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Kirkpatrick (1998); Phillips (1997).
190 Coaching That Counts

Table 11.3 The Five Levels of Evaluating Coaching Initiatives

Level Description
Level 1: Reaction This level looks at the initial reaction of the coaching
clients to the coaching they received. Reaction data are
typically captured after the ¬rst two or three sessions.
Level 2: Learning This level captures what the clients have learned from
their coaching sessions.
Level 3: Application This level evaluates how well clients have applied what
they have learned (and committed to) during the
coaching to their workplace. All evaluation strategies for
coaching initiatives should include assessments at this
level.
Level 4: Business This level documents the business impact from the
Impact coaching initiative. Impact areas include output, cost,
quality, and time.
Level 5: ROI This level tabulates all monetary bene¬ts from the
coaching initiative, factors in the fully loaded cost of the
initiative, and calculates the return on investment.




How well the assessment data were explored and explained
The pacing of the initial sessions (e.g., too fast or too slow)

The purpose of gathering these data early is to take stock of how
the coaching relationship has gotten off the ground and, if there are
issues, to deal with them early. The last thing anyone wants is for
issues to be left unattended so they can fester and impede the
progress of coaching. If, for example, after three sessions the client
is still not clear about the behavioral objectives he or she must
address, then this issue must be dealt with quickly in order for the
coaching to have focus and direction. If the client still has lingering
questions about his or her personal assessment data, then the client
and the coach need to explore these questions and incorporate the
learnings into the coaching conversations.
Data that capture the initial reaction of people to coaching are
grouped and summarized from all coaching participants. These data
Developing an Evaluation Strategy 191

are important for the sponsors and managers of the coaching initia-
tive to review. There may be issues common to the participants that
must be dealt with in order for the initiative to be successful. For
example, if after three sessions most clients have not developed
objectives for their coaching, then some additional support would
have to be provided to the clients. Or if many clients are struggling
with the available assessment data, then perhaps the appropriate data
were not adequately collected during the initial stages of the coach-
ing process. Additional multisource feedback data could be collected
or an entirely new assessment process could be implemented. The
point here is that it is better to hear about these issues after three ses-
sions rather than during a debrie¬ng at the end of the six-month
coaching initiative. The more that is learned at the beginning about
how to make coaching more effective, the fewer the number of
lessons learned that will be recorded at the end of the coaching.
Level 2 explores what the clients are learning from their coaching
experiences. Every client will have a unique learning experience, but
themes may emerge and topic areas common to many clients may
become evident. Examples of learning areas include discovering new
ways to do the following:

Be a more effective leader
Gain insights into personal changes required to grow and
develop
Better understand how personal actions affect others
Work more effectively with peers to accomplish business goals
Improve communication skills
Improve the ability to collaborate with other leaders
Increase teamwork
Embrace a big picture view of the organization
Think more systemically about ¬nding solutions to problems

Each of these learning areas can be a stepping stone to accom-
plishing a business objective. For those who sponsor or manage a
coaching initiative, it is not so important which stepping stones are
192 Coaching That Counts

being touched, as it is to know that at least some stepping stones are
being touched. If halfway through a six-month coaching initiative
little of signi¬cance has been learned by many of the clients, then
something is not working. If people are not making signi¬cant
strides in learning how to be more effective leaders, then it is unlikely
they will do anything differently. One cannot apply what one has
not learned.
Level 3 is where the rubber meets the road. Evaluation at this level
looks at how well people have applied to the workplace what they
have learned from their coaching experiences. Of course, not all of
what people learn from coaching can be immediately applied, but
coaching conversations conducted in business settings will at some
point turn to what the client will do differently. These changes in
behavior are the subject matter for the evaluation of application. For
example, in Chapter 3, Jane was able to accomplish her top priori-
ties by focusing her time and energy more effectively. The actions
she took were tangible expressions of what she learned about herself
from the coaching sessions. Here are some other examples of taking
actions based on coaching:

More clearly setting priorities for major initiatives
Making decisions based on a greater diversity of input
Using vision and passion to motivate others
Recasting roles and responsibilities to smooth out working
relationships
Expressing appreciation for the contributions of others to
increase retention
Articulating problem statements in a way that engages people
to take action

In each of these examples, a client did something differently as a
result of coaching. These behaviors can be observed and recorded,
which begs the question: What data are required to conduct an
evaluation of application?
The answer to this question lies in how best to tell a story about
the growth and development of the coaching client. Virtually all
Developing an Evaluation Strategy 193

clients will apply at least something they learned to the workplace.
Recording percentages and rates of application while important,
don™t come close to telling the whole story. What is of interest is how
coaching stimulated the client to take bold and successful actions.
Each of the four stories of clients in Section One of this book chron-
icle successful actions that were taken. These stories, while qualita-
tive in nature, pack an emotional punch. Sharing these stories (with
the client™s permission of course) can have a powerful impact on ini-
tiative sponsors and business leaders about the value of coaching. In
a successful coaching initiative, almost every client will have a com-
pelling story to tell.
The stories and experiences of coaching clients can be summa-
rized to show areas of application.
Level 4 examines the success stories of the coaching clients to
determine the potential impact on the business. Taking action is one
thing, but having this action translate to business results is quite
another. There are four types of business impact: output, quality,
cost, and time. Output measures include such areas as productivity
and sales revenue. Quality measures include such areas as increased
product reliability and reduced manufacturing defects. Cost mea-
sures refer to reducing costs in operations; sales, general, and admin-
istrative (SG&A) expenses; manufacturing; and other areas. Time
measures include reduced cycle time and product-to-market time.
A coaching client may affect one or more of these areas, based on
his or her work responsibilities. A leader in research and develop-
ment may take actions that reduce the product development cycle
(time), whereas a sales leader may work in a new way with sales
representatives that leads to increases in revenue.
The impact on the business can be both monetary and intangi-
ble. In a sense, all bene¬ts are intangible until we make the decision
to convert these bene¬ts to monetary value. Making this decision is
not to be taken lightly. A considerable amount of effort may be
required to convert bene¬ts to monetary value. There are two major
avenues for converting coaching bene¬ts to monetary value: expert
estimation and performance indicator tracking. Keep in mind that
at this point we are developing the evaluation strategy, so all that is
194 Coaching That Counts

