Determining the ROI for the Coaching Initiative

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The monetary benefits were tallied for all 26 respondents. Table 12.2

presents the total benefits for the coaching organized by each of the

six sources of value. The total of all benefits was $802,000. There

were two primary sources of these benefits: team productivity and

increased sales accounted for 81 percent of the total ($649,000).

Personal productivity, cost, and quality contributed modest

amounts, and no monetary benefits were associated with reduced

cycle time. There are some possible explanations for these data. First,

a high proportion of coaching clients were drawn from the sales

area, so it is not surprising that sales benefits were so high. Also,

improved teamwork was one of the goals of the coaching initiative,

so having this emphasis surface as higher team productivity would

seem to be a natural outcome.

There were many product development leaders in the mix of

coaching clients, so it initially seemed odd that there were no

benefits for reduced cycle time. Upon further examination, it was

revealed that these leaders had made significant strides in reducing

Table 12.2 Sources of Value and Total Benefits for

the Coaching Initiative at OptiCom

Source of Value Monetary Benefits

Personal productivity $82,000

Work group productivity $284,000

Increased sales $365,000

Reduced cost $44,000

Increased product quality $27,000

Reduced cycle time $0

TOTAL $802,000

cycle times for key product processes, but many more months (if

not years) would be needed until these reductions would show up

in monetary terms. This calls into play the issue of timing the

evaluation. In this case the evaluation was conducted too soon for

some of these benefits to surface.

Total program costs were tabulated as follows:

Professional fees $360,000

Cost of client’s time $45,000

Materials $16,000

Travel $48,000

Telecommunications $6,000

Administration and evaluation $57,000

TOTAL $532,000

The ROI was calculated to be:

ROI = (($802,000 - $532,000) Π $532,000) = 51%

Intangible Benefits

Intangible benefits are the last, but not forgotten benefits. Several

strategically critical but intangible benefits were noted and documented

by at least half of the respondents. These included the

following:

_ More effective planning

_ Faster revenue stream

_ Increased customer satisfaction

_ Reduced market penetration cost

_ Increased collaboration between sales leaders and product

development leaders

Epilogue: The Final Accounting of Coaching at OptiCom

We are about to close out our saga at OptiCom. There is but one act

left. Jacqui was preparing for her presentation to the Leadership

Advisory Board. In part, her presentation was to look back at the

successful coaching initiative, and in part, it was to look ahead to

expanding the coaching initiative to other areas. Her presentation

began by asking: Were the coaching initiative objectives achieved

in a way that contributed to achieving the business goal? In order to

answer this question, she dusted off her evaluation strategy (see

Table 12.1) and noted the actual outcomes. The revised strategy

document is presented in Table 12.3, whereby the “plan” entries

refer to the evaluation strategy and the “actual” entries refer to what

was accomplished by the coaching initiative.

It was clear during Jacqui’s presentation that the coaching initiative

created real value—both monetary and intangible—for the

business in a way that contributed to achieving the business goal.

This is where the line-of-sight linkage between the evaluation objectives

and the business goal comes into plain view:

_ Team productivity increased, as evidenced by $285,000 in value.

_ Increased productivity accelerated implementing the market

penetration plan.

_ Implementing the plan increased sales in the newly penetrated

market.

This was a wonderful story for Jacqui to share with the Leadership

Advisory Board—with a 51 percent ROI to top it off ! Valuable

recommendations for expanding the coaching initiative to other

groups were also made, including the following:

_ Streamline the process by which leaders set expectations for

their coaching participants

_ Provide more structure to introducing clients to coaching,

including a mandatory orientation session. Also, make sure that

senior leaders and the Leadership Advisory Board have an early

opportunity to meet the coaches, ask questions, and begin to

build a business relationship.

_ Better utilize company communications to educate the general

employee audience about coaching and share success stories

Table 12.3 Final Plan versus Actual Comparison of Results for the

Coaching Initiative

Coaching Initiative Objectives Evaluation Objectives

Plan: Business Unit leaders Plan: Increased collaboration

effectively collaborate across functions among leaders as a result of coaching

to develop market penetration plan More than 70 percent of

Collaboration behavior leaders reported a demonstrated

increased and was quickly focused increase in collaboration.

on market planning.

Plan: Increased productivity of leader’s

Plan: Leaders quickly engage their teams

respective teams to implement Increased team productivity

penetration plan produced $280,000 in value.

Team performance was

demonstrated to be more effective.

Isolating the Effects of Coaching

Plan: Expert estimation of impact resulting from coaching by the clients;

estimations discounted by error factor.

Isolated monetary benefits totaled $802,000

Expected Areas of Improvement

Plan:

More effective planning Faster revenue stream

Higher leader productivity Increased customer satisfaction

Higher team productivity Reduced market penetration cost

Personal productivity: $82,000

Work group productivity: $284,000

Increased sales: $365,000

Reduced cost: $44,000

Increased product quality: $27,000

Reduced cycle time

More effective planning

Faster revenue stream

Increased customer satisfaction

Reduced market penetration cost

Increased collaboration between sales leaders and product development leaders

Actual Intangible Benefits

Actual Monetary Benefits

Actual:

Actual:

Actual:

Actual:

Actual:

Bottom Line: Significant contribution to business goals through achievement of

initiative goals and earning an ROI of 51 percent.

_ Keep the Leadership Advisory Board more informed of how

the coaching initiative is progressing and be upfront about

problems or potential issues

_ In the spirit of continuous improvement, consider team coaching

to follow the individual coaching to sustain and increase

the gains made in team development.

The Leadership Advisory Board took these recommendations to

heart and committed to expanding coaching to the next-level-down

group of leaders. Jacqui took a few moments to smell the roses and

then got to work on developing the new initiative proposal and

evaluation plan.