Executive Coaching Needs Research to Back Up ROI

In the heart of a worldwide economic downturn, where does coaching—specifically executive coaching—fit in? Is it a luxury to be cut back during tough times? Or is coaching corporate executives a necessity that requires continued investment even during the tightest of times?

A study published in this month’s “Coaching, An International Journal of Theory, Research and Practice” suggests executive coaching works—even works wonders—and at the same time cautions that the return on investment has to be proven before the true potential of executive coaching can be met.

“The necessity for coaching tomorrow’s leaders is critical,” write the study’s authors, Dr. Kenneth De Meuse and Dr. Guangrong Dai of Korn Ferry Leadership and Talent Consulting, and Dr. Robert Lee, a New York management consultant and coach, adjunct faculty member at New York University, and Senior Fellow with the Zicklin School of Business at Baruch College.

“The opportunities for practitioners to substantially impact the business world are great,” the researchers write. “However, the effectiveness of executive coaching needs to be clearly and scientifically demonstrated for us to achieve these desired outcomes.”

The study’s authors report there’s no shortage of interest in executive coaching: “it has been estimated that more than 70% of organizations with formal leadership development initiatives employ coaching as an important part” of their leadership development practices.

But the boom in business and executive coaching hasn’t coincided with a flood of research to support the effectiveness of all that coaching.

“While executive coaching is gaining popularity, the professional application of coaching, our understanding of when to use coaching, and the evaluation of its effectiveness has lagged far behind,” write the researchers. “A recent Harvard Business Review Research Report asserted: ‘The coaching field is filled with contradictions. Coaches themselves disagree over why they’re hired, what they do, and how to measure success.’”

The new study finds that reliable estimations of return on investment (ROI) for coaching have been encouraging, but perhaps not fully reliable. One study finding an “average ROI of almost six times the cost of coaching,” and another estimating a dramatic ROI of 700 percent.

A case study performed by a Fortune 500 company in 2001 concluded coaching produced “an ROI of 529%” the researchers say, but the number was “boosted to an overall ROI of 788% when including the financial benefits of enhanced employee retention.”

All that sounds exceedingly positive, but the study’s authors believe real, reliable research on ROI has yet to be done, despite the stunningly high numbers listed above.

The study’s authors question those numbers, suggesting that “hindsight bias” may be at play when coachees fill out questionnaires after the fact to evaluate the coaching process. Further, managers who’ve been coached may believe it’s “in their personal interest to report that the coaching worked.”

So does it work?

The authors say it clearly does, even dramatically so in some cases. But they’d like to see scientific data to prove that, even as they concede that doing true academic research in a corporate setting has its challenges.

“Retrospective questionnaires are likely to be the workhorse methodology for coaching studies for some time to come, given the difficulties of implementing rigorous research designs in the coaching field. It would be helpful if we develop better instruments for this purpose,” the study reports.

The authors suggest standardized questionnaire formats and study guidelines as ways to get more reliable ROI data on executive coaching.

The study also points to case studies as an important tool to better understand the effectiveness of the coaching process, beyond crunching numbers. “Some of us may not see this as ‘research’ in a pure sense,” the authors write. “The most important learnings about coaching can be lost in research designs that examine only correlation coefficients, statistical averages, and curvilinear trends.”

Shining a spotlight on case studies, of course, would also mean focusing attention on how well individual coaches perform, and that’s something the researchers believe has been widely overlooked.

“There is almost no research assessing the effectiveness of individual coaches; nor is there an easy way to design such research.

In practice, however, the reputations and references of experienced coaches carry the greatest weight when it comes to decisions about whom to hire. Certainly it is here that we must look if we are to identify what makes for excellence in coaching.”

As the researchers conclude, executive coaching is in demand with companies paying tens of thousands of dollars to provide coaching to individual executives. A significant number of those executives report the coaching experience produced positive change.

The trick, they say, is proving it.

“There is no professional consensus as to what constitutes effective coaching and little in the way of guidelines and protocols to inform coaching evaluation.”

So how can we evaluate how well coaching works (when it does—and why it doesn’t work when it doesn’t)? Is turning the focus to individual coaches the next step in research?