Studies Support ROI in Corporate Education:
Play of the Day: Fostering employee loyalty in a tight labor market, companies are offering workers personal coaches as a tool to help them thrive.
The article focuses on what FORTUNE 500 companies are doing to retain top talent. Companies mentioned in the article include: IBM, Kodak, Dow Chemical, Marriott International, and Glaxo Wellcome. Abbott Laboratories is cited with having an in-house coaching program. Davis A. Thomas Fitzhugh, professor of business administration at Harvard Business School says, “Some data show the quality of the relationship between boss and subordinate is a major predictor of intentions to remain. Coaching - which can help managers talk with subordinates about their developmental needs - absolutely affects the relationship positively. And there’s a big payoff.”
Executive Coaching ROI
Manchester Inc.’s recent study (Business Wire), included 100 executives; half holding positions of Vice President or higher, almost half between the ages of 40 – 49 and one-third earning $200,000 or more per year. The services included both change-oriented coaching and growth-oriented coaching.
The results of their 6 – 12 month study are as follows:
- an average return on investment of 5.7 times the initial investment in a typical executive coaching assignment or a return of more than $100,000, according to executives who estimated the monetary value of the results achieved through coaching.
- Productivity (53% of executives reported improvements)
- Quality (48%)
- Organizational strength (48%)
- Customer service (39%)
Reducing customer complaints (34%)
- Retaining executives who received coaching (32%)
- Cost reductions (23%)
- Bottom-line profitability (22%)
- Working relationships with direct reports (reported by 77% of executives)
- Working relationships with immediate supervisors (71%)
- Teamwork (67%)
- Working relationships with peers (63%)
- Job satisfaction (61%)
- Conflict reduction (52%)
- Organizational commitment (44%)
- Working relationships with clients (37%)
Training Alone vs. Additional Coaching as a Reinforcer
An action research study examined the effects of executive coaching in a public municipal agency. A conventional training program followed by one-on-one executive coaching had 31 participants. Training increased productivity by 22.4%, whereas additional ongoing coaching produced a productivity gain of 88%.
Olivero, G., Bane, K.D., Kopelman, R.E. Executive coaching as a transfer of training tool: Effects on productivity in a public agency. Public Personnel Management.
This study shows impressive results when comparing the effects of conventional managerial training alone vs. the same training followed by one-on-one executive coaching. The results clearly indicate a significant improvement in all areas of management skills and responsibilities when additional coaching was added.
The study examined the effects of executive coaching in a public sector municipal agency. Thirty-one managers underwent a conventional managerial training program, which was followed by 8 weeks of one on one executive coaching. Training increased productivity by 22.4%. The coaching - which included goal setting, collaborative problem solving, practice, feedback, supervisory involvement, evaluation of end results, and a public presentation - increased productivity by 88%, a significantly greater gain compared to training alone.
Executive coaching as a transfer of training tool:
Effects on productivity in a public agency.
Numerous factors have been identified that influence the extent to which knowledge acquired during classroom training transfers to the job (e.g., the work environment; the personality of the trainee).(1) There is considerable evidence that a critical factor influencing transfer of training is the extent to which the trainee receives the opportunity for practice and constructive feedback.(2) One-on-one executive coaching can provide this opportunity. Coaching trainees once they return to the job can facilitate the transfer of training, especially if the coaching fosters the development and use of knowledge imparted during training. Through coaching, trainees have a safe, personalized environment in which practice and feedback can take place.
In recent years, there has been particularly rapid growth in the use of one-on-one executive coaching.(3) Among the organizations adopting this practice are: American Express, the American Management Association, AT&T, Citibank, Colgate, Levi Strauss, Northern Telecom, NYNEX Corporation, and Procter & Gamble.(4) Yet, the use and efficacy of one-on-one executive coaching has not, to date, been reported in a public sector municipal agency. To our knowledge, the present action research is the first such intervention.
Various methods of executive coaching have been employed; some programs, grounded in a psychodynamic perspective, aim to ameliorate personal problems; others are more directive, using, for example, goal-setting, feedback, and collaborative problem-solving.(5) The present intervention entailed the latter approach, emphasizing: (1) goal-setting, (2) collaborative problem solving, (3) practice (4) feedback, (5) supervisory involvement, (6) evaluation of end-results, and (7) public presentation.
Executive Coaching ROI
Michigan-based Triad Performance Technologies, Inc. studied the effects of a coaching intervention on a group of regional and district sales managers within a large telecom organization. The study cited a 10:1 return on investment in less than one year.
Training Seen as the Key to Retaining Top Talent in the Workplace The most recent International Workplace Survey by specialist financial recruitment company Robert Half International reports that firms are more often using training and development as a means to motivate and keep leading talent. The survey was performed among more than 2,300 human resource and finance managers throughout 12 nations and offers an insight into global workplace patterns. Internationally, 73 percent of human resource and finance managers think training is the top way to increase workplace retention, followed by career development initiatives (37 percent), and monetary compensation (31 percent).
(Robert Half International)
Invest in Your People for Lower Employee Turnover
Laurie Bassi measured how well employees are trained and developed. She writes that organizations that make large investments in people typically have lower employee turnover, which is associated with higher customer satisfaction, which in turn is a driver of profitability (p22). A second driver is manager proficiency — good managers determine if people stay or go, and this is also influenced by training and development. She further writes that the education and training variable is the most significant predictor of an organization's success as compared to price-to-earning ratios, price-to-book statistics, and measures of risk and volatility.
(Delahoussaye, et al.)
Companies that fail to invest in employees jeopardize their own success and even survival…investments in human capital management (HCM) - things like leadership development, job design, and knowledge sharing.
(Bassi & McMurrer)
Hidden Brain Drain Task Force of the Center for Work-Life Policy relied on focus group feedback, two surveys and dozens of interviews to estimate that about 20 percent of high earners in the United States (defined as those in the top 6 percent of income levels) meet the definition of an extreme worker. That means 20 percent of those who make it to the top are working harder than any human can sustain for very long. "It's the American dream on steroids," says Sylvia Ann Hewlett, who heads the task force, turning another phrase. Hewlett points out that these extreme workers love their jobs. "They love the thrill, the meaning, the challenge, the oversized compensation packages and the brilliant colleagues." Sixty-nine percent say their extreme jobs undermine their health, 46 percent say work gets in the way of a good relationship with their spouse, and 58 percent say it gets in the way of strong relationships with their children.
Experts at the United States Centers for Disease Control and Prevention, as well as the National Institute for Occupational Safety and Health, have found that each year in the United States $300 billion (or $7,500 per employee) is spent on stress-related compensation claims, reduced productivity, absenteeism, health insurance costs, direct medical expenses and employee turnover.
Research shows that 60-80% of all difficulties in organizations stem from strained relationships between employees, not from deficits in individual employee’s skill or motivation.
Daniel Dana, Managing Differences: How to Build Better Relationships at Work and Home (2005, 4th ed.); Barbara J. Kreisman, Insights into Employee Motivation, Commitment and Retention
One-fourth of employees view their jobs as the number one stressor in their lives. (Northwestern National Life)
The typical manager spends 25-40% of his or her time dealing with workplace conflicts. That’s one to two days of every work week.
(Washington Business Journal)
Ernst & Young reports that the cost of losing and replacing an employee may be as high as 150% of the departing employee’s annual salary.
Wellbeing in the Workplace
On December 30, 2011, Gallup provided a retrospective of the top findings for 2011: Gallup reports that actively disengaged workers have lower wellbeing than those who are unemployed.