Coaching ROI

“I’ve written before about CEO coaches. I’m a big fan of the work they do and how they can help entrepreneurs work on things that are holding them back from being the best leaders they can be. I encourage most of the CEOs I work with to get mentors or coaches (or both).”
-Fred Wilson, Union Square Ventures (investments include Twitter, FourSquare, Zynga)

Coaching helps successful entrepreneurs become more successful by reaching and sustaining peak performance.

Studies in larger organizations show that coaching top executives at large companies yields 5-7x the company’s initial investment.  While studies haven’t been done on the value of coaching on smaller companies and startups, it’s reasonable to expect that entrepreneurs are under similar pressures and their actions at least as critical to the success of their organizations so that the value of coaching might be greater.

Entrepreneurs are generally lifelong learners; an executive coach may be the only person in your life who is solely devoted to accelerating and supporting your learning, growth, and self-knowledge. This in turn supports you making the best possible decisions and doing the best possible work for your company.

Wondering if coaching is worth it? Here are some studies about the return on investment for coaching.

Coaching is gaining in popularity, and studies have shown that business coaching for top executives at large companies yields 5-7x the company’s initial investment. There have not yet been studies done on the value of coaching at smaller companies or startups, but executives in these situations are under similar pressure to perform, and their actions are at least as critical to the success of their organizations, if not more so.

      • Companies that have used professional coaching for business reasons have seen a median return on their investment of 7 times their initial investment, according to a study commissioned by ICF, and conducted by PricewaterhouseCoopers and Association Resource Centre Inc. (ICF Global Coaching Client Study, 2009)
      • A study commissioned by a professional services firm, and performed by MatrixGlobal showed that the ROI on coaching was 6.8x the initial investment. (The Business Impact of Leadership Coaching at a Professional Services Firm, Merrill C. Anderson, PhD, 2006)
      • Three stock portfolios comprised only of companies that spend aggressively on employee development each outperformed the S&P 500 by 17-35% during 2003. (How’s Your Return on People? Harvard Business Review, Laurie Bassi and Daniel McMurrer, 2004)
      • Employees at Nortel Networks estimate that their coaching programs earned the company a 5.2x return on investment and significant intangible benefits to the business, according to calculations prepared by Merrill C. Anderson, a professor of clinical education at Drake University.  Including the financial benefits from employee retention boosted the returns to 7.8x the initial investment. (Coaching the Coaches, Psychology Today, 2004, and Case Study on the Return on Investment of Executive Coaching, Merrill C. Anderson, PhD, 2001)
      • According to a study of senior level executives at Fortune 1000 companies who received developmental coaching, the average return from the programs was nearly 5.7 times the initial investment. (Maximizing the Impact of Executive Coaching, The Manchester Review, Volume 6, Number 1, Joy McGovern, et.al., 2001).