A Quantitative Approach

A quantitative approach, explained by Mary Beth O’Neil in her book Coaching with Backbone and Heart, takes a host of variables into consideration; from the client’s perspective.  The client makes the determination regarding the percentage contribution of coaching to bottom line result.  As a client might phrase it, “We would have gone 60% of the way by ourselves, some expert consultants helped 20% and you, the coach, delivered 20%.  But without that 20% we would have failed, we wouldn’t have achieved the goal.  Without the coaching, we would have failed.”  So a benefit-cost ratio formula would look like this:

Business Results    X    20% Impact of Executive Coaching    
Cost of Coaching   =    Benefit-Cost Ratio

To be relevant and have credibility, clients need to decide which business result to insert in this formula and, determine the % impact of executive coaching given other variables.  This formula can be used as a tool prior to a coaching engagement to decide whether or not coaching is worth the investment for the client.

$1,000,000    X    25%
$40,000         =     6 : 1

This client realized a $1M increase in net profit and believed the coach contributed 25%.  The benefit-cost ratio was 6 to 1 or the client received 6 times the financial benefit of what they paid out for the coaching effort.

While each approach to measurement is unique to each client the most important task is to establish consensus and clarity upfront regarding metrics to enable an ROI report at the conclusion of an engagement.