Let’s face it: like any business education and training, leadership coaching costs both time and money. But is it a cost or an investment? Is there a return on investment (ROI) that justifies the expense?  

 “A Fortune 500 firm engaged Metrix Global LLC to determine the business benefits and return on investment for an executive coaching program. The bottom line: coaching produced a 529% ROI (that’s $5 for every $1 spent on coaching) as well as significant intangible benefits to the business. When the financial benefits of employee retention were rolled into the mix, the ROI was nearly eight to one, or 788 %.” Executive Briefing: Case Study on the Return on Investment of Executive Coaching. MetrixGlobal, LLC. Merrill .C. Anderson, PhD, November 2, 2001. 

Executive vs Leadership Coaching 

 First let’s be clear on what leadership coaching is and how it’s different from executive coaching. 

 

Executive Coaching 

Executive coaching focuses on organizational skills such as business planning, strategy, decision-making, and change management. The focus is specifically on business development skills. 

 

Leadership Coaching 

“Leadership coaching is the act of guiding, advising, encouraging, challenging or developing an organizational leader to improve their performance, achieve desired metrics or reach organizational outcomes. Leadership coaches help leaders live out their purpose and accomplish their goals by having the right conversations.” Gallup 

 Leadership coaching is about people. Communication, active listening, motivation, conflict management, critical thinking, and empathy are a few of the competencies a leadership coach helps to develop.  

 

 Leadership Coaching Makes a Difference 

 When an organization has good leadership, it can weather all kinds of storms. Everyone is rowing in the same direction. Good leaders build strong teams whose “whole” is greater than the sum of its parts. Coached team leaders know how to set measurable achievable goals and foster team member engagement to accomplish them. Improved efficiency and greater productivity are the result. 

 Another result is greater employee satisfaction, which is not to be underestimated. The leader who is coached feels the organization is invested in his or her career and tenure with the company and acts accordingly. The student – the coached leader – becomes the teacher, leading by example, and thereby increasing the job satisfaction of team members. This reduces turnover.  

“When Gallup talked to exiting workers, they found two fascinating bits of information: First, more than half (52%) of them said their manager or organization could have done something to keep them from leaving. Second, 51% said that in the three months before their departure neither their manager nor any other company leader had spoken with them about their job satisfaction or their future.”

Employee turnover is a multi-faceted loss for companies. According to Gallup, replacing even the lowest paid hourly employees can cost from .5% to 2.5% of their annual wages. The cost increases in tandem with position level and seniority. A less measurable cost is what is often referred to as brain drain, referring to either a mass exodus of employees or those in critical or leadership positions. Exiting employees take valuable institutional knowledge with them. Even if they are quickly replaced with highly qualified people, there is still a company culture learning curve, and it takes time for important relationships to be formed and mutual trust to be earned. 

So Is Leadership Coaching A Valuable Investment? 

There are many benefits to leadership coaching. We’ve only covered the highlights here. If sustainable growth, increased productivity, and employee retention are among your company’s goals, it’s certainly worth reaching out to a certified coach to learn what is possible for your organization. 

 

Gallup Suggests That Employee Turnover in U.S. Businesses Is a $1 Trillion Problem — With a Simple Fix 

 

Why Leadership Coaching Is More Critical Than Ever for Your Business 

 

10 Ways Leadership Coaching Can Benefit Your Business and Your Team