Business coaching is typically aimed at increasing the bottom line of a company by increasing revenues and/or reducing costs. Coaching can do both, if done right:
Cutting edge companies know and understand the value of their people and invest in their performance, well-being, and professional development. They understand that a happy workforce is a more productive one. Coaching is one of the best tools available to companies to bring about change and transformation in their people.
According to the ICF Global Coaching Client Study, published in 2019, clients who received business coaching reported several business improvements, including better teamwork, more clarity of goals, and better communication.
In their own words, here is a sample of some of the benefits they experienced within their company:
- Better corporate culture
- More courageous conversations, more intentionality, more strategic approach
- Enabled an environment of internal coaching and encouraged staff at all levels to see the value in own external personal/leadership coaching
- People listen to each other, support each other and enjoy coming to work more. Performance has improved
- My department has achieved a much better team spirit
- Better communication, shared understanding of the vision, very high mutual trust
- Better interpersonal discussion between management and staff
According to the same ICF Global Coaching Client Study:
“Several focus group participants indicated that, prior to experiencing it themselves, they had negative perceptions of coaching and the people who use it. In many cases, it was perceived to only be for people with problems or those who can’t ‘do it on their own’ rather than a tool that can help people excel and teach them new skills. Importantly, while participants in the focus groups did hold some negative views on coaching prior to commencing coaching themselves, these negative views were dispelled once the coaching process started and all ended up viewing the process positively.”
Of the 2,130 clients surveyed by the ICF, over 70% reported significant improvements in the following five areas:
- Self-esteem/self-confidence (80%)
- Relationships (73%)
- Communication skills (72%)
- Interpersonal skills (71%)
- Work performance (70%)
Other areas of improvement cited include:
- Work/life balance
- Career opportunities
- Personal organization
- Business management
- Time management
Business coaching is for companies or organizations that want to invest in the growth and development of their people. They see business coaching as a strategic initiative to improve the corporate culture and be more successful. To steal the phrase of the popular business writer Jim Collins, business coaching is about going from Good to Great!
That said, business coaching is often sought to remedy a specific pain within the organization such as high worker turnover, decreased morale, employee burnout, poor communication, or decreased sales. All of these issues can be addressed with a well designed coaching program.
Depending on the needs and goals of the company, business coaching programs can be created to directly impact top-level executives, middle managers, and even front-line staff.
Measuring the return on investment (ROI) of business coaching is a hotly debated issue. Traditionally, it has been difficult to demonstrate an increased value of a company’s human capital. The knowledge and value of coaching is growing and clients are increasingly demanding that rigorous methods be employed by coaches to measure the impact of coaching. Clients want clear statistical evidence of the bottom-line value of coaching and they want coaches to better justify the methodologies they employ.
The challenge is that the cost/benefit analysis of coaching is not easily made because the outcomes produced by coaching may not be easily measured or directly attributable to coaching.
THE FORMULA FOR MEASURING ROI OF BUSINESS COACHING
ROI % = ($ Gain from Coaching – $ Cost of Coaching) / Cost of Coaching x 100 = %
Example: $100,000 increase in Revenue- $15,000 annual = $85,000 / $15,000 = 5.666 X 100 = 566% ROI
This of course does not take into account diminished stress to owners & employees, operational efficiency of time, boosted moral and lowered operating expenses and a better corporate culture all the way around.
For example, a coaching initiative may improve team communication which then stimulates more innovation. How is that innovation measured? Would the company’s best ideas have been generated without the coaching? Furthermore, coaching initiatives are not usually implemented in isolation. If the company grows revenues by 25% during the time that coaching initiatives were employed, what other initiatives were taken during that time?
To improve the accuracy of ROI calculations, first identify what the purpose of the coaching is and what key metrics will be used to measure the benefits. Depending on the type of business you operate and the type of coaching being deployed, you may want to measure any one of the following metrics:
- Profit increases such as higher throughput, increased sales, sales by department, cross-division sales, etc.
- Cost savings such as decreased inventory, lower cost per lead, less management, etc.
- Aggregate employee metrics such as worker turnover, worker satisfaction, injuries and more
- Andividual employee metrics such as behavior-based measures
Once you’ve determined the metrics you want the coaching to affect, collect baseline data against which you can measure the benefits of the coaching. If you are in the process of hiring a business coach for your company, be sure to cover the topic of measuring ROI in detail.
The difference between small business coaching and business coaching for large companies is in scale and complexity. Regardless of size, all companies have a financial motive for using coaching. The major difference, having spoken to both small business coaches and their clients, is that many small business owners will also rely on their business coaches for expert business knowledge in addition to the coaching.
Small business owners don’t always have the luxury of big budgets and employees with specialized skill sets. Therefore, if a small business coach can also offer expert knowledge, they can get more benefit from a single relationship. For example, a small business owner may hire a coach who is an expert in social media marketing, writing business plans, project management, human resources, or any number of other areas.
The most important thing to remember when looking for a business coach is to find one whose training, background and skills most closely match your specific goals. There are many coaches with many different specializations, and your ultimate success will largely depend on finding the coach with the best “fit” for your particular situation.
Because finding the right fit is so important, it’s critical that you not just hire the first coach you talk to. While many coaches offer a free, 15 or 20 minute consultation, at Max Business Profits, we take this step very seriously. Max Business Profits provides a Complimentary Coaching Session (CCS) that can often last up to 2 hours, in which we assess your business needs and design a comprehensive plan for moving forward together!
Any business owner looking to sell their business now or in the next 2-5 years must get a Comprehensive Business Valuation to understand where they are on their journey to a most profitable Exit. Before one decides where they need to end up (or what price they want to sell at!), one must understand where they are NOW. This benchmark allows us to help you get to your financial destination. Contact us below to find out more.