required is to plan which bene¬ts will likely be converted to
monetary value and how this conversion will take place. The ¬rst
approach, expert estimation, means that the coaching clients, and
perhaps others, will give their best estimate of how their actions
created monetary value to the business. So, for example, a leader
who, as a direct result of the coaching she received, reduced the
product development cycle time by 15 percent would estimate the
annual monetary value of this improvement to be $250,000. She
would then state her con¬dence in this estimate to be 50 percent.
The bene¬t would be discounted by this amount to result in a value
of $125,000. As an option, additional steps may be taken to validate
the monetary bene¬t. For example, the leader™s coworkers could be
interviewed to see if they would agree with the 15 percent cycle time
reduction.
The second approach, which may be combined with estimation,
is to track established performance indicators. An important aspect
of determining business results is to isolate the effects of coaching
from other potential in¬‚uencing factors (which is dealt with in more
detail later in this chapter). Brie¬‚y, these effects are isolated by
looking at performance indicators according to a base period and
then a treatment period. The base period refers to performance
before coaching, and the treatment period refers to coaching. So, in
this product development example, the performance of the product
development team could be examined after coaching and compared
to the performance before coaching. Changes in performance could
be attributed to coaching, all other factors being equal.
At this point of developing the evaluation strategy, it is important
to think through how business results will be measured. In all like-
lihood, both estimation and metrics tracking will be used. The
advantage of building these measurement activities into the evalua-
tion strategy is that plans can be made to obtain the required data.
Also, sponsors of coaching and other business leaders can under-
stand and buy into how business impact will be measured. Gaining
this buy-in early will save a lot of headaches later. In situations where
the required data are not being tracked, having this early warning
Developing an Evaluation Strategy 195

allows people to put the appropriate measurement tracking in place.
Coming to this realization at the end of the coaching initiative may
be too late to collect the required data.
Level 5 looks at ROI. A coaching initiative may have produced
monetary bene¬ts, but did these bene¬ts outweigh the cost of the
initiative? This evaluation level factors in the cost of the coaching
initiative and, when compared to the monetary bene¬ts, the ROI can
be calculated. The formula for ROI is as follows:

ROI = ((Bene¬ts - Cost) ∏ Cost) ¥ 100

The ROI formula can be contrasted with the bene¬ts-cost ratio
(BCR) in that ROI deals with net bene¬ts whereas the BCR deals
with total bene¬ts. ROI is expressed as a percentage whereas the BCR
is expressed as a ratio:

BCR = Bene¬ts ∏ Cost

So, for example, a coaching initiative that produced $400,000 in
value and cost $200,000 to execute would produce the following
calculations:

ROI = (($400,000 - $200,000) ∏ $200,000) ¥ 100 = 100%
BCR = $400,000 ∏ $200,000 = 2:1

It is important to include both the ROI and the BCR given that
people often confuse the two. Some people, for example, will report
a “3 to 1 return on investment.” Upon closer inspection it™s clear that
they did not follow the standard formula and use net bene¬ts. There
is no quicker way to lose credibility than to appear confused about the
standard formulas for showing monetary value for the investment.

Structuring an Evaluation Strategy Based on the Five Levels

At ¬rst, structuring an evaluation strategy that addresses all ¬ve
levels may seem to be a daunting task. How do these ¬ve levels ¬t
196 Coaching That Counts

into an evaluation strategy? It really boils down to two options:
evaluate at level 3 application or evaluate at level 5 ROI. A central
tenet of this book is that every coaching initiative should be evalu-
ated at either of these levels. Which level is best? Let™s contrast these
two strategies and look at the reasons for conducting a level 5
evaluation.
Table 11.4 contrasts level 3 (application) and level 5 (ROI) eval-
uations. Although both kinds of evaluations collect data on intan-
gible bene¬ts, these bene¬ts are the primary stated bene¬ts of a level
3 analysis, whereas with a level 5 analysis, intangibles supplement
monetary bene¬ts. Monetary bene¬ts are central to a level 5 analy-
sis and are not included in a level 3 analysis. As such, isolating the
effects of coaching is critical to a level 5 analysis and not required
for level 3. Likewise, initiative cost data are not required for a level
3 analysis, although they are required with a level 5 analysis. The

Table 11.4 Contrasting Level 3 Evaluation with Level 5 Evaluation

Differentiator Level 3 Evaluation: Application Level 5 Evaluation: ROI
Intangible bene¬ts Intangibles included as Intangibles included as
primary bene¬t a secondary or
supplementary bene¬t
Monetary bene¬ts Not included, although Included as a central
incidental cost savings may bene¬t
be cited
Isolating the Not needed, given that no Central to establishing
effects monetary bene¬ts are cited monetary bene¬ts
resulting directly from
coaching
Initiative cost Cost data are not collected Cost data are collected
for the purposes of the and, when compared to
evaluation bene¬ts, the ROI is
calculated
The punchline How what was learned How what was applied in
of the story from the coaching was the workplace created
applied in the workplace monetary value for the
business
Developing an Evaluation Strategy 197

punchline of the level 3 story is how what was learned from the
coaching was applied in the workplace. For level 5, the punch line is
how what was applied in the workplace created monetary value for
the business.
Given that at least a level 3 evaluation is recommended for every
coaching initiative and is also conducted for every level 5 evaluation;
the real question becomes whether or not to evaluate at level 5. Let™s
examine the reasons to conduct a level 5 evaluation for coaching:

The business leader or initiative sponsor asks for it. This was the
case with OptiCom, and although Jacqui pushed back on the
request, she did construct an evaluation strategy for the full
deployment of coaching.
The coaching initiative has especially high visibility. If a lot is
riding on the outcome of the initiative, it is probably worth the
investment of time and money to ensure that the organization
gets the most out of the initiative.
The initiative (or pilot) is the ¬rst of many deployments of coach-
ing throughout the organization. Evaluating the ¬rst of many
deployments will enable the learnings from the evaluation to
be leveraged across subsequent deployments. For example, at
OptiCom, coaching will be deployed to 80 leaders. Still in the
of¬ng is potential deployment to an additional 250 leaders,
who represent the next lower level of management. Leverag-
ing the learnings from the 80 to improve the deployment
and coaching experiences of the 250 represents an excellent
investment.
You, as a learning or change leader, need to learn as much as you
can about how coaching created value. A level 5 evaluation pro-
vides a deeper understanding of the sources of value for coach-
ing, the areas in the organization that were impacted, and how
a monetary ROI was realized overall.

Any one of these four reasons is suf¬cient to launch a level 5 eval-
uation. If none of these reasons is met, then a level 3 evaluation
198 Coaching That Counts

may be best. Evaluating application provides insights into how the
coaching clients utilized their learning to create value for the orga-
nization. This value, while intangible, may nonetheless represent a
substantial bene¬t to the business.
Conducting an evaluation is a more formal way of telling a story.
Every coaching client has a story to tell. Each level of evaluation rep-
resents, in effect, chapters in these stories. It is important not to leave
any chapters out. So, when evaluating at level 3, consider beginning
the story with the initial reaction (level 1) of the client to the coach-
ing, the foundation that was set, and the rapport that was built. This
foundation supported the client in gaining insights into his or her
behavior and discovering ways to grow and develop (level 2). These
insights and discoveries led to taking bold new actions and direc-
tions to impact the organization (level 3). Filling in these three chap-
ters tells a great story. When evaluating at level 5, the story continues
by showing how these actions and directions created value for the
business (level 4) in such a way that the coaching initiative more
than paid for itself (level 5).

