: ‘The Coaching at Work Toolkit’ by Zeus and Skiffington -Copyright 2002: McGraw-Hill Professional. Extracts published with permission.)..Behavioural Coaching

“It is critical that coaches recognize the importance of evaluating coaching outcomes.  Coaching, as we mention throughout this book, remains an emerging profession and there is a dearth of empirical studies testifying to its effectiveness. We can no longer afford to simply sing the praises of coaching. If coaching is to develop and attain true professional status, it is imperative that coaches produce evidence that it is effective and useful. Otherwise, it may be dismissed as a fad or co-opted by other professions.

In our coach training workshops, we are frequently asked about evaluation issues and methods. Coaches who do not have a background in research are especially concerned about the role of evaluation in coaching and the requisite skills of the coach.  The purpose of this chapter is to highlight some of the major issues in evaluation and to offer some general guidelines for coaches.

Benefits of evaluation in coaching
There are numerous reasons why evaluating coaching outcomes is essential. Some of the benefits of evaluation include:

– It allows the coach to prove to the client how and why coaching is effective.  Also, the coach can offer prospective clients information that demonstrates a Return on Investment.
– It allows the coach to justify the advantages of coaching over traditional training methods which usually are not evaluated, or certainly not on any long-term basis.
– The coach can evaluate the effectiveness of what the organization is currently doing, and provide a rationale for how coaching can fill the gaps.
– Outcome studies provide the coach with information as to how and why coaching works. It presents opportunities to develop and update our knowledge, skills and abilities. Overall, we can build on the evaluation data to improve the efficiency of our coaching services.

Of course, we are not suggesting that coaches necessarily conduct complex statistical analyses of coaching outcomes. However, it is important that we are aware of the issues surrounding evaluation, that we appreciate its role in the coaching process and that we can develop our own methods of evaluation.”

EXECUTIVE COACHING – An example of a specialist area of application:
HELPING EXECUTIVES SUCCEED IN ‘HIGH-PRESSURE’ SITUATIONS

Every high-pressure situation is unique. Here are a few high-pressure situations where some specialist behaviorally-oriented executive coaches are helping high-flying executives successfully negotiate.

# 1. The company has been changing so fast that the executive hasn’t been paying enough attention to his/her key players. The executive expects them to know how to get it done -but the numbers have dropped, and he/she doesn’t really know why.

#- 2. The executive is newly promoted/hired with added/new responsibilities but he/she hasn’t figured out yet how to navigate through the new superior, peers, teams to achieve their objectives.

# 3. The economic conditions have impacted upon the company and a top performing executive’s teams are not responding to him/her. Budgets have not been reached. No one seems to be cooperating with each other.

# 4. The company is about to lose their top producer. He/she has got on the wrong side of someone one time too often. The company needs to know how to get him/her on the right track, and quick.

# 5. An executive has been overlooked for promotion. The executive wants it and thinks he/she has earned it. But no-one is giving any straight answers.

After the Executive and the specialist coach have clearly identified the high-pressure situation, the coach helps the executive identify the key players in that situation, and using reliable behavioral profiling determines which ‘type’ the executive and the players fit. The coach then works with the coachee to establish specific people behavioral management strategies to use to succeed in the high-pressure situation. Ongoing support is required as the executive achieves his/her objectives and outcome returns are qualified. With very high ROI figures the coach is usually hired to work with the executive on an ongoing basis to keep him/her on target as new challenges emerge.

COACHING and ORGANIZATIONAL CHANGE. (Introduction to Chapter from the book: ‘The Coaching at Work Toolkit’ by Zeus and Skiffington -Copyright 2002: McGraw-Hill Professional. Extracts published with permission.) ..

“Change is at the heart of coaching. It plays a critical role in helping individuals and organizations to create, adapt to, and accept change as a challenge rather than an obstacle. The process, though, can be a difficult one.

The coach’s role as a change agent, either internal or external, in an organization can assume the following forms:
– 
The internal or external coach who is introducing a coaching program to an organization, that is, working to establish a culture of coaching
– The coach who is working with executives to develop and enhance their leadership skills such as leading change.
– The coach who is working with leaders or managers to adopt a coaching style, for example, a ‘manager as coach’ program.
– The coach who is working with an executive or leader to enhance his or her personal or operational mastery skills within an organization. Working with an individual on business issues such as clarifying values, challenging beliefs, working on goals and strategies allows the executive to employ these skills with staff and colleagues and thereby play his or her role in creating a Learning Organization.

