Having 20 years experience as a senior finance executive for international companies in Europe and the United States, I had set out to explore how financial thinking can help in coaching and how it can improve the coaching business.
I had written the first article about ROI (Return on Investment) in Coaching a couple of weeks ago and since that, I have had many insightful discussions with my clients, my fellow coaches and other stakeholders. Based on this, I have realized further insights as regards to ROI that I would like to share.
1. Every company has decision makers. It is very important to realize who the decision-makers are. Sometimes, they are business owners but very often Managing Directors or this power is further delegated to Human Resources Directors, Finance Directors or other executives. It is vital to understand who is the decision-maker in the company, and based on this to tailor the strategy.
The decision-makers (and their bosses) are usually interested in financial KPIs (Key Performance Indicators). A good ROI on a coaching project makes good KPIs so there is a high likelihood that a coaching service proposal with good ROI will be accepted. This is because decision makers know that such a project will bring their company good financial results.
2. The ROI calculation and presentation is very powerful during the negotiation phases when trying to develop a new business or trying to get a new assignment. It is also extremely helpful when we want to keep our existing coaching business. During difficult times or during changes within companies, coaching is usually the first service being cancelled. With ROI calculation, the likelihood of this scenario is highly reduced.
We need to be very realistic about basic ROI assumptions. Some people tend to overestimate potential benefits and gains of coaching or sometimes they could confuse benefits and gains. Most of the companies have adopted good monitoring systems – they monitor actual gains and savings versus planned ones. Eventual constant underperforming can have an adverse effect on the trust and future cooperation. It is very good idea to be proactive as a coach and introduce an ongoing self-reflective feedback system. It is also a great idea to have more contingency plans in a pocket to be able to quickly adapt to a changed situation.
ROI calculation can be also prepared for all our previous coaching cases as case studies, so we are well-equipped and prepared for meetings with clients and negotiations. Showing clients that our previous coaching assignments have brought high ROI makes significant breakthroughs more likely. Having ROI for our previous cases show the clear tangible results and creates trust.
3. It is vital to have a good understanding of ROI % calculation and rates, what is the average % and minimum % in respective industries. Then it is possible to use these as benchmarks and compare with planned or real ROI.
I have prepared several Excel ROI Calculation scenarios with concrete financial costs and benefits and a calculation of ROI, payback period and graphs.
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Author: Tomas Horejsi has 20+ years’ experience in the corporate finance area with top international companies in Europe and USA, as Chief Finance Officer (CFO), Finance Director, Finance Manager, Finance Controller, Finance Analyst etc with the best international companies – SEPHORA (LVMH Group Louis Vuitton Moet Hennessy), Dover, Cemex, Tesco Stores, Royal Ahold, Mediterranean Shipping, Gefco, Unilever, KPMG. He is Certified IECL Coach (Institute of Executive Coaching and Leadership), Sydney. He owns Finance Coaching & Consulting International Company. Contact email: email@example.com