Isolating the Effects of Coaching

A coaching initiative can certainly have a major impact on the busi-
ness, and yet it is just one of many potential in¬‚uencing factors on
business performance. Isolating the effects of coaching on business
performance from all other factors is critical for the evaluation. This
can also be one of the most contentious issues in the evaluation
process.
In the case of OptiCom, coaching was expected to increase col-
laboration and increase productivity. However, a major reorganiz-
ing project was also underway and salespeople were getting refresher
training in relationship selling techniques. If collaboration and pro-
ductivity go up, who should get the credit”coaches, reengineers, or
the sales trainers? This is the essence of the isolation issue.
The effects of coaching can be isolated in the following three main
ways:
Developing an Evaluation Strategy 199

1. Pre/postanalysis
2. Control group analysis
3. Expert estimation4

Each of these isolation techniques is now discussed, although we
will see that estimation is usually the only viable alternative.

1. Pre/postanalysis. This technique involves assessing perfor-
mance before and after the coaching and then comparing the
change in performance (if any). In the case of OptiCom, levels
of collaboration before the coaching would be compared with
levels of collaboration after the coaching initiative. Ditto with
changes in productivity. In order for increased levels of col-
laboration or productivity to be attributed to coaching, all
other potential factors that might in¬‚uence collaboration and
productivity would have to be held constant. In looking at pro-
ductivity, for example, the major reengineering effort that
occurred contemporaneously with the coaching would have
to be taken into account when deciding how coaching
contributed to productivity gains. Likewise for sales training.
The challenge then becomes how to separate, or isolate, the
effects of these three initiatives (reengineering, sales training,
and coaching) on productivity. Pre/postanalysis alone can™t do
it. This is where other isolation techniques come into play.
2. Control group analysis. Control groups, or comparison groups,
are two groups that are identical in all major respects except
for participation in coaching. One group, the treatment group,
was coached, and the other, the control group, was not.
Returning to the productivity example, gains of productivity
would be observed from precoaching to postcoaching.
However, this group also experienced reengineering and sales
training. So another group would have to be selected that was
also part of the reengineering and training efforts, but that did
not receive coaching. This second group, or control group,
4
Anderson (2003); Campbell and Stanley (1963); Phillips (1997).
200 Coaching That Counts

would be compared to the coaching group. The only major dif-
ference between the two groups was the coaching, so compar-
ing productivity between these groups would further isolate
the effects of coaching on productivity. The challenge is that,
in real life, parsing out treatment and control groups is
extremely dif¬cult to do. Reengineering, sales training, and
other business initiatives are undertaken to make money, and
business leaders are not going to delay or reschedule develop-
ment of these initiatives just to suit the needs of the evalua-
tion. This brings us to expert estimation, which can be a very
powerful and credible tool to isolate the effects of coaching.
3. Expert estimation. This technique represents the third evalua-
tion method and is the most widely used for evaluating coach-
ing. Experts here refer to those who were coached; the
superiors, peers, and subordinates of the coaching clients; the
coaches; and others who could provide credible data about the
impact that coaching had on an outcome. Let™s say that in the
productivity example, initiative sponsors were still skeptical
that coaching produced the productivity gains. The coaching
clients could be interviewed about how they attributed their
productivity gains to coaching, reengineering, sales training,
or other factors. The subordinates of these clients, or a ran-
domly selected subset of the clients, could also be interviewed
to validate the claims made by the clients. Adding expert esti-
mation to the evaluation strategy provides a credible set of data
to isolate the effects of coaching.
Given the complexity of organizations and the plethora of
business initiatives intended to improve business performance,
expert estimation is typically the only method available to isolate
the effects of coaching from other potential in¬‚uencing factors.

Developing the Isolation Strategy

When it comes to deciding which of the three isolation techniques
to use, the more the merrier. Ideally, all three techniques will be used.
Developing an Evaluation Strategy 201

Practically, this is often not possible. It is recommended that expert
estimation always be included in the evaluation strategy. In the case
of OptiCom, this was the only technique used (e.g., Table 11.2), and
expert estimation can be a powerful stand-alone isolation technique.
Coaching does present three unique challenges for evaluation in
contrast to more traditional leadership development activities:

1. Each coaching experience is unique. More traditional learning
programs practice “sheep dipping,” where all leaders go
through the same experiences.
2. Coaching initiatives may lack a “quorum for impact.” When
coaching participants are drawn from across the organization,
it is not reasonable for coaching to impact business measures.
3. The bene¬ts of coaching may require a gestation period. The
higher up the leader is in the organization, the longer it may
take for the bene¬ts of his or her actions to be realized.

Despite these challenges, initiative managers and evaluators can
think creatively about how to include pre/post and comparison
groups techniques in an evaluation strategy. For example, coaching
deployment can be phased in over a period of time so that natural
comparison groups are created. The productivity of those groups
that experience coaching early in the deployment can be compared
to those who have yet to experience coaching. Preexisting perfor-
mance data collection and reporting procedures can be utilized to
provide high-quality data at little additional cost. In the case of pro-
ductivity, the output measures of groups that experience coaching
can be compared to those who have not experienced coaching. Mea-
sures such as units produced or units sold can be included in the
evaluation.
In this chapter we covered a lot of ground. As we set the stage for
the postprogram ROI evaluation: important decisions were made
about setting objectives in the context of an evaluation strategy. In
the next chapter we™ll see how such a strategy came to life in the eval-
uation of coaching at OptiCom.
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12
Demonstrating the ROI
of Coaching

In Chapter 11 we learned how to develop a strategy for evaluating
coaching. In particular, we learned how best to isolate the effects of
coaching on performance from other potential in¬‚uencing factors
on performance. This chapter deals with how to collect and analyze
the data so that the effects of coaching on performance can be con-
verted to monetary bene¬ts. Given these bene¬ts, then, tabulating
the cost of the coaching initiative completes the ROI equation and
enables us to calculate the ROI. The Data Collection and Analysis
Plan pulls all of these activities together.

The Data Collection and Analysis Plan

When it comes to determining the ROI for coaching, we certainly
have our work cut out for us: converting bene¬ts to monetary value,
isolating the effects, tabulating program costs, and calculating the
ROI. The intention of this chapter is to make this evaluation as
simple and painless as possible. An evaluation process will be pre-
sented that has been battle-tested and proven to work with coach-
ing time and time again. Consequently, not every possible angle for
the evaluation will be explored. Readers who wish to further explore
alternative approaches to evaluation are encouraged to review the
References and Further Reading section at the end of this book.
Many excellent resources are available to help build knowledge and
skills in the art and science of evaluation.

