Founder & Managing Director Matt Somers - Coaching Skills Training Ltd
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A business case for coaching: how to measure the effectiveness of coaching interventions

Coaching can unlock so much untapped potential in organisations, so why do many hesitate to take it up? Here, we present a simple business case to explain how coaching can offer measurable performance improvements.

15th Mar 2021
Founder & Managing Director Matt Somers - Coaching Skills Training Ltd
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businesswomen negotiating sit at desk in office
iStock/fizkes

Back when face-to-face training sessions and presentations were a thing, I used to like to ask my audiences to consider this question: “how much of your people’s potential shows up at work?”

If coaching has a positive impact on two or three key organisational areas the cumulative effect is real, measurable performance improvement.

Everyone had a number – even the pedants who complained I’d asked a nonsense question because ‘what did I mean by potential?’, had a number. The number was never 100%, however.

Aggregating years of answers to this question in my head would lead me to conclude that most people at work are considered to be performing at somewhere around 30 – 60% of their potential. This means there is at least 40% more to tap into for very little additional cost. I bet there’s not a single piece of plant or office equipment that anyone in your organisation would be prepared to use so inefficiently.

Quantifying learning

In my previous articles we’ve looked at reducing interference to release some of that potential and then at sustaining performance by promoting learning and enjoyment. People who enjoy their work perform better – they take less time off and they contribute discretionary effort. They take a pride in their work and in the organisation. People who maximise their learning at work spot opportunities for improvement, make fewer mistakes and become an invaluable source of best practice.

What about those key coaching principles of awareness, responsibility and trust? What if I could sell you those qualities? How much would you be prepared to pay? If you’re currently being bashed by the competition, have a look at their people. Are they not more aware, responsible, trusting and trustworthy?

While the case for coaching may be highly compelling, the take-up can be patchy. This may be because of a lack of empirical evidence, but is probably more due to a reluctance to invest the time and money for fear the results will not become apparent quickly enough. Coaching generally pays off in the medium to long-term, but most leaders and compelled to produce measurable results inside a 12-month timeframe.

Coaching hub link

Putting a price on progress

This hesitancy does not seem to affect other parts of working life so readily, however. Let’s go back a few decades to a time when organisations were considering replacing their clunky old typewriters with PCs. They’d have asked themselves the following questions:

  • Will it mean we can work more quickly? Yes.
  • Will our work look more professional? Yes.
  • Will our work be more accurate? Yes
  • Will business results improve? Er, not necessarily.

There is no direct relationship between buying a computer and improved results, but we do it because it makes sense. In the same way, I believe that coaching simply makes sense and this article is about presenting some evidence for that belief.

We’ll start by looking at the numbers.

TSIO Ltd (it stands for ‘try switching it off’) is a micro business. It is owned and managed by Debbie and offers IT support to small businesses. Debbie employs one other consultant and an office administrator. Trading is okay, but Debbie thinks she could grow the business if she were better able to manage her colleagues and better able to focus herself. Here’s a summary of TSIO’s accounts:

  £
Sales 200,000
Direct costs (100,000)
Gross profit 100,000
   
Payroll  (60,000)
Overheads (20,000)
Net profit 20,000
Debbie spends a few hundred pounds on a coaching skills programme and enthusiastically applies what she learns over the next year or so. What would happen if this resulted in sales increasing by 1% and costs reducing by 1%?
  £   £
Sales 200,000 +1% 202,000
Direct costs 100,000   99,000
Gross profit 100,000   103,000
       
Payroll (60,000) -1% 59,400
Overheads (20,000) -1% 19,800
Net profit 20,000 _19% 23,800
That’s 19% increase in net profit with an almost negligible impact from coaching. What if the coaching resulted in sales increasing by 5% and costs reducing by 5%?
  £   £
Sales 200,000 +5% 210,000
Direct costs 100,000 -5% 95,000
Gross profit 100,000   115,000
       
Payroll (60,000) -5% 57,000
Overheads (20,000) -5% 19,000
Net profit 20,000 +95% 39,000

These are only modest estimates of the tangible results that coaching can achieve, and yet the impact on the bottom line is astonishing.

To be really accurate I would have needed to adjust the figure for overheads to include the cost of the coach training, but in this example such costs would be minimal.

It’s also fair to say that we’ve looked at a very simple organisation in very simple terms, but the point is not to scrutinise these figures, but rather to illustrate that if coaching has a positive impact on two or three key organisational areas the cumulative effect is real, measurable performance improvement.

If you’re an L&D manager struggling to win support for a coaching initiative, try exploring by how little ‘performance’ (typically increased revenue or reduced costs) would need to improve to cover the costs. I think you’ll be pleasantly surprised at how realistic the prospect then becomes.

Interested in this topic? Read Coaching: are goals still useful in a climate of rapid change?

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