Not Just a Job Perk: The Measurable Benefits of Leadership Coaching

Despite the occasional skepticism from senior-level management, research shows that leadership and executive coaching provides companies with measurable return on investment (ROI), with one report into Fortune 500 Companies revealing that organizational investment in senior-level coaching produces an average ROI of nearly six times the initial cost. With that in mind, here are some of the most important, tried-and-tested benefits of leadership coaching that lead to increases in employee retention and engagement, and create a coaching culture across any organization. 

In this blog post, you’ll learn: 

• Why leadership coaching has become a necessity in the modern workplace
• How leadership coaching delivers measurable results
• Why it’s vital to map coaching goals onto company-wide targets

Why attitudes to leadership coaching are changing

One of the most common misconceptions about leadership coaching is that it is a remedial measure, implemented to address the shortcomings or failures of the leader in question. In reality, this couldn’t be further from the truth. 

If we take high-performance athletes as an example, it is clear that top-level athletes in any sport need guidance in order to achieve their full potential. No one would assume that these athletes seek coaching because they are unable to “do the job”, nor indeed would anyone assume the athlete’s coach is a better performer in their sport than the athlete themselves; top-level athletes seek coaches because they recognize the importance of challenging their methods, strategy, and approach to their given sport. Why should coaching for business leaders be any different? 

The truth is that, increasingly, organizations are acknowledging the importance of providing leadership coaching for their workforce, evidenced by the 57% growth in the online coaching industry since the pandemic, as reported by the International Coaching Federation. 

This significant increase is due in part to the impact of the pandemic, and the need for organizations to find digital, remote-friendly solutions as we move to remote-first and hybrid work settings. A broader and more far-reaching trend contributing to the growth of digital leadership coaching, however, is the fact that today’s business leaders are faced with a VUCA business environment - one characterized by volatility, uncertainty, complexity, and ambiguity. In this environment, senior-level management needs to find effective, scalable, and long-lasting ways to support their leaders and cultivate a company-wide culture that can respond to volatile industry changes through effective communication and leadership. This is where the real strengths of leadership coaching are found.

The key benefits of leadership coaching

1. Leadership coaching improves employee retention

One of the most important benefits of leadership coaching is an increase in employee retention. As one 2022 report conducted by LinkedIn reveals, professional development is now a key driver in employee retention. Put simply, if employees and leaders do not feel they can grow within an organization, they are more likely to consider seeking alternative employment. Coaching is, undoubtedly, a highly effective leadership development strategy; it ensures that leaders are engaged and aligned with a broad, strategic vision of organizational changes and their role within it. 

Employee retention is vitally important in VUCA business environments not only for team morale but crucially because employee turnover is extremely costly. According to a study conducted by the Center for American Progress, the costs entailed by losing a highly-skilled employee can reach as high as 213% of the lost employee’s annual compensation. It is therefore vital for organizations to ensure that their talented leaders feel empowered, engaged, and committed to the company’s strategy and vision; the ability to do this alone makes a significant contribution to the ROI of coaching. 

2. Leadership coaching promotes long-lasting changes

Another important benefit of leadership coaching is that it is a proven method for altering managerial behavior over the long term. Leadership coaching that is personalized, addressing the individual challenges of leaders and addressing them by improving key competencies such as communication skills, is far more likely to lead to effective outcomes than generic L&D programs. 

Academic research further suggests that organizational leaders receiving coaching assume a coaching role for their teams much more frequently, considering team members’ individual challenges in relation to the organization’s goals. In turn, this trickle-down coaching helps to build a company-wide coaching culture that allows your organization to thrive.  

Research demonstrates a clear knock-on effect of leadership coaching; this means that, by altering leaders’ behavior, organizations can promote wide-reaching improvements across teams. Moreover, the improved company-wide relations between leaders and their team members through coaching further drive employee retention. A recent Gallup study revealed that over 50% of employees have, at some point, left a job because they did not get on well with their manager. The economic imperative to cultivate and refine leaders’ so-called soft skills of communication and active listening, therefore, is clear. 

3. Leadership coaching aligns leaders with organizational goals

Lastly, leadership coaching helps organizations to align their strategic business targets with individual leaders’ focus areas during coaching sessions. At Sharpist, we ensure that the KPIs of the company are established at the very start of the coaching process during a kick-off meeting. This means that HR leaders can track the progress of learners in line with organizational targets, with data-driven insights available via Sharpist’s new Goals Page. 

The key to any successful L&D strategy is to establish clear expectations and outcomes at the start of the process, and Sharpist’s unique approach ensures measurable, long-lasting success for organizations of any size. 

Conclusions

In conclusion, the benefits of leadership coaching extend far beyond the initial ROI, promoting a company-wide culture where leaders are able to adapt to volatility and uncertainty, while also engaging and empowering their teams. However, if we are to examine the ROI of coaching, the ability for coaching to significantly increase employee retention and align strategic focus on the company’s vision is a key economic incentive in implementing leadership coaching.