Executive Coaching: An Investment with 8-fold ROI for Successful Leaders

By Dr. Vic | Oct 17th, 2024 | Executive coaching, Management consulting, Organizational development, People management, | 0 Comments

Executive coaching investment has 8-fold ROI for leaders, increases individual performance by 70%, team performance by 50%, and organization performance by 48%.

Executive coaching is a strategic investment in the future. Leaders who work with an executive coach unlock their potential by removing blind spots and aligning their values, goals, and behaviors.

We’ve all had the experience of “hitting the wall” at one point or another. We run into a situation or a problem that we just can’t get around, climb over, or push through. We may keep running into the same situation or problem, over and over. How do these things find us?

Or, maybe we’ve gotten that big promotion, landed that big client, or hit the “big time.” After the celebration is over, we realize we need to grow, along with our new responsibilities. Who can we turn to? How can we even admit we want help?

The answer to each of these questions is: An executive coach can help! Whether you’ve hit the wall, hit the jackpot, or just want to keep hitting the mark, coaching is a great way to keep moving forward.

One third of Fortune 500 companies already include executive coaching as part of their standard leadership development program, according to Forbes. They’ve embraced it for a good reason: Executive coaching generates a whopping 788% return on investment (ROI), including higher productivity and employee retention, per a report by American University. Even when employee retention is left out, ROI remains a robust 529%, according to Metrix Global.

But change is hard. And change that requires both new skills and new behavior is the hardest to achieve. Without help, individuals have an 80% failure rate. Seen in this light, executive coaching really is, as stated in Forbes, “a strategic investment in the overall health and growth of an organization.”

This article will take a look at how executive coaching works and how it can improve outcomes for individuals and organizations.

Executive coaching builds better leaders

Executive coaching is a collaboration between coach and client designed to unlock potential and improve leadership skills. Coaching usually involves one-on-one sessions designed to help the client gain clarity about their core values and purpose, and to align their behavior with desired outcomes.

Coaches can help their clients overcome the habits, mental blocks, and blind spots that undermine performance by providing:

A safe space to explore strengths and weaknesses without judgment;
Objective feedback and personalized suggestions for development.

But coaching is not the same as mentoring or teaching. The coach doesn’t offer the “right answers” as much as ask the “right questions.” For coaching to be effective, the client should be prepared to have a few uncomfortable conversations designed to get to the root of things.

The goal of the coach is to help clients identify their own strengths and weaknesses, and gain self-awareness. “Of the many benefits coaching can offer, increased self-awareness is perhaps the most pivotal as it underpins everything else,” according to U.K. based coach Tracy Sinclair, as quoted in Forbes.

Executive coaching builds the bottom line – and beyond

Executive coaching is good for the client – and the organization. Here a few of the individual benefits of a successful coaching experience:

Better Relationships: By learning new skills and improving communication, clients find that their relationships with team members and stakeholders improve. Greater understanding leads to less friction and more trust, improving collaboration and productivity.
Better Decision Making: After recognizing blind spots, unconscious biases, and ingrained habits, clients can look at problems more clearly and with a focus on improved outcomes. Better decision making can help avoid wasted effort and reduce the risk of missing out on opportunities.
Greater Satisfaction: By focusing on their core values and purpose, clients learn to align thought and action to become the leader they were meant to be. In the process, they improve job satisfaction, lower stress levels, and become a more consistently high performer.

Those aren’t just “feel good” statements, hard numbers back up the results. The American University report found the following outcomes from executive coaching:

Individual performance improved by 70%, reflecting better goal attainment and clearer communication;
Team performance improved by 50% through improved trust and collaboration;
Organizational performance improved by 48%, as reflected by increased revenue and higher employee retention.

Metrix Global corroborates those findings. Their survey concluded that 77% of executive coaching clients found a “significant” to “very significant” impact on business results, while 60% were able to identify specific financial benefits from coaching.

Productivity and employee satisfaction were the two areas most improved by coaching in the Metrix Global survey. Half of the respondents documented annualized financial benefits from the improvements. And, as mentioned in the introduction, Metrix Global concluded that the cost of executive coaching is offset by a ROI of 529%, even without considering improved employee retention.

Executive coaching is a tool for leadership development and an investment in your organization’s future. If you would like to learn more, please contact us.

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TEP.Global not only has a combined 100 years of experience and expertise in people management, talent acquisition, executive assessment, but also deep knowledge in building teams and workplace culture in organizations of all sizes. For more information and insights, please contact us.