Is Coaching Worth It — Literally WORTH IT?

What is the return on investment (ROI) of coaching? This is an important question for managers who consider opening their doors to the ever-increasing breed of coaches.

 

To quote Goethe’s Faust, “Two souls, alas, are housed within my breast […]” — because I am writing this as an MBA and business analyst but also as a coach. The coach in me will of course say the value of coaching is priceless and I will come armed with stats and graphs to prove it. For example, one study says the ROI for coaching is 529%, meaning for every $1,000 invested in coaching you get over $5,000 in return. The International Coaching Federation (ICF) reports an even better ROI of some 600%. 

 

Too Good to Be True?

So, the coach in me is happy and can feel smug. But then I get this funny feeling I always get when I look at spreadsheets with 10,000 rows, calculate an average and subsequently launch into my highly sophisticated process of analyzing the numbers, i.e. sorting, eye-balling, guessing and basically applying my very own bullshit radar. Here is why I find the 600% ROI claims worth investigating further (to put it kindly). In the world of stock markets, an ROI of 10% is considered good and it can range up to just under 30% for technology as of 2023. On the other end of the spectrum, the average ROI for a fast-food restaurant was 5% in 2022.

 

Whatever Google search terms I apply — and I am eager to learn where I got it wrong purely for personal financial gain — I don’t find any sector, industry, stock index, etc. with an ROI much above 30%. That means I cannot see myself taking that 600% ROI seriously for the simple reason that a CFO/CEO worth his or her metal will simply laugh me out of his or her office. Then there is the other thing: the 529% ROI is from a 2001 study. The 600% ROI quoted in the ICF study is more recent but from 2009. Either one is still being used, no wonder, by coaching companies. Such eye watering results are hard to kill. Dig a little deeper and you will find problems.

 

The Math Is Correct But the Methodology?

The formular to calculate the ROI of coaching is easy enough: Coaching ROI = (Benefit attained by coaching) / (Cost of coaching) x 100. That bit about “benefit” is the tricky part providing ample opportunity to misunderstand numbers and let’s be frank to fudge numbers. I am not a statistician but smarter people than me have mentioned the words sample bias, lack of control samples, independence of assessors, etc. when reviewing these studies.

 

Personally, I find it easier to check for additional factors. The study published in 2001 was the result of research that took presumably place in 2000 and earlier. Ditto for the ICF study published in 2009. If the data collection and analysis took about a year, the data were probably based on outcomes which occurred before 2000 and 2007, respectively. What did the economy do just before and after these studies were published? Between 1995 and 2000 it grew, a lot. Same for the years 2003 to 2008. The S&P500 more than doubled between 1995 and 2000. It grew much slower at around the time the ICF study was conducted but it grew.

 

Why all this history? Because the ROI formular takes the benefits of coaching including for example increased productivity comparing them against the investment costs of coaching. However, coaching is only one line item under investment costs. I am having a hard time believing coaching alone resulted in productivity improvements for example. 

 

Refocusing on What Organizations Call their Biggest Asset

Writing as a coach now, I argue improved efficiency and/or productivity numbers are a byproduct. The main product is the preceding transformation of people if coaching is done well. That’s the fuzzy bit in the formular to calculate the ROI of coaching, the real “benefits attained by coaching”. But most organizations should not have a problem with that because they say people are their most important asset anyway, right?

 

Let me try and change the perspective a little when I reiterate my earlier statement the value of coaching is priceless — under the right circumstances. As executive manager, you play a crucial part in ensuring coaching takes place under the best possible circumstances. You can argue with better byproducts, but your focus needs to be the people in your organization which is a significant part of your job description anyway — people. How then to create the right circumstances? Let’s take the challenges organizations face regarding diversity, equality, and inclusion (DE&I), the latest variables that have been identified as high impact factors for efficiency and productivity gains. There is one easy way to create the right environment — the top brass needs to seriously want the transformation and must be willing to be coached to transform themselves first. 

 

Bottlenecks Are at the Top

I would not be surprised if 90% of executive management teams would agree DE&I is important and a transformation is needed. Based on “what I hear in the market” a big chunk of these executives really mean everyone else but them needs to undergo a transformation. This is not unusual. The running joke among coaches is that when our clients say they want to change, what many of them really mean is they want everyone else to change. Change is hard because it brings uncertainty and we don’t like uncertainty. 