203
204 Coaching That Counts

This chapter cuts to the quick: how to plan the data collection and
analysis and quickly select those data collection tools that will
creditably show the ROI. The sponsors and leaders of coaching
initiatives, evaluators, HR professionals, coaches, and others will
have, in this chapter, all they need to conduct an ROI evaluation of
coaching. The next chapter presents a slimmed-down version of
evaluating only the application of coaching.
The ¬rst step is to develop the Data Collection and Analysis Plan.
This plan is the link from the evaluation strategy to conducting the
evaluation. The Data Analysis Plan has six major elements:

1. The evaluation objective, which comes directly from the
evaluation strategy
2. The isolation strategy, which again comes from the evaluation
strategy
3. The sources of data, which are required to execute the isolation
strategy
4. Data collection tools, which will be used to gather all relevant
data from the identi¬ed sources
5. The analysis approach, which summarizes how the data will be
collected and analyzed
6. The key events schedule, which includes the major activities
required to execute the data collection plan

Let™s return to OptiCom to see how they utilized this format and
created an effective plan to analyze the evaluation objectives. In this
example, we look only at how they planned the Data Collection and
Analysis Plan for the ¬rst objective: increased collaboration among
leaders resulting from coaching. Table 12.1 presents this plan. Let™s
break it down as follows:

Isolation strategy. The isolation strategy was taken directly from
the evaluation strategy document (Table 11.2). Expert estima-
tion is planned as the only isolation technique. Neither a
pre/post nor a comparison group analysis were planned to be
used. This means, of course, that the credibility of the entire
Demonstrating the ROI of Coaching 205

Table 12.1 Data Collection and Analysis Plan for One Evaluation
Objective at OptiCom

Evaluation Objective 1: Increased collaboration among leaders resulting from
coaching
Isolation Strategy Sources of Data Data Collection Tools
Expert estimation of Coaching clients who Questionnaire A:
impact resulting from estimate increased Reaction and learning
coaching by the clients collaboration Interview Guide B:
and validated by selected Validation of monetary Application and
peers; estimations bene¬ts by peers impact
discounted by error factor
Analysis Approach: Questionnaire A will be administered to every coaching client via
e-mail immediately after the client completes his or her fourth coaching session. This
questionnaire will assess the reaction of clients to the coaching and document some
initial learning experiences. Interview Guide B will be conducted with clients about
two months after the coaching has been completed to assess how they have applied
what they have learned and to document the business impact.
Data Collection and Analysis Key Events Schedule
What must be done? Who will do the activity? When is the activity due?
Develop evaluation Senior Communications 2 weeks before kick-off
communications packet Specialist of the coaching initiative
Gain approval for all Initiative Manager (Jacqui) 2 weeks before kick-off
evaluation tools and timing of the coaching initiative
Administer Questionnaire A Evaluator (Michael) 6 weeks after coaching
initiated
Analyze Questionnaire A Evaluator (Michael) 8 weeks after coaching
data; prepare report with initiated
recommendations
Share report with Initiative manager (Jacqui) 9 weeks after coaching
recommendations to the initiated
initiative sponsor and
Leadership Advisory Board
Etc.
206 Coaching That Counts

evaluation rests on one method of evaluation. Credibility of the
evaluation is a critical issue that is dealt with in more detail in
the last section of this chapter.
Sources of data. Coaching clients were to be interviewed to
produce the main body of data. These data include the clients™
initial reaction to their coaching experience, what they learned
from their coaching, how they applied what they learned to
their workplace, and how these actions produced value for the
business.
Data collection tools. Two data collection tools were required for
the evaluation. Questionnaire A (Figure 12.1 located in the
Evaluation Toolkit section of this chapter) is intended to
capture reaction and learning data from the coaching clients.
Interview Guide B (Figure 12.2 and also in this next section)
captures application and business impact data. The question-
naire and interview guide, when combined, collect all of the
data required for an ROI analysis. This interview guide offers
a step-by-step process to successfully demonstrate ROI.
Readers are encouraged to review these documents and the
speci¬cations that follow in the Evaluation Toolkit section.
Later we will see how these data collection tools were utilized
at OptiCom.
Analysis approach. Jacqui and Michael planned to administer
Questionnaire A via e-mail to each coaching client after his or
her fourth coaching session, which occurred about six weeks
into the coaching initiative. Clients were to receive the e-mail
message, complete the questionnaire, and then e-mail it back
to the evaluator. These data represent the early returns of the
coaching initiative: Are the clients responding well to their
coaching? Is rapport being established? Is the coaching being
conducted effectively? The answers to these questions are criti-
cal to understand if any corrective actions are needed. Later on
we will see how OptiCom used this survey to spot and ¬x a
potential trouble point. This questionnaire also sheds light on
the initial learning experiences of the coaching clients: under-
standing how to be more effective as a leader, engaging work
Demonstrating the ROI of Coaching 207

teams more effectively, and improving communication skills.
These and subsequent learning experiences form the founda-
tion for making signi¬cant personal and professional changes.
Interview Guide B was planned to be administered by the
evaluator, Michael, with each coaching client in a personal
interview setting about two months after completion of the
coaching. The external evaluator brings objectivity and privacy
to the data collection with a certain measure of credibility.
Coaching clients are naturally sensitive about their coaching
experience and the changes they would like to make, both per-
sonally and professionally. Clients more readily open up to a
third-party evaluator who ensures that their individual data
will not be revealed to the sponsoring company. Only grouped
data were presented.
The two-month time lag for administering Interview Guide
B is important. An appropriate gestation time is needed for the
impact of coaching to be felt in the organization. Later on we
will look at a speci¬c example of this kind of impact. Suf¬ce it
to say at this point that leaders who make signi¬cant changes
in their behavior will likely have signi¬cant impact in the orga-
nization. This impact takes time to manifest in the form of
monetary bene¬ts. Generally, the higher up the leader is in the
organization, the longer this time frame becomes. In other
words, those leaders who are higher in the organization will
take actions that have greater strategic value and it is the strate-
gic nature of these actions that take longer to have impact on
the business. There are no hard-and-fast rules for timing the
data collection. Common sense is the best guide. Just ask your-
self: Has a reasonable amount of time elapsed for the leader™s
behavior changes to have impacted the organization?
Key events schedule. The last piece of the Data Collection and
Analysis Plan is the key events schedule. These key events refer
to everything that must be done to successfully execute the
plan: communicating the purpose for the evaluation, gaining
approval for the evaluation tools and approach, conducting the
data collection, preparing reports, and other activities. Table
208 Coaching That Counts

12.1 presents a few of these activities. Each activity is described
in terms of what must be done, who will do it and when the
activity must be done. Ideally, these evaluation activities are
integrated into the overall plan for the coaching initiative and
not kept as a stand-alone plan. Having one, integrated project
plan enables the manager of the coaching initiative to more
easily make the connections of coaching activities and evalua-
tion activities.

