Executive coaching has become more mainstream over the last few years. As the industry has grown, executive coaching rates have risen as well. Unfortunately, there’s no simple way to A/B test the impact of coaching. So how much should you invest in coaching and how can you tell whether it’s a profitable investment?
Imagine you’re the captain of a ship. You have set a course for a north star, a vision for where you want to go. There are countless decisions that have to be made on your ship to execute that vision—or perhaps even to change the north star. If a coach can help you make each decision better by even just 1%, imagine the difference in where the ship ends up as a result of tens or hundreds of these decisions added up.
Let’s explore a hypothetical situation. You’re a startup executive that works at a growing technology company. You get paid $250,000 a year in cash compensation. You’d break even on a coaching investment of $25,000 per year if working with a coach can increase your output by more than 10%.
But that increased output won’t just affect your individual work output, it will affect your entire team’s output. If your company headcount is 25 people with an average cost per head of $100,000, you’d break even on your coaching investment if working with a coach can increase your team’s output by just 1% (25*$100,000*0.01=$25,000).
Furthermore, this analysis doesn’t factor in the winner-takes-all nature of technology startup market dynamics. There are a limited number of unicorn companies that emerge within each industry. The winners usually take home the lion’s share of the profit. So being 1% better than your competition can mean the difference between an IPO and an acquisition.
With all that said, it can be challenging to make a direct tie between coaching and the bottom line. While I work with clients on tactical and strategic challenges, a large part of my work with clients covers emotional intelligence, personal growth, and leadership. You may not be able to see the immediate impact of all these intangibles in the short term, but the impact can be far-reaching over the long term.
Investing in your emotional intelligence can improve your ability to make good decisions and communicate better with your team. It can help you weather the storms of navigating your ship. Investing in your personal growth can help you scale as your business scales. It can set an example for your team that you’re creating a culture of learning. Investing in your leadership can translate to increased employee morale and retention. It can improve your team’s cohesion and effectiveness. It can prevent mutiny.
Improving in each of these areas is like the ship captain making a slightly better decision on how to get the ship closer to the north star. Sometimes, a coach can help you identify an obvious blind spot so you can avoid the fate of the Titanic and steer around an iceberg. And other times, a coach can help you a little bit here, a little bit there, and over enough time, those little bits add up to a big difference in the trajectory of your ship.