Regardless of which enterprise the coach is engaged in, he or she requires a solid knowledge of the organization.  The coach has to be aware of its climate and culture, the current challenges it faces, its current learning and development programs and its people management programs and philosophy. Although we emphasize the importance and usefulness of conducting a Coaching Needs Analysis (see chapter 4), it alone is not sufficient for the coach to embark upon working in an organization. In the same way, neither process knowledge or proven ability to work with personal mastery skills will equip the coach to work effectively in an organization.

The coach has to be familiar with various models of organizational change and the model or framework, either explicit or implicit, within which the particular organization operates. If a coach chooses to work within an organizational environment, it is recommended that he or she adopt a systemic approach, that is, one that recognizes, acknowledges and can work with both internal and external factors that impact on the organization and its individuals. The coach’s role may be to focus on human processes in the organization, on organizational design, developing and enhancing job competencies, or on coaching individuals through technology change programs.

If the coaching program is a pilot or minimum intervention, the coach has to have access to key stakeholders in other other parts of the organization and the external world.

Whatever the brief, the coach should bear in mind that an organization is a living organism. It is a living system with its own unique values, beliefs and processes.

Any coaching program has to be tailored to the individual organization’s unique systems needs. Generic solutions are no longer feasible or acceptable in the marketplace. In our coaching clinics for managers as coach, we conduct seminars and workshops to establish the specific coaching needs of the organization as a whole. One cannot approach an organization with the intention of ‘imposing’ a model or solution.”

TRADITIONAL HR PRACTICES ARE SIMPLY NOT WORKING”

Companies spend over $375 billion every year on corporate training. However, the typical training experience has been shown to increase employee productivity only by 20-25%, but when you combine customized training and corporate coaching together employee productivity explodes past 80%!

The study in the Journal of Applied Psychology (1990, 75(1), pp. 28) found that the more complex the job, the greater the difference in productivity between top performers and average performers. The percentage difference in productivity ranged from 52% in low-complexity jobs to 85% in medium to 127% in high-complexity roles. 

High performers are as much as 25-50% more productive than sub-par performers. If an organization could accurately grow and foster top performers they would, then, likely see a reduction in their payroll alone of upwards of 25%.


– In a recent publication by McKinsey & Company consultants, published by Harvard Business School (based upon five years of in-depth research and analysis, including case studies from 27 leading companies and surveys from 3,000 executives at more than 120 companies), it was found in a market characterized by uncertainty and instability, that the personal development of high potential talent is a significant trend in America.  This report describes how there is now the urgent need for all leaders to quickly adopt a “talent mindset” and develop a strategic approach to talent management if they wish to successfully compete in today’s world. It also concludes that the vehicle for propelling a talented person to greater heights and greater performance in much less time is coaching -which enabled people to stretch and grow in ways that hold them to the company.
– In a study conducted by the Chartered Institute of Personnel and Development (CIPD), only 13 out of 48 board directors ‘were aware of research linking good people management practices to profitability’. This situation is explained as being partly due to HR managers’ own ignorance of the link between their sphere of competence and the business’s balance sheets. It also suggests a continuing segregation between functions across the whole business. HR, in other words, is still thought of in many companies in old-fashioned ‘personnel department’ terms.

– Results of a survey undertaken by recruitment consultants, Strategic Dimensions, commissioning partner Mike Haffenden commented: ’[we] find most people in HR have little knowledge about business. They don’t understand key financial ratios and what’s going on in business generally. What is surprising is that so many people working in HR don’t know much about HR either.’
– The importance of HR in forward planning for change has been tradionally overlooked, especially in the era of mergers and acquisitions. Managing the transition in terms of motivating and integrating different sets of personnel can make all the difference to companies whose productivity levels can drop as much as 50% following a merger.  –Cited in Management First ‘Leading through uncertainty to success’ 24 October 2001
– A further worrying statistic is that nearly two-thirds of major change programmes initiated by HR Departments fail because of resistance on the part of staff – their reasons for such oppositions are usually considered bad, but may often be well grounded. Uncovering and understanding these sources of resistance and engaging staff are clearly areas where good direction is required. It is also an area where a good grasp of the financial and strategic rationale for change needs to be part of the skill portfolio of HR professionals themselves. – Resistance to change: enemy or ally?’ in Management First, 8 November 2001.
Note: No material from this website may be republished in any form without written permission by the Behavioral Coaching Institute..