Coaching has become a popular people development tool, with many organisations upping their spending year on year. But while they seem happy to throw handsome amounts of money at coaching, worryingly few measure the bottom line return on this investment.
This was one of the more alarming findings from our survey of nearly 500 Personnel Today readers, conducted in conjunction with HR consultancy Chiumento, to explore the profession’s attitudes towards coaching in the workplace.
Two-thirds (67%) of respondents say return on investment (ROI) in relation to coaching is not formally measured within their organisation. A further 20% say they simply don’t know if coaching gets measured.
That leaves just 13% with any kind of formal measurement in place. Of these, participant feedback is the most popular method, used by 80%, while appraisal (73%), feedback forms from coaches (70%), and employee engagement surveys (66%) are also considered useful.
However, just 34% of the organisations with formal systems in place say they are able to measure the impact of investment in coaching on the bottom line, even though coaching eats up a huge chunk of their annual budget.
The majority – 70% – of respondents offer coaching to either everyone in the organisation or to certain job levels within it. This represents a significant business cost, with the average spend coming in at £83,250 per year. That represents nearly a quarter of those companies’ learning and development budgets. But, astonishingly, 45% of all respondents don’t know how much their organisation spends each year on coaching.
This sounds like good news for professional coaches, particularly as more than half of respondents plan to use even more coaching over the next year. But this profligate attitude to spending company money – without checking you’re getting adequate value for it – can do HR no favours at all.
“Failing to measure coaching ROI means you fail to take it seriously as an important investment in people,” argues Mike Amos, head of coaching at Chiumento.
While there is an overwhelming belief that measuring the effectiveness of coaching is far too difficult – more than half believe it is only possible to get anecdotal evidence of its effectiveness, while 44% feel it is impossible to measure the ROI of coaching at all – not all HR directors believe that to be the case.
Graham Parker-Gore, vice-president at credit card company Visa Europe, says. “It’s certainly hard to measure statistically, but it can be looked at on a qualitative level.
“The objectives should be set well in advance and the progress made by the individual being coached can be measured over a period of time. This doesn’t have to be a fiscal year it could be longer.”
Quality not quantity
Lack of accreditation is also a thorny issue, which has helped foster some negative perceptions of coaching. Some 85% of respondents believe all coaches should be accredited, and 83% agree that the coaching profession as a whole needs more regulation.
Quality is the biggest factor when choosing a coaching organisation (cited by 71%), followed by recommendation (49%), price (48%) and methodology (38%).
Individual coaches are largely selected on the basis of their coaching experience, according to 79% of respondents, while track record (61%) and background (51%) are also taken into account.
But quality appears to be hard to measure, with three-quarters (76%) saying to some degree that finding high-quality coaches is difficult, while 69% go so far as to say that “too many coaches are cowboys”, and “anyone can set up as a coach”.
“The paradox is that while organisations are spending more money on coaching, there is still widespread concern about the quality of coaches,” says Amos. “There is a clear need for an industry-wide standard.”
Even without this, Amos believes there are steps you can take to ensure you don’t fall victim to ‘cowboy coaching’. “When hiring a coach, probe their training and qualifications,” he advises. “Price will undoubtedly influence the decision-making process, but these other factors are equally important.”
While just 17% believe supervision is significant when choosing a coaching provider, Amos insists that supervision is essential in ensuring best practice.
“I am surprised that so few organisations take this into account during selection,” he says. “You should always get references and talk to people they have worked with.”
Nearly half (49%) the coaching budgets of responding organisations are spent one-on-on-one executive coaching. But many organisations expect managerial staff to coach, with 30% of budgets going on training managers in coaching skills, and 10% on training internal trainers. Just 7% is used for team training, reflecting the intimate nature of most coaching.
Asked why they feel organisations invest in coaching, respondents agree unanimously that the primary aim is to improve individual performance. Improving leadership or management effectiveness is also cited by almost all respondents as a key motivator. Aiding personal development, improving the productivity of the organisation, supporting individual career progression, and improving employee engagement are all significant factors.
But even the strongest figures on improvements as a result of investment in coaching are not overwhelming. Less than half (45%) agree strongly that the performance of individuals has improved since coaching was introduced, although 51% agree slightly that this is the case. Worryingly, more than a third (38%) say investment in coaching has no discernible effect on retention rates.
This impression of vagueness is perhaps due to a lack of strategy when planning coaching, with more than half (55%) saying that coaching is ad-hoc, while 44% have a strategic approach (although a third don’t know what this approach actually is). Of those that do, the ‘GROW’ model (41%) and solution-focused coaching (38%) are the top two models of coaching used.
Amos says: “It concerns us that so many organisations fail to set a strategy for coaching. If coaching is used as a knee-jerk reaction, and isn’t planned, there is far more chance of being unable to track expenditure, and of using someone who hasn’t got the necessary skills or training. It is therefore hardly surprising that some organisations end up with their fingers burnt.”
Reach for the top
The responsibility for ensuring that coaching is strategic, and that the ROI it offers is properly measured, appears to lie with HR departments, which need to involve senior management if they are to effect real change. Our survey found that decisions about coaching are largely made by HR departments (in 56% of cases).
Learning and development departments (52%) and line managers (41%) are also key decision-makers, but coaching issues don’t often reach the top table – just 19% of respondents say coaching decisions were made at board level, while in another 15% of cases other directors were in charge. Central HR is in charge of the coaching budget in 62% of organisations that responded.
“Coaching needs to be managed properly to be truly effective, and that means looking at the benefits it brings to the business as a whole,” says Amos. “This may be challenging, but can be done by involving business leaders as well as HR in determining the ROI of coaching. In addition, agree clear objectives for coaching from the outset.”
With HR increasingly expected to provide tangible evidence of the value for money of all its decisions, the ROI in relation to coaching can no longer be ignored.