 

What about the coaching “targets”, the employees? A large share will have one question in mind, namely “what does this transformation mean for me”. They won’t speak the language of efficiency gains, increased productivity nor will many of them speak “DE&I” and their organizational benefits unless inclusion, equality and diversity relate to their own day-to-day work. Your female workforce may develop hopes for promotions for management positions while the post-modern whipping boy (i.e. white middle-aged male) will fear losing out because to make it look good, the next VP of Marketing better be a non-white woman.

 

To help your organization handle the uncertainty let them see the executive team walk the talk. If you don’t believe in the necessity of your own transformation as a manager — and your organization lets you get away with it — it might be better for everyone to forget about transformation. Here is why. Transformations are expensive and above all exhausting. The assumption coaching can serve as a band aid to get your people over the hump while you or your managers carry on as the always have will only cause frustration and headaches. 

 

People Power

The truth is successful transformations also mean change for the executive management. Examples for that are Google’s restructuring into Alphabet, Microsoft’s re-focus on a common purpose after Satya Nadella took over from Steve Ballmer, Amazon’s continued outward focus on the customer rather than a navel gazing profit focus, and Toyota’s efficiency drive that gave the world just in time delivery. What do all these companies have in common? They focus on people, the customer and/or or their employees and to really want change. For example, the focus on employees resulted in authorizing Toyota’s front-line workers (the ones who tighten the screws during assembly) to suggest local improvements and brought us just in time production. Google examined what teams work best based on the thousands of teams working for the company and published the results: the top factor? Psychological safety. And for all the hate Mr. Bezos received for getting even richer during the pandemic, all he did was pay attention to what we needed and wanted and then provided it.

 

Some organizations make it look like they focus on people but in praxis do what they can to avoid change. For instance, they reward high potential talent with executive management courses which can easily set the education budget back $45,000 per talent. The problem often is these high potentials come back with a lot of enthusiasm and a lot of ideas on how to change things. However, the organization is not ready for change. Doing that with one high potential may not cause any issues. If this turns out to be a pattern, you end up with an entire group of high potentials who take notes, get disgruntled — and may easily opt to leave. Some providers of executive training courses have taken notice and collect statistics on how many members of an average training cohort change jobs within four to six months after returning to their respective organizations. That’s $45,000 down the drain for the organization and that’s just for starters. 

 

Realizing that your organization requires change is one thing. Not getting lost in smokescreen activism because you subconsciously try to avoid change is the challenge. Therefore it is a good idea to seek coaching for the executive team first so that a real willingness to change can trickle down the organization. It starts at the top. Getting back to the concept of ROI of coaching perhaps it helps change perspectives. What if the primary objective of coaching is not more efficiency, productivity, etc.? What if it is to help people transform themselves first and with them the organization resulting in efficiency and productivity gains? That kind of ROI is easier to calculate anyway.

This blog post was original published in German on September 19, 2023 on crimalin.com.

 

 

Empathy in the Business World Is Overrated

People demand empathy from their managers. An entire industry has sprung up promising to transform managers into empathetic leaders. What made me curious about the role of empathy in human behavior started with a little experiment I conducted a while ago. I consulted an authority on the topic — in this case religion — and ran a search for the word “empathy” in the bible. My hypothesis was, somewhere in the bible’s 66 chapters, the authors would capture something on “empathy”. Lo and behold, the book has very little to say about it. The NIV translation has one mention of the word in Hebrews 4: “For we do not have a high priest who is unable to empathize with our weaknesses, but we have one who has been tempted in every way, just as we are—yet he did not sin.” 

Empathy Can only Get You So Far

The reason why I think empathy in leadership is overrated is my theory that it is often based on expectations that have nothing to do with what empathy means. I would not be surprised if a big chunk of employee respondents who say “empathy” is a crucial trait in a manager are actually looking for something else. For example, some really want a cuddle group. That is not what your team is about. The same goes for psychological safety, the holy grail of high performing teams. This safety refers to a safe space for you to get challenged and even uncomfortable. That is the opposite of a cuddle group which will not help anyone in their professional growth. 

In short, real empathy is not about having a friendly and ever affirming manager. It is simply the ability to understand and share the feelings of another. Empathy is a valuable trait but I find it stops short of what you need if you are growth oriented. The first step is to understand and accept you yourself have the biggest role to play in your growth. I define growth in a broad sense and do not limit it to a career advancement plan. Growth encompasses personal development, too. Second, your desire to grow requires you to self-reflect. The Greek philosopher Thales of Miletus once said: “The most difficult thing in life is to get to know yourself.” This is not something you can delegate if you are serious about your personal development. But you can ask for help.

