What is the return on investment (ROI) of employee coaching for an organization?

Offering coaching for employees – especially at the executive level – has become a widespread management tool. Companies often hire coaches with the goal to improve performance and develop talents, but also to keep high-performing people within an organization.

However, coaching is an expensive intervention: aside from the fees of the coach, there’s also the opportunity cost of the employee’s time spent with the coach during working hours. Therefore, companies who are paying for coaching for their employees will want to know whether it is a good investment. Does it improve the company’s bottom line enough to be worth the cost?

A look at the evidence

What effects does coaching have? I put together a selection of research articles investigating this question, including all the meta-analyses I could find that have been conducted in the past two decades. You’ll find the full list of references below, and here’s my very brief, non-systematic, summary:

Despite using different measures, each of the meta-analyses found that overall, coaching is a very effective intervention. It affects goal achievement, performance and skills directly, but also other work-relevant variables, such as employee’s well-being, work attitudes, and self-regulation.

A few random fun facts:

• Novice coaches are as effective as the more experienced coaches.
• The background of the coach matters: coaches with a mix of psychology and non-psychology background were more effective than coaches solely with a psychology or non-psychology background.
• Coaching outcomes were more improved in undergraduate coaching clients than in either executive or non-academic, non-executive coaching clients. (But the explanation might be as simple as that students had the most immediate opportunities to prove performance, such as in exams).
• Coaching has the strongest effect on behavioral changes, as opposed to attitude changes.

But: how can an organization assess their own coaching ROI and effectiveness?

Despite these robust findings of the effectiveness of coaching, several studies point out that it is not only very difficult, but probably impossible, for any one organization to measure the true ROI of their own coaching interventions accurately, because links between coaching and monetary changes within an organization are so complex. However, any one organization can make use of more established knowledge when interpreting their outcomes of coaching:

For instance, coaching may increase an employee’s self-efficacy, and we already know from a considerable amount of research that self-efficacy is related to better performance in the work place. As another example, if coaching increases employees’ well-being and resilience, we can assume that this will also benefit the employer, because we already know from a multitude of other studies that well-being and resilience are linked to desirable employee attitudes, behaviors and performance. Similarly, goal achievement has been established as a reliable outcome of coaching interventions, and higher or continued goal attainment leads to greater satisfaction on an individual level, as well as to increased productivity, performance and organizational profitability.

Beyond ROI

In other words, while most coaching studies have focused on the benefits of coaching to the individual, rather than the organization, we already know from a large body of research how these individual benefits extend to the team and organizational level. There is therefore no need to get discouraged by the elusiveness of ROI as an outcome measure. Organizations can assess the effectiveness of their coaching in many other ways, and rely on earlier research when interpreting these outcomes.

by Ursina Teuscher (PhD), at Teuscher Decision Coaching, Portland OR

References:
Avey, J. B., Reichard, R. J., Luthans, F., & Mhatre, K. H. (2011). Meta-analysis of the impact of positive psychological capital on employee attitudes, behaviors, and performance. Human Resource Development Quartely, 22, 127–152.
Burt, D., & Talati, Z. (2017). The unsolved value of executive coaching: A meta-analysis of outcomes using randomised control trial studies. International Journal of Evidence Based Coaching and Mentoring, 15, (2), 17-24.
Grover, S., & Furnham, A. (2016). Coaching as a Developmental Intervention in Organisations: A Systematic Review of Its Effectiveness and the Mechanisms Underlying It. PLOS ONE, 11(7), e0159137.
Hodgkinson, G. P., & Ford, J. K. (2010). International Review of Industrial and Organizational Psychology, 2010. John Wiley & Sons.
McGovern, J., Lindemann, M., Vergara, M., Murphy, S., Barker, L., & Warrenfeltz, R. (2001). Maximizing the impact of executive coaching. The Manchester Review, 6(1), 1–9.
Meuse, K. P. D., Dai, G., & Lee, R. J. (2009). Evaluating the effectiveness of executive coaching: beyond ROI? Coaching: An International Journal of Theory, Research and Practice, 2(2), 117–134.
Passmore, J., & Fillery-Travis, A. (2011). A critical review of executive coaching research: a decade of progress and what’s to come. Coaching: An International Journal of Theory, Research and Practice, 4(2), 70–88.
Passmore, J., & Gibbes, C. (2007). The state of executive coaching research: What does the current literature tell us and what’s next for coaching research? Coaching Psychology Review, 2(2), 116.
Robertson, I. T., Birch, A. J., & Cooper, C. L. (2012). Job and work attitudes, engagement and employee performance: Where does psychological well-being fit in? Leadership and Organizational Developmet Journal, 33, 224–232.
Sonesh, S. C., Coultas, C. W., Lacerenza, C. N., Marlow, S. L., Benishek, L. E., & Salas, E. (2015). The power of coaching: a meta-analytic investigation. Coaching: An International Journal of Theory, Research and Practice, 8(2), 73–95.
Stajkovic, A. D., & Luthans, F. (1998). Self-efficacy and work-related performance: A meta-analysis. Psychological Bulletin, 124, 240–261.
Theeboom, T., Beersma, B., & Vianen, A. E. M. van. (2014). Does coaching work? A meta-analysis on the effects of coaching on individual level outcomes in an organizational context. The Journal of Positive Psychology, 9(1), 1–18.
Wright, T. A., & Cropanzano, R. (2000). Psychological well-being and job satisfaction as predictors of job performance. Journal of Occupational Health Psycholology, 5, 84–94.