Measuring the ROI of Leadership Coaching


During the past several years, the concept of leadership coaching has gained a great deal of attention. When successful, coaching has the potential to increase organizational effectiveness by increasing the contribution and capacity of individuals. However, many formal coaching interventions (not to be confused with the ongoing informal coaching responsibilities of a manager) generate little return for the investment in time, expense, and emotional energy. Some coaching situations may even cause more harm than good.

What is the purpose of leadership coaching? Ultimately, it's to help both the individual and the organization become more effective. However, we find that most organizations (and coaches!) don’t measure the effectiveness of the formal coaching that takes place. Many feel that it's not necessary; that coaching is one of those "soft interventions" for which an ROI cannot be calculated. Others simply do not know what to look for.

Because it's nearly impossible to isolate each of the multiple variables tied to overall success, and determine that a specific improvement can be attributed exclusively to a coaching intervention, it's still critical that we understand whether or not coaching has been effective. We must also understand the degree to which an individual is progressing while he or she is being coached.

4 Levels of Coaching Effectiveness

We use 4 Levels of Coaching Effectiveness to determine whether a coaching intervention is successful. Measuring against these four levels both helps us gauge an individual’s progress and understand the effectiveness of the coaching itself. It's important to note that the person being coached will move through a natural progression, but cannot move from one level to the next until he or she "graduates" from that level. These levels are:

  1. 1.Reaction: The person being coached responds positively to the coaching opportunity itself. He or she demonstrates an active willingness to be coached– both through actions and words. This person is a willing participant, rather than a coach's hostage.


  2. 2.Self-Awareness: He or she demonstrates an awareness of the situation, recognizing the gaps between the desired state and his/her current state of performance or behavior. This may involve the use of formal assessments, such as 360-degree feedback or other psychometric and performance assessments. The individual accepts the feedback, and understands where he/she needs to improve in order to be more effective.


  3. 3.Behavioral Change: The person being coached changes his/her behavior in a way that will more closely align him/her with the desired state. This is where the hard work takes place, and involves developing a plan and putting that plan into action.


  4. 4.Performance: The change in his or her performance brings about the desired state, and improves the state of the organization. The behavioral changes have resulted in the corresponding increase in individual performance. This individual improvement also results in an improvement in the performance of the organization.


Many times, a coaching intervention is initiated by an internal sponsor (typically the coachee's manager or Human Resources contact). Yet many organizations report that they are not kept informed of progress. Before engaging in formal coaching, we often present these levels to the sponsor, indicating that we will be measuring progress against these. Measuring against these four levels allows a coach to do several things that are often missing from coaching accountability:
    • Help the individual measure progress.
    • Understand the effectiveness of his or her own coaching method.
    • Report progress back to the sponsor (where part of the coaching agreement).

Without measurement of coaching progress and success, a coaching intervention often turns into a series of coaching conversations, with no real, tangible improvement taking place. Understanding and applying the 4 Levels of Coaching Effectiveness helps the coach, coachee, and organization measure the return on the coaching investment and the degree to which individual is progressing.