Asking for Help Is Your Job

Help is the operating word here. If you need help, I have a challenge for you: what type of leader or manager do you need if you are serious about professional and personal growth? Do you want a leader who is empathetic, i.e. who is aware of your feelings? Or do you want a leader who has a desire to take action and help? These are two different things because empathy is just the ability to understand and share the feelings of another.

Perhaps even more challenging, who is going to help you advance more, a friendly manager who is aware of your feelings and that’s it — or a manager who has his/her outbursts but understands where you want to go and helps you despite letting off steam? One way to figure out how to respond to that question is to ask yourself which leader will broaden your horizon. If your manager is focused on practical help AND empathic, all the better. But I invite you to consider what is more important for your growth, the feel good factor or practical help in broadening your horizon.

People with Scars Find Each Other

I wish I had come up with this profound statement but I overheard it at a dinner party years ago. It has stuck with me for several reasons. First, I get to see the truth in that every time I encounter people with scars. Second, it has shaped my opinion about empathy, especially empathy in the business world.

With “scars”, I mean significant negative events which cut your life into a before and after. These scars are the result of acute suffering. The wounds may have healed but the impact is so severe, that subsequent events will be evaluated differently than before. 

Here are some examples: I have friends who lost one of their sons to suicide. No family gathering will ever be the same for them as the ones before. Other friends have lost their businesses not of their own fault but due to criminal actions of competitors. They felt the loss of reputation so severely that they had suicidal thoughts. They, too, need to make a conscious decision about how they view competitors. Surviving a potentially terminal illness will make you view every medical checkup from a very different point of view afterwards. Of course, this is highly subjective but I hope you get the idea. 

From Scars to Compassion

War experiences are another thing. To illustrate, I was born 25 years after WWII ended. Among my elders were many veterans. My own father had been bombed out and shot at from all directions when he and his brother crossed a war-torn Germany. As teens, alone and on their own. When he entered the labor force, “empathy” was not a thing, certainly not something you talked about in the context of your career. But he said one thing I haven’t forgotten. The best bosses he ever had were the ones who had been serving in WWII. They were often focused on getting things done rather than politics. They were direct and sometimes tough but they were able to move on. They were “humane”.

That statement always made me curious especially as my father was not an admirer of military attitude and his parents had made it a point not to join the Nazi party. I would have expected the opposite and I am sure there were plenty of examples of embittered soldiers who returned and never learned how to deal with their experiences. 

However, those who were great managers may have taken important lessons from the horrors they had seen. 

• When you have faced death, what’s the big deal about a missed deadline or more minor mistakes? 
• Extreme situations can bring out the best in some people and that can bring out the best in others. 
• In suffering they have received compassion — help — and decided to give back. 
• With suffering comes authority that projects up and down the corporate ladder. 
• As stated before, people with scars find each other. There is an understanding about the impact of suffering that does not require words and shows primarily in action.

People with scars were forced into a gray area where the challenges were often so deep that black and white are not always helpful categories when we try to make sense of things. I wonder whether religious texts such as the bible have so little to say about empathy because the impact of compassion is much greater because it is action oriented. So, what is compassion? It is a sympathetic pity and concern for the sufferings or misfortunes of others that is action oriented and comes with a desire to help.

From Compassion to Growth

Black and white are really comfort zones and, as British journalist Anita Anand once said, “we elbow our way into the gray zones” because it is often a forced entry for us. To do that, we leave the black/white of certainty and that is uncomfortable. Meeting compassion in that area is most helpful to be able to stay, explore and make sense. Compassionate people want to help you do that. A compassionate manager is willing to enter this space with you so that you can learn from your mistakes.

Some scars are visible because life can be tough. They may come across as a little edgy or rugged. In many cases, this is because they have no time for pretense. They may be direct, even blunt. They may not be your idea of empathetic. If you start digging deeper, they may have learned compassion with themselves and others more so than the empathetic leader down the hallway. And when you are young and have already developed your own scars, you will find each other.

So, what do you do as an employee who wants to learn and grow?

• Take action yourself. You cannot delegate personal growth to others. 
• Develop a curiosity about yourself: what is it you really want?
• Identify people with scars in your life.  
• Ask for concrete help.
• Test whether the person actually does provide help; if not, move on. Mere empathy from others won’t get you places if all you get is just someone who can relate. 

The last word goes to one of two friends of mine who was financially ruined by the criminal activities of a competitor. “I have not become bitter. If anything it has made me more compassionate.” And then he proceeded with the offer to connect me with someone who could be helpful for the next business venture.

The original article was first published in German on crimalin.com on May 31, 2024.