The next section of this chapter presents the two evaluation tools
with detailed speci¬cations. In the subsequent section, we learn how
OptiCom used these tools to evaluate the coaching initiative.

ROI Evaluation Toolkit

Questionnaire A: Reaction and Learning

Questionnaire A: Reaction and Learning: Speci¬cations

Reaction: Your Initial Coaching Sessions

Questions 1“8. These closed-ended questions enable the
respondents to quickly rate their initial experiences with coach-
ing. The seven items included in the scale were determined by
the client and the evaluator to be the most important areas for
which to collect data on the coaching initiative. These items
may change based on the particulars of a coaching initiative.
A four-point scale is used to force a choice between agree-
ment and disagreement with each of the seven statements. It is
recommended not to include a response category for “uncer-
tain” because these responses do not provide any clarity about
what respondents are thinking about a particular item.
Items 2 and 4 are called reversal questions, in that these items
state a negative situation in contrast to the positive cast of the
other items. Reversal questions are included to counter
“response set,” or the tendency of some respondents to quickly
Demonstrating the ROI of Coaching 209

Leadership Coaching Survey
Initial Reaction and Learning

Introduction: Thank you for participating in this important survey! The intention of this
survey is to better understand the value and business impact of the coaching provided so
far to the leadership program participants. The results from this survey will enable
OptiCom to best utilizecoaching in the context of the business.
Survey results will be anonymous”the data will be presented in group form only and
individual names will not be reported. A third party, MetrixGlobal LLC, will analyze all
data and a summary report will be provided to the sponsors of OptiCom. You will also
receive a summary report.

Thank you so much for your participation!


Your Initial Coaching Sessions

Please provide your initial impressions of coaching based upon your first four sessions.
Place an “X” in the appropriate category for each item.

1 2 3 4
Strongly Disagree Agree Strongly
Disagree Agree
1. My coach and I set objectives for
coaching.
2. The expectations from the senior leaders
for the coaching initiative are not clear.
3. My coach and I connected and established
rapport.
4. I was skeptical that coaching was going to
work for me.
5. I was satisfied that the first three or four
sessions provided a strong foundation for
our coaching conversations.
6. Conducting coaching over the telephone is
very effective for me.
7. The pacing of the coaching sessions is
about right; not too fast or too slow.
8. The personal assessment data were
effectively explained to me.

9. What suggestions do you have for improving the introduction and initiation of
coaching?

(Write your response here.)



Figure 12.1 Questionnaire A: Reaction and Learning.
210 Coaching That Counts

Initial Learning Gained from Coaching

Please reflect upon your initial experience with coaching and respond to the following
items. Place an “X” in the appropriate category for each item.

1 2 3 4
Strongly Disagree Agree Strongly
Disagree Agree
10. I understand how to be more effective as
a leader.
11. I am gaining insights into personal
changes that I needed to make to be more
collaborative with peers.
12. I am learning about the impact my
actions have on others.
13. Coaching is opening up new ways for me
to look at business situations.
14. I understand how to work more
effectively with my peers to accomplish
business objectives.
15. I am learning how to engage my work
team more effectively to achieve goals.
16. Coaching is enabling me to explore new
ways to increase teamwork.
17. I have begun to improve my
communication skills.

18. How has your experience with coaching increased your knowledge about how to be
more effective?

(Write your response here.)



Figure 12.1 Continued



run down the list of items and select the same response cate-
gory without actually reading the questions. The values of these
questions are reversed during data analysis so that all responses
can be grouped.
Question 9. This open-ended question is the opportunity to
hear from the respondent in his or her own words how the
coaching initiative could be improved. The preceding closed-
ended questions often act as brain ticklers to help the
respondents think of additional improvements. The qualitative
data from this item are important because, no matter how well
written the preceding closed-ended questions are, you cannot
Demonstrating the ROI of Coaching 211

include everything that might be important to the respondents.
Open-ended questions enable the respondents to speak with
their own voices.

Initial Learning Gained from Coaching

Questions 10“17. These items use the same scale as the reaction
items (e.g., items 1“8). The content is speci¬cally tailored to the
initiative objectives so items dealing with collaboration,
working with peers, engaging work teams, and so on are
included in the survey.
Question 18. This open-ended question is included to capture
key learnings that were not necessarily addressed in the
previous set of closed-ended questions.

Interview Guide B: Application and Impact

Interview Guide B: Application and Impact: Speci¬cations

Question 1. This open-ended question is designed to have the
respondent re¬‚ect on how coaching has contributed to
improved performance. The data will be qualitative and will
provide some written comments that will complement the
monetary data. The answers to this question will also yield
intangible bene¬ts.
Question 2. This question is intended to capture all of the major
ways in which improved performance management will impact
business results. Given the diverse nature of coaching clients
(e.g., sales, production, human resources), six response cate-
gories are provided. The ¬rst three categories (e.g., A, B, and C)
are output measures. Cost (D), quality (E), and time (F) are
also included. Respondents will rarely check more than three
or four categories.
Question 3. This item comprises ¬ve elements and two sets of
calculations. Each of the ¬ve elements is answered by the
212 Coaching That Counts


Capturing the ROI of Coaching Worksheet

Instructions: This worksheet is designed to serve as an interview guide for evaluators to
assist coaching clients in evaluating the monetary impact of coaching. While not an exact
science, this worksheet follows a well-established, conservative, and credible approach to
evaluation. Estimation is a necessary and accepted part of the ROI process.

1. Describe the performance improvements that you have realized as a result of coaching.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
2. Identify the potential sources of impact of these improvements. (Please check all that
apply.):
a. Increasing your personal productivity _______________
b. Increasing the productivity of your work group _______________
c. Increasing sales _______________
d. Reducing cost _______________
e. Increasing product quality _______________
f. Reducing cycle time _______________

3. For each item checked above, please complete one of the bene¬ts calculations on the
following page. Use one letter code for each response. Identify currency used in the
analysis: _______________
Determine/use the standard values of the client organization. If these are not known
or available, use the following values in calculating the monetary bene¬ts. If the
bene¬ts are not in $US, then convert the values to the appropriate currency. All
bene¬ts must be recorded in annualized numbers (i.e., a bene¬t that is recorded in
monthly terms will be multiplied by 10.5 months to get to the annualized number).
Compensation rate = $75 USD
Hours per week = 40 hours
Weeks per year = 46 weeks
Months per year = 10.5 months
Sales margins = 20%
Cost of money = 10%

Figure 12.2 Interview Guide B: Application and Impact.


respondent for each letter code checked in question 2. The
calculations are done by the evaluator (or coach) either during
the discussion with the respondent or after the discussion. The
entire response series is repeated for each letter code selected
by the respondent.
The ¬ve response elements for Question 3 are as follows:
1. Letter code. The participant enters a letter code from Ques-
tion 2. Only one letter code is entered for each set of
responses. If two letter codes are checked in Question 2, then
Demonstrating the ROI of Coaching 213

