Recently, an individual with an executive coaching firm contacted us and asked to visit for a day to learn how to measure the ROI for coaching. We showed him how to evaluate a coaching project at the impact and ROI level. The coaching engagement should begin with the end in mind, the end is one or more business measures that could be improved. After spending a day learning how the methodology works and what is involved, he concluded the ROI Methodology is an appropriate, effective process.
“This is a great way to show the business value, and even the financial ROI,” he said. “However, for my particular case, I don’t think I’m interested.”
Somewhat surprised we asked, “What’s the issue?”
“Well, I have a million-dollar contract to deliver coaching to a Fortune 500 company. I keep hearing comments about ROI and just thought that I should explore this concept. But I’m afraid that if I calculated ROI, it could be negative, and I might lose my contract.”
We asked, “Is your coaching designed to add business value?”
“Well, probably not, but the client thinks that it does.”
“Have you told the client this coaching would drive business value?” We asked.
“Not specifically, but I’m sure they are expecting it because it costs so much.”
“Why do you think it’s not connected to the business?” We inquired.
“We just haven’t required that upfront connection to business measure with the coaching process, and if we haven’t done that, it’s probably not going to deliver business value in the follow-up.”
“So, I think an ROI study would raise more issues than it would resolve.”
“So what happens if the client asks for business impact or ROI when it’s completed?” We asked.
“Well, I will have to deal with that issue at that time. If the result is disappointing and negative and the project is complete, then I’ve just lost one client.”
We warned, “But, the reputation of a negative ROI could follow you.”
“Maybe or maybe not. I’ll take the chance.” He replied with some frustration.
This scenario underscores the greatest barrier to connect learning to impact and ROI — a fear that results will not be positive. In this scenario, there is an intermediate client and the ultimate client. The intermediate client contracted with the external firm, and the ultimate client provides the budget. The perception is if the ROI is negative, it will reflect on the entire team’s performance: the intermediate client who bought the program, the program designers, the coaches or the individuals being coached.
Essentially, a negative ROI may cause the ultimate client to discontinue the project. But we say, not so fast. If you can approach this issue on your own, before being asked, you have a chance to determine if it works and make adjustments to make it successful.
In reality, if the coaching program — or any other learning and development program for that matter — does not work, more than likely it is because something went wrong in the client organization. It is not usually the content, but something else.
A comprehensive evaluation system uncovers why the results are not there, so adjustments can be made to deliver value in the future. When you approach a client with this request, “I think this project should be delivering business value. We don’t know that for sure, but we think it does. Why don’t we check to see, and if it’s not working, we will make adjustments.” That’s a much better position. If it is negative, you can point out that with some adjustments it can be made positive. Then make those adjustments and check it again. In that situation, you are being proactive, and you are driving program accountability. That’s a much better place to be.
Unfortunately, many people wait for the request and hope for the best. When it comes to delivering program results, hope is not a strategy, luck is not a factor, and doing nothing is not an option. You need to be proactive. Step up, and show the value of your major programs. That’s the best way to become a good business partner.
Jack J. Phillips is the chairman, and Patti P. Phillips is president and CEO of the ROI Institute. To comment, email editor@CLOmedia.com.