Leadership Development– Best ROI: Coaching executives vs. traditional leadership development methods

There is something to say about the ROI of coaching vs. traditional leadership development methods with ROI’s of over 600% return. I can prove the tangible and intangible return on their investment.

I have worked in Fortune 500 companies in human resources for 23 years of my career. As an executive, I struggled to measure the results of traditional leadership development programs. In the corporate world we traditionally identified leadership competencies for the leaders to practice. We wanted them to fit the corporate profile. We spent tens of thousands of dollars identifying competencies and training leaders to lead according to the identified competencies. I was never able to measure the return on that investment.

A few years into coaching managers and executives, I realized that individuals have natural talents that are taken for granted by the individual leaders as well as the boss. I was able to identify, bring out, and leverage those natural talents that they had not been exercising in the past. At times, we were able to move leaders into other positions to leverage their natural talents.

I regularly get over a 600%  returns when coaching leaders. I have measured over a 20:1 return from some coaching engagement. There is something to say about the ROI of coaching vs. traditional leadership development methods with ROI’s of over 600% return. I can prove the tangible and intangible return on their investment.

Over the last 3 years I find that the most effective way of developing leaders is through individual, group, and team coaching. My colleagues recently recognized that I am differentiating myself from others who use the traditional leadership development methods. They noted that I can prove that my leadership development methods really work.

I frequently develop good leaders to lead at a higher level by identifying the their natural talents and expanding their use. I now know that the traditional use of leadership competencies is wasted effort. I want to identify the natural talent in each individual leader and develop those talents.

I recently found research and evidence from others who feel as I do. On the International Coach Federation blog posting, Ray Williams, president of Ray Williams Associates, in Vancouver, B. C., stated, ” Despite the collective wisdom of centuries on the topic, confidence in our leaders is low and continues to decline. In a 2012 survey by the National Leadership Index (NLI), released by the Center for Public Leadership at Harvard Kennedy School and Merriman River Group, 77% of the respondents said the United States now has a crisis in leadership. Confidence levels in leaders have fallen to the lowest level in recent times.” He goes on to say, ”It appears the major reason for this has nothing to do with competency, knowledge, or experience.”

Sydney Finkelstein, author of Why Smart Executives Fail, says that most leaders fail because of their  hubris, ego and a lack of emotional intelligence.

In an article in the Harvard Business Review Blogs, author Tomas Chamorro-Premuzic says that arrogance and overconfidence are inversely related to leadership talent. Leaders must have the ability to build and maintain high performing teams inspiring followers to set aside their selfish agendas to work for the common interest of the group.

In a recent study by Richard Arvey at Singapore’s NUS Business School found evidence that leadership training has become a big business, with publishers, universities and consultants jockeying to position themselves as the quotation mark “goal-to” partners and gurus to develop leaders. Although, research shows most development programs fail to deliver expected returns. Arvey is convinced that the focus on leadership development is in the wrong place. I agree with Arvey. I have found the same evidence both in my corporate career and my coaching practice. Arvey goes on to say, ”Most initiatives focus on competencies, skill development and techniques, which in some ways is like really arranging the deck chairs on a sinking ship. Good leaders need to become masters of themselves before they can be masters of anything else.”

This is why the leadership development, using coaching methods, must help leaders understand that they need to have a personal stake in their self-development. Their self-awareness and self-determination are key ingredients to developing into successful leaders. Leaders need to experience the emotional transition that coaching provides in contrast to the intellectual development that is necessary as a foundation for leaders but doesn’t make the leader successful.

This research and evidence described above helps validate for me that coaching will more effectively develop leaders… and measure the return on investment. I feel that my coaching methods for leadership development in addition to my practical experiences as a corporate leader deliver quality results and a ROI that traditional development methods can’t measure.

Here are a couple of examples of the dollar return on investment from the RCG coaching:

A $19M printing company with 124 employees experienced group coaching with 16 participants in two group. Using a “before and after” measurement method that was validated by the bosses, the annual ROI was $1.9M for the tangible ROI. The intangible return was 25% improvement for the intangible behaviors. The following year they increase revenue by $5M…not all was from coaching contribution. They made significant progress in the sales area.

A privately owned freight forwarding company with about 95 employees agreed to individual and team coaching to improve leadership and performance. The hard dollar ROI was $433,219. The intangible return was a 22% improvement in performance from behavioral changes.


About Bud Roth

Bud is a seasoned executive with over 25 years experience working with Fortune 500 companies. Roth Consulting Group LLC focuses on team and executive coaching, organizational renewal, expatriate support, and improving leadership performance. Bud's recently published book, Be More Productive – Slow Down, suggests methods of reflection and actions that guide us to regain control of our busy life and reduce stress by slowing down.

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