Calculating the ROI of Executive Coaching

Executive coaching can be expensive. According to an article entitled “What Can Coaches Do for You?” published in 2009 in the Harvard Business Review, you can expect to pay between $200 and $500 per hour for executive coaching, with elite coaches charging up to $3,500 per hour. And that was ten years ago!

ROI of Executive Coaching

However, we all recognize the folly of those who know the price of everything and the value of nothing. If that $3,500 price tag were to earn you $7,000, you would be more than satisfied. Well, what if I were to tell you that several studies show the return on investment (ROI) of executive coaching far exceeds 100%?

Here are the numbers:

  • According to Joy McGovern, et al. in the study Maximizing the Impact of Executive Coaching: Behavioral Change, Organizational Outcomes, and Return on Investment, published in The Manchester Review,2001, and available for download here, a conservative estimate of the ROI (for the 43 participants who estimated it) averaged nearly 5.7 times the initial investment in coaching.
  • In another study, Booz Allen Hamilton’s executive development director, Vernita Parker-Wilkins, coaching produced intangible and monetary benefits for seven out of eight business impact areas, and ROI 689 percent.
  • Confirming those results is an Intel study revealing its internal coaching program resulted in an ROI of more than 600 percent.
  • In a study conducted by MetrixGlobal LLC, companies reported an average return of nearly $8 for every $1 invested in executive coaching.
  • And in a global survey of coaching clients by PwC (Price Waterhouse Coopers) and the Association Resource Center, it was reported that the mean ROI for companies investing in coaching was seven times the initial investment, with over a quarter reporting an ROI of 10 to 49 times.

Will My Investment in Executive Coaching Be Worth It?

You can easily calculate your ROI after you receive coaching, pay the bill, and evaluate the results. You simply subtract the cost from the total value gained, divide by the cost, and multiply the result by 100%. For example, if you paid a coach $5,000 for services that resulted in a $30,000 increase in your gross income, your ROI is ($30,000 – $5,000)/$5,000 = 5 x 100% = 500%.

However, when you are deciding whether to hire a coach, you don’t yet have the numbers to crunch to determine whether the coach will be“worth it.” After all, several factors, in addition to cost, contribute to ROI, including the following:  Continue reading…