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cost benefit analysis

22nd Nov 2000
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I have been 'committed' to funding some 'Executive Coaching' for a team of senior managers by external providers. The cost is high and I am looking for a means of weighing the costs against the actual benefits to the organisation.
Any experience /tools etc you can share would be really helpful.
Liz Robertson

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By jeffpert
23rd Nov 2000 15:58

Hi Liz,
Cost/benefit analysis is often thought to relate only to financial issues but should also cover nonfinancial issues. It is really no more than listing the costs of doing something, both financial and nonfinancial (such as Time, lost opportunity etc) against the benefits, again both financial and nonfinancial (experience, future benefits, improvements to products etc.). Then consider alternative ways in which the same objective can be achieved. i.e. training to increase sales can be achieved by face to face or CBT. Different consultants may provide better coaching at a cheaper price. What are different costs, which will be more effective etc.
If you want any further info let me have a bit more detail on what the Senior managers want to achieve and I can be more sprecific.
See also any decent accounting book.

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By admin
28th Nov 2000 10:42

Dear Liz,

In addition to other comments:

A lot depends on what you want to get out of it

In my organisation we mangaed to 'sell' executive coaching by comparing the costs to the alternatives, in particular being away from the office for a week or so at a time on a training course with the travel/accomodation costs that also entails.

We also see that the transfer of learning to the work place is higher than that from traditional training courses because the coachee is addressing real work issues and the coach is able to help the learner 'scratch where it itches'.

It is often easier to do the analysis after the event than before it. Do you have a trial period after which it can be reviewed?

Naturally the benefits will depend on what issues the executives are tackling. Doing a cost benefit analysis may impinge on the confidentiality of the coaching sessions. Sometimes they work well because it isn't discussed outside the relationship. But if you can get people to discuss how the coaching worked for them it may be possible to get some good data on which to base an evaluation.

Hope this helps,

Michael

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By algar
11th Dec 2000 16:25

Hi Liz
I dont know if this is helpful, but i did a CBA of visitors to a Neighbourhood Office in Birmingham in 1988. The question was 'do people get vfm from attending NO's?' To do this I used a Clawson Technique. This is from research in the USA around national parks - asking how far are people prepared to travel to a park and how much are they willing to pay.

I did a satifaction questionnaire on a random sample of clients and ascertained their financial status (benefit/wage etc), the distance they travelled and whether they were satified with the outcome of the visit. From that I worked out a time-distance value for each of the sample and averaged this out on the total enquiries per month and per year. This gave the benefit price.

This was then calculated against the capital cost of the building, opportunity costs of the building, opportunity cost of the client sample, intangibles (where else would they have gone etc.)benefit to other agencies and elected members etc.

Perhaps you could base your analysis on the opprtunity costs of what they are missing and how beneficial it will be to their work and personal development (ie is a day back at the office as beneficial as being on a course that may increase their promotion prospects etc.
Each managerv would have a time-distance value of travelling to the course. this could be analysed against a customer satisfaction sheet and an anticipated benefit sheet.

I hope that this is helpful. I am sorry that I have not been able to reply sooner. Please get in touch if you need any further information. Tel 0121-628-2147

Thanks, Brian Goredema-Braid
Outlook Associates

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