Bene¬t Calculations: Please describe the bene¬t in the left margin.
Letter Estimate Monetary Estimate % of State Con¬dence
Code Value of Improvement in This Estimate (on a
Performance Due to Percentage Basis:
Improvement Coaching 0% = No Con¬dence;
100% = High Con¬dence)
______ $ ____________ ¥ ______ % ¥ ______ % = $ _________
Based Daily Est. Monetary
On: Weekly Bene¬t
Circle Monthly ¥ (______________) = ______________
One Quarterly Annualizing multiplier Annualized bene¬t
Yearly

Letter Estimate Monetary Estimate % of State Con¬dence
Code Value of Improvement in This Estimate (on a
Performance Due to Percentage Basis:
Improvement Coaching 0% = No Con¬dence;
100% = High Con¬dence)
______ $ ____________ ¥ ______ % ¥ ______ % = $ _________
Based Daily Est. Monetary
On: Weekly Bene¬t
Circle Monthly ¥ (______________) = ______________
One Quarterly Annualizing multiplier Annualized bene¬t
Yearly

Letter Estimate Monetary Estimate % of State Con¬dence
Code Value of Improvement in This Estimate (on a
Performance Due to Percentage Basis:
Improvement Coaching 0% = No Con¬dence;
100% = High Con¬dence)
______ $ ____________ ¥ ______ % ¥ ______ % = $ _________
Based Daily Est. Monetary
On: Weekly Bene¬t
Circle Monthly ¥ (______________) = ______________
One Quarterly Annualizing multiplier Annualized bene¬t
Yearly

Figure 12.2 Continued


the entire set of responses illustrated in Question 3 is com-
pleted twice, once for each letter code.
2. Estimate monetary value of performance improvement. The
participant estimates a monetary value, expressed in U.S.
dollars or another currency, of the improvement in perfor-
mance for the letter code category that was checked.
3. Select the appropriate time frame. The respondent then
selects the appropriate time frame (e.g., daily, weekly) for
the monetary bene¬ts.
214 Coaching That Counts

4. Determine the cost of the coaching.
_______ Professional fees
_______ Cost of client™s time to participate in coaching (hours ¥ $75 or standard value)
_______ Materials
_______ Travel expenses
_______ Telecommunications
_______ Administration costs (includes cost of evaluation)
_______ TOTAL
=

5. Calculate the ROI
Tally the annualized bene¬ts (A through F) = ____________
Enter the values into the formula:
ROI = ((Bene¬ts - Cost) / Cost) ¥ 100
ROI = (( )/ ) ¥ 100 ____________
- =

6. Identify the intangible bene¬ts.
A. __________________________________________________________________
B. __________________________________________________________________
C. __________________________________________________________________
D. __________________________________________________________________
E. __________________________________________________________________


Figure 12.2 Continued



4. Estimate percentage of improvement resulting from coaching.
The participant estimates,on a percentage basis,how much of
the monetary value can be attributed to performance
improvements that were made as a direct result of coaching.
This item is intended to isolate the effects of improvements
realized through coaching. This approach to isolation has
proven to be both effective and credible (e.g.,Phillips,1997).
5. State con¬dence in this estimate. The participant expresses,
on a percentage basis, his or her con¬dence in the previous
estimate of how much of the monetary value was attributed
to coaching. This item is intended to determine the error
factor for the estimate of bene¬ts.
The two sets of calculations are as follows:
1. Calculate the estimated monetary value. Multiply the ¬rst
three values in the equation to produce the estimated
Demonstrating the ROI of Coaching 215

monetary value of the bene¬t (e.g., multiply estimate of
monetary value ¥ % attribution ¥ % con¬dence).
2. Calculate annualized monetary bene¬t. Record the appropri-
ate annualizing multiplier provided by the respondent. For
example, if the respondent said that coaching reduced costs
by $5000 per month, then the interviewer would select 10.5
months to annualize the bene¬ts ($5000 ¥ 10.5 = $52,500).
Note that 10.5 is used rather than 12 months per year to
account for time away from work (e.g., holidays). Multiply
the estimated monetary bene¬t by the annualizing multi-
plier to produce the annualized bene¬t. These calculations
are based on what are called standard values. Standard values
may be estimated and/or supplied by the organization™s HR
department or ¬nance group. These values are posted on the
¬rst page of the interview guide:
Compensation rate = $75 USD (fully loaded)
Hours per week = 40 hours
Weeks per year = 46 weeks
Months per year = 10.5 months
Sales margins = 20%
Cost of money = 10%
It is important to apply these values consistently throughout
the analysis to avoid comparing apples and oranges. For
example, if the compensation rate is higher for the numerator
(bene¬ts) than the denominator (cost) of the ROI equation,
then the results of the ROI can be viewed as tainted or biased.
Note too that the compensation rate is fully loaded with salary,
bene¬ts, and other employment costs.
Question 4. The cost of the coaching initiative is then tallied
according to the listed categories. The cost for coaching all
clients is included in the cost total, whether or not these clients
produced any monetary bene¬ts or whether they responded to
the survey. In other words, if a total of 10 people were coached
and only three of the seven people who responded to the survey
216 Coaching That Counts

were able to document bene¬ts, then the bene¬ts of these three
people would have to cover the costs of the 10 people who were
coached.
Question 5. If you are calculating the bene¬ts of more than one
coaching client, the quali¬ed bene¬ts of all participants are
tallied. The values are entered into the ROI formula and
calculated.
Question 6. Qualitative data are captured in the form of written
comments by the participants. These comments add insights
into how participants perceive that coaching created value for
the business.


Evaluating Coaching at OptiCom

As the coaching initiative got underway at OptiCom, the initial and
informal feedback from the participants was very favorable. As the
initiative manager, however, Jacqui had been down this road before
with the pilot. The ¬rst blush of positive feedback from participants
fell short of sustaining the commitment of senior sponsors for the
coaching initiative. The evaluation plan, therefore, represented a
two-pronged approach to collect credible data that will tell the
whole story of how the coaching initiative created value for the orga-
nization. Jacqui soon learned that this approach to evaluation
represented more than just a measuring stick: it represented a struc-
tured approach to increase the value of coaching for the clients and
the organization.


