Workplace Coaching: Can You Really Measure It’s ROI?

The benefits of workplace coaching

Research carried out by the Institute of Leadership and Management (ILM) showed that 95% of learning and development managers say coaching has delivered tangible benefits for their organisation. Which is probably why 90% of organisations over 2000 employees use business coaching. They listed the key areas improved by coaching to be:

Workplace-Coaching-Can-You-Really-Measure-Its-ROI

  • Better communication and interpersonal skills
  • Increased confidence and motivation
  • Improved conflict resolution
  • Better management performance

What do these benefits mean in practice?

What kind of business results can we expect to see from the key areas of improvement listed above? Here are a few business benefits that we often see after workplace coaching is provided:

  • Absenteeism falling
  • Improved staff retention
  • Grievances dropped
  • More effective meetings (less wasted time)
  • Achieving sales targets
  • Lower number of complaints

In terms of ROI, PricewaterhouseCoopers (PwC) carried out research that identified that on average organisations estimated an ROI of 7 times their initial investment by implementing workplace coaching. In fact, quarter of those organisations actually reported ROI 10-49 times their initial investment.

But that’s still not a monetary figure specific to our organisation…

Let’s take one of the potential results from above – achieving sales targets. Now let’s say that the company in question were making £100,000 in sales each month. After workplace coaching they have been able to raise this to an average of £105,000 each month (a 5% increase).

We could automatically attribute this improvement to the coaching programme and claim an ROI of £5000 per month, or £60,000 each year. However, we need to take into account other factors that may have influenced sales and accept that the coaching may not be entirely responsible.

For this example, let’s estimate that the coaching is responsible for 50% of the sales increase (£30,000 each year). Even if we can’t identify any other contributing factors to the sales increase our figure needs to be conservative to be considered reliable

Now, to be doubly sure that our figure is realistic, let’s say we are 70% confident in our estimation (70% of £30,000 leaves us with £21,000). At this stage we are pretty confident that our coaching programme has directly allowed us to increase sales by £21,000 each year.

Finally, we need to subtract the cost of the coaching itself. Let’s say a team of 4 sales staff went through a number of one to one coaching sessions at a total cost of £1000 per person (£4000 for the team).

£21,000 – £4,000 = £17,000

We can estimate that one to one coaching has provided a return on investment of £17,000 this year in terms of sales figures (this is before we even consider the other benefits and areas of ROI).

Of course, this is just a conservative estimate and the success of coaching is not best judged by trying to use exact monetary terms. However, it’s a handy calculation to have up your sleeve when asked to put a figure on it.

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