Evaluating Reaction and Learning

The early returns were in: eight weeks after the coaching initiative
was launched, the report from the ¬rst questionnaire highlighted
strengths”and an immediate improvement opportunity. Figure
12.3 shows the reaction data from Questionnaire A. The report sum-
marized the data as follows:
Demonstrating the ROI of Coaching 217


Item %
Favorable
1. My coach and I set objectives for coaching. 77%
2. The expectations from the senior leaders for the coaching initiative are 54%
not clear.
3. My coach and I connected and established rapport. 89%
4. I was skeptical that coaching was going to work for me. 72%
5. I was satisfied that the first four sessions provided a strong foundation for 83%
our coaching conversations.
6. Conducting coaching over the telephone is very effective for me. 91%
7. The pacing of the coaching sessions is about right; not too fast or too slow. 86%
8. The personal assessment data were effectively explained to me. 89%

Figure 12.3 A Portion of a Report from Questionnaire A: Reaction Data at
OptiCom.


1. Only about half (54% favorable rating) of the coaching clients
felt that their leaders clearly shared their expectations for
coaching. Remember, this is a “reversal” question, so that 46%
of the respondents agreed with the negatively stated question.
2. Even after two months of coaching, only about three-quarters
(77%) of the clients set objectives for coaching, while about
one-quarter (28%) harbored skepticism that coaching is going
to work for them.
3. Overall, clients felt very positive about the rapport (89%),
pacing (86%), and delivery (91%) of the coaching.

Michael met with Jacqui to review the results and to prepare rec-
ommendations for the Leadership Advisory Board. They concluded
from the data that the senior leaders needed to immediately share
their expectations for coaching with their people who are being
coached. This communication was a critical element in the leader-
ship process, and Jacqui was dismayed that these communications
were not yet complete. Each coaching client was to base, in part, his
or her objectives on meeting these expectations, so it was not sur-
prising to learn that one-quarter of the clients (23%) had yet to set
these objectives. This also raised the question as to how these clients
218 Coaching That Counts


Items % Favorable Rank Order
10. I am understanding how to be more effective as a 66% 3
leader.
11. I am gaining insights into personal changes that I 54% 4
needed to make to be more collaborative with peers.
12. I am learning about the impact my actions have on 62% 5
others.
13. Coaching is opening up new ways for me to look at 77% 2
business situations.
14. I am understanding how to work more effectively 42% 7
with my peers to accomplish business objectives.
15. I am learning how to engage my work team more 48% 6
effectively to achieve goals.
16. Coaching is enabling me to explore new ways to 42% 7 tie
increase teamwork.
17. I have begun to improve my communication skills. 86% 1

Figure 12.4 A Portion of a Report from Questionnaire A: Learning Data at
OptiCom.



had grounded their coaching, given that they had not set objectives.
Moreover, for those who did set objectives, it wasn™t clear how closely
aligned these objectives were to senior leader expectations. Written
comments supported the notion that those clients who had neither
expectations nor objectives were becoming skeptical that coaching
was going to work for them. Jacqui and Michael agreed that this
issue had to be nipped in the bud. They recommended to the advi-
sory board that all senior leaders immediately set expectations for
their people, based on the guidelines that had been issued some two
months before. In this way the evaluation revealed how to increase
the effectiveness and value of coaching.
The next question Jacqui raised was what implications this issue
had for shaping the early learning experiences of the coaching
clients. Figure 12.4 shows the summary of the data for the learning
section of the questionnaire. Michael had summarized the data as
follows:

1. Overall, the coaching conversations had proven to be rich
learning experiences for the clients, with percent favorable
Demonstrating the ROI of Coaching 219

ratings ranging from 42 percent to 86 percent. Keep in mind
that not all coaching clients are expected to improve in every
item listed in Figure 12.4. So, to have so many items selected
at a higher percentage underscores the breadth of what was
being learned from coaching.
2. Immediate gains seem to come from learning how to com-
municate better (86%) and opening up new ways to look at
business situations (77%).
3. Two-thirds (66%) of the clients were learning how to be more
effective as leaders, but were these areas corresponding to what
was most important for the organization (e.g., collaboration
and teamwork)?
4. A rank order of the learning areas revealed that peer collabo-
ration (ranked fourth and seventh) and teamwork (ranked
sixth and seventh”tie) were not at the top of everyone™s hit
parade.

A more in-depth analysis showed that those clients who did not
have set coaching objectives were also those whose rankings of col-
laboration and teamwork tended to be lower. This con¬rmed
Jacqui™s suspicions: Leaders who did not share expectations for
coaching missed an opportunity to in¬‚uence the early course of
coaching. Jacqui had the ammunition she needed to ensure that the
advisory board held the leaders accountable to quickly share expec-
tations with their people who were being coached.

Evaluating Application and Impact

Several months had elapsed since Jacqui shared the results of the
reaction and learning evaluation with the advisory board. All in all,
the senior leadership was very supportive of the coaching initiative
and questions were being raised about whether to extend coaching
to other groups in the company. This begged the question about
what value had been generated so far. With the coaching initiative
having been completed for about two months, it was time to
conduct the second piece of the evaluation: application and impact.
220 Coaching That Counts

Thirty coaching clients from the entire group that was coached
were selected to participate in this next phase of the evaluation. The
evaluator, Michael, scheduled a time to meet with, or in some cases
talk with, the coaching clients. Twenty-six of the 30 were available
(87% response rate) for the interview. Throughout these 30-minute
conversations, Michael followed Interview Guide B (see Figure 12.2)
to capture intangible and monetary value. When all of the interviews
were complete, Michael grouped and organized the data. Let™s look
at how Michael conducted the interview for one respondent and
then see how all of the data were organized and evaluated.
Figure 12. 5 shows how an ROI interview was conducted with one
respondent. The individual ROI was calculated for illustrative pur-
poses. In the actual case study, the ROI was determined only for the
entire coaching initiative. That means that all of the data for all
respondents are grouped and used for the ROI calculations.
The respondent whose data are captured in Figure 12.5 was a
leader of a sales team. As suggested by the answers to Question 1,
before coaching, the business situation had become somewhat dicey.
The team was not meeting its goals and most salespeople were not
achieving their quotas. The leader complained that the salespeople
were not focused and motivated, while team members cited the
leader™s inability to articulate direction as the primary cause of the
poor performance. The coach helped the leader get past the emo-
tional baggage and provide the team with a more structured
approach to evaluate sales opportunities.
This approach produced immediate results in terms of increasing
the productivity of the sales team and increasing sales (according to
items checked in Question 2). Each of these sources of value was
explored in greater detail, as outlined in Question 3. So, for example,
following the logic of letter code B, or team productivity, the respon-
dent estimated that at least one hour per week was saved by each of
10 salespeople and that this productivity gain directly resulted from
coaching. Given a compensation rate of $75 per hour, this translated
to $750 per week. This amount was not taken at face value; rather,
this value of $750 was discounted by two factors: (1) estimating the
Demonstrating the ROI of Coaching 221

percentage of this amount that resulted from coaching and (2) the
percent con¬dence of the estimate. These two factors”attribution
and con¬dence”represent the way the monetary bene¬ts are iso-
lated. Speci¬cally, the respondent said that he attributed 60 percent
of the $750 to his coaching and that he was 50 percent con¬dent in
this estimate. Multiplying $750 ¥ 60% ¥ 50% = $225.
ROI calculations always deal with annualized bene¬ts. Therefore,
the weekly amount of $225 must be annualized. This is done by

Capturing the ROI of Coaching Worksheet
Instructions: This worksheet is designed to serve as an interview guide for evaluators to
assist coaching clients in evaluating the monetary impact of coaching they have received.
The ROI may be calculated for each client. Data from all clients are combined to
determine the ROI for the entire coaching initiative.

1. Describe the performance improvements you have realized as a result of coaching.
I have really been able to focus my sales team on the right sales opportunities.
Before, many salespeople were struggling with opportunities that, while potentially
very big, seemed like a lot of work and went nowhere. I provided the team with an
approach to decision making that focused us on the right opportunities and got big
results.

2. Identify the potential sources of impact of these improvements. (Please check all that
apply.):
a. Increasing your personal productivity ___________
b. Increasing the productivity of your work group X
c. Increasing sales X
d. Reducing cost ___________
e. Increasing product quality ___________
f. Reducing cycle time ___________

3. For each item checked above, please complete one of the bene¬ts calculations on the
following page. Use one letter code for each response. Identify currency used in the
analysis: US Dollars
Determine/use the standard values of the client organization. If these are not known
or available, use the following values in calculating the monetary bene¬ts. If the
bene¬ts are not in $US, then convert the values to the appropriate currency. All
bene¬ts must be recorded in annualized numbers (i.e., a bene¬t that is recorded in
monthly terms will be multiplied by 10.5 months to get to the annualized number).
Compensation rate $75 USD
=
Hours per week 40 hours
=
Weeks per year 46 weeks
=
Months per year 10.5 months
=
Sales margins 20%
=
Cost of money 10%
=

Figure 12.5 Example of Interview Guide B Completion for a Coaching Client at
OptiCom.
222 Coaching That Counts

Bene¬t Calculations: Please describe the bene¬t in the left margin.
Letter Estimate Monetary Estimate % of State Con¬dence
Code Value of Improvement in This Estimate (on a
Performance Due to Percentage Basis:
Improvement Coaching 0% = No Con¬dence;
100% = High Con¬dence)

1 hour/per 10 salespeople saved every week 60% due to coaching; 50% confident

B $ 750_________ ¥ 60___ % 50___ % = $ _225______
¥
Based Daily Est. Monetary
On: Weekly Bene¬t
Circle Monthly ¥( 46 weeks ) = $10,350
One Quarterly Annualizing multiplier Annualized bene¬t
Yearly
Letter Estimate Monetary Estimate % of State Con¬dence
Code Value of Improvement in This Estimate (on a
Performance Due to Percentage Basis:
Improvement Coaching 0% = No Con¬dence;
100% = High Con¬dence)

Sales increase of $50,000/month ¥ 20% margins = $10,000

C $ 10,000______ ¥ 60___ % 50___ % = $ _3000______
¥
Based Daily Est. Monetary
On: Weekly Bene¬t
Circle Monthly ¥( 10.5 months ) = $31,500
One Quarterly Annualizing multiplier Annualized bene¬t
Yearly

4. Determine the cost of the coaching.
$12,000 Professional fees
1,500 Cost of client™s time to participate in coaching (hours ¥ $75 or standard value)
800 Materials and assessment
2,000 Travel expenses
200 Telecommunications
2,300 Administration costs (includes cost of evaluation)
$18,800 TOTAL
=

5. Calculate the ROI.
Tally the annualized bene¬ts (A through F) = $ 41,850
Enter the values into the formula:
ROI = ((Bene¬ts - Cost) / Cost) ¥ 100
ROI = (($41,850 - $18,800) / $18,800) ¥ 100 = 123%

6. Identify the intangible bene¬ts.
a. Improved teamwork and collaboration
b. Enhanced leadership skills of the sales manager
c. Improved productivity of the sales support staff
d. Increased customer satisfaction
e. Increased employee satisfaction


Figure 12.5 Continued
Demonstrating the ROI of Coaching 223

multiplying $225 ¥ 46 = $10,350. Therefore, the total isolated bene¬t
of team productivity for this respondent was $10,350.
Let™s turn now to the second source of bene¬ts: sales increase. Sales
increased by $50,000 per month over a seven-month period (¬ve
months of coaching and two months that had elapsed before the eval-
uation). ROI calculations do not include total sales, but rather sales
net of the cost to produce sales; in other words, margins. The margin
for OptiCom solutions was 20 percent. Therefore, the $50,000 was
multiplied by 20 percent to produce $10,000 in monthly bene¬ts.
Discounting this amount by the same attribution and con¬dence
factors produced a monthly isolated bene¬t of $3,000. Annualizing
this amount was done by multiplying $3,000 ¥ 10.5 months =
$31,500. Determining the total isolated bene¬ts of the coaching for
this respondent was done by adding $10,350 + $31,500 = $41,850.
Let™s now turn to item 4 in the interview guide and determine the
cost of the coaching. The fully loaded cost of coaching includes
professional fees, opportunity costs (or the cost of the client™s time
to participate), materials, travel, telecommunications, administra-
tion, and the cost of the evaluation. All of these costs combined for
this respondent were $18,800.
Item 5 shows how the ROI was calculated, given the bene¬ts and
costs:

ROI = ((Bene¬ts - Cost) ∏ Cost) ¥ 100
ROI = (($41,850 - $18,800) ∏ $18,800) ¥ 100 = 123%

Item 6 summarized the intangible bene¬ts noted by the respon-
dent. These included improved teamwork and collaboration,
enhanced leadership skills of the sales manager, improved produc-
tivity of the sales support staff, increased customer satisfaction, and
increased employee satisfaction. Some of these bene¬ts could, in
fact, be explored further to see if these bene¬ts could be converted
to monetary value. Improved productivity of the sales support staff,
for example, would seem to readily convert to monetary value. It™s
really a judgment call whether to do this. If the tally of monetary
224 Coaching That Counts

bene¬ts is great enough to demonstrate the value of coaching, then
there is little need to take the extra step to convert these additional
bene¬ts.

Determining the ROI for the Coaching Initiative

The monetary bene¬ts were tallied for all 26 respondents. Table 12.2
presents the total bene¬ts for the coaching organized by each of the
six sources of value. The total of all bene¬ts was $802,000. There
were two primary sources of these bene¬ts: 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 bene¬ts 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 bene¬ts 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
bene¬ts for reduced cycle time. Upon further examination, it was
revealed that these leaders had made signi¬cant strides in reducing


Table 12.2 Sources of Value and Total Bene¬ts for
the Coaching Initiative at OptiCom

Source of Value Monetary Bene¬ts
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
Demonstrating the ROI of Coaching 225

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 bene¬ts 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

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