Considering the cost and ROI of CEO Coaching are natural elements of determining a good pairing between an Executive Coach and the leader of your organization. While many people look at the cost alone first, I invite you to consider that the more important element of the process is actually the ROI. Think about it: if you knew your ROI would be 50 times or even 5 times your investment, wouldn’t it be a good one? Most likely, yes. So really then, the actual questions are: what’s the ROI, and is it worth it?
Executive coaching can be expensive, with rates ranging from $200 to $600 per hour. In 2009, the median cost of executive coaching was $500 per hour. However, due to inflation, the median cost of executive coaching in 2023 is estimated to be $708 per hour.
To put this into perspective, $1 in 2009 has the same purchasing power as $1.42 in 2023. So, if a coach charged $500 per hour in 2009, they would need to charge $708 per hour in 2023 to maintain the same level of purchasing power. (CPI Inflation Calculator)
It is important to note that these are just estimates, and the actual cost of executive coaching can vary depending on a number of factors, such as the coach’s experience, the location of the coaching, and the length of the engagement.
With a typical CEO Coaching Engagement lasting from 6-12 months, with an average of four hours per month of coaching, plus assessment tools and possibly some shadowing of the CEO, you can expect the Executive Coach is working about 50 hours. At $708/hour, that puts a six-month engagement at $35,400, and a year-long engagement at $70,800. We don’t charge that much at Arden, but let’s use those numbers to look at ROI, to give you a higher-end estimate:
I’ll use the formula for ROI laid out in this article: ROI of Executive Coaching.
By that formula, the ROI is calculated at % ROI = [(benefits achieved – cost of coaching)/cost of coaching] x100
That means, that if the benefit achieved from the coaching is worth, say, $200,000 and the cost of the coaching is $35,400: the %ROI is 465%.
Many studies show that the typical % ROI on Executive Coaching is actually much higher than that, but again, let’s use a conservative approach.
So now the question is: Is a 465% ROI, or a $200,000 benefit to your company worth it?
Well, if you’re a small company, probably; especially given that the skills a coach will work on with the CEO will continue to pay benefits long after the engagement is complete. That is, if it’s a $200,000+ return each year for every year the CEO is in that role, is that worth it?
Of course, the larger the organization, the larger the impact coaching will have: the leader impacts the entire organization, so impacting the leader of a 50-person company is one thing; impacting the leader of a 5000-person company is a whole different ballgame.
If Coaching the CEO will give that leader a clearer understanding of her/himself that results in a new strategy for the company, how much is that worth? $200,000? $2,000,000? In many cases, much more. If CEO Coaching results in a new way of working internally or of dealing with clients, might it retain three valuable VPs at a replacement cost of $300,000 each, plus resulting in more business with new clients that are worth millions? Of course.
8 Amazing Benefits of CEO Coaching
At an HR conference, Rebecca, the VP of Human Resources for a growing technology company, compared notes with fellow HR executives about their experiences engaging CEO coaching for their respective CEOs (maintaining professional confidentiality of course!).
Naturally, there were challenges, and an interesting perspective was shared about how executive coaching for CEOs actually benefits the entire organization. But as the group talked, many shared similar experiences and perceptions about how their CEOs evolved and improved in critical leadership characteristics and behaviors.
1. Emotional Intelligence
The group quickly acknowledged that improved emotional intelligence was foundational for their CEO, and their ability to grow in other areas. As conceived by Daniel Goleman, emotional intelligence is a way of looking at the ability you have to manage yourself and your relationships.
Heightened awareness of yourself, such as your emotional state and how your behavior impacts your employees, and awareness of others, such as empathy and strong listening skills are fundamental. But being able to act on that awareness is what builds and shows true emotional intelligence. In a real sense, emotional intelligence is the foremost leadership skill. Rebecca and others saw significant improvement in their CEOs as their CEO coaching progressed.
2. Communication Skills
Rebecca and the group agreed that communication skills were critical for their CEOs. Virtually every CEO had begun their ascent to the C-Suite by first becoming accomplished in a functional area of business, such as IT, engineering, finance, logistics, or marketing — and in situations where the ability to communicate was not always essential.
When transitioning from subject matter expert to leader, communication is often the skill that needs the most improvement. And this was an area where the HR discussion group saw significant, measurable progress after executive coaching. The ability to communicate effectively allows CEOs to articulate their strategic vision more, inspire employees, motivate people, and accomplish organizational goals.
3. Collaboration and Teamwork
Many CEOs have a history of being “lone wolves.” And there are limits to that approach when it comes to sustained success in leading others. Rebecca and the others in her discussion group shared instances where the coaching was focused on leadership skills that supported teamwork and building collaborative organizational cultures — from building trust and supporting productive debate to accountability and focusing on results.
Patrick Lencioni’s approach to team performance was used, at a higher level, by many executive coaches. Many lone wolf CEOs benefited from re-considering their senior leadership groups, divisions, and departments as “teams” to be nurtured and worked with… not “directed” with CEO coaching.
Related to the lone wolf, several CEOs had a history of rolling up their sleeves and “doing it themselves.” Some HR directors in the group shared instances where their CEO undertook every meaningful component of a project or strategic initiative — to “get it done right” the CEO would say.
The executive coaches helped their CEOs realize that not delegating is a time trap. Without delegation, how could they possibly find the time and focus to be better strategic thinkers and work on crucial new initiatives? How else would they find the time to motivate and inspire their employees? CEO coaching then helped many of the CEOs build effective delegation skills and techniques.
5. Giving Feedback
Rebecca’s group of HR executives observed a similar need for giving (effective) feedback. While the classic stereotype of a CEO giving feedback is an overly direct bull-in-a-china-shop, some in the group talked about their CEOs being very uncomfortable and reluctant to give difficult feedback.
CEOs benefitted from CEO coaching that improved their skills in giving feedback — useful, productive, constructive feedback that made their employees more successful. Rebecca noted that the SBI feedback model was especially useful for many.
6. Executive Presence
Some of the CEOs discussed in Rebecca’s HR group had struggled to develop a sense of their “presence” as a leader. Somehow, the brilliant CEO-strategist, -engineer, -systems designer found it difficult to project “executive presence” among all their employees.
Their CEO coaches worked with them to develop their executive presence — in many respects, a combination of self-confidence, authenticity, and poise. The benefit of improved executive presence to these CEOs resonated across other leadership skills and characteristics, from communication and motivating their employees to deliver feedback and leading organizational change.
7. Driving Organizational Change
The topic of change came up often in the group conversation. Change is a constant in the life of a leader. Economies change, industries change, markets change, customers change, and employee needs and expectations change. It’s the CEO’s job to inspire and drive change throughout the organization. From Rebecca’s perspective, driving change was an essential and fundamental part of her CEO’s job description.
Some CEOs found it beneficial for their CEO coaching to define coaching goals and organize leadership skills development through the prism of managing and leading change. In addition to communication, team building, and strategic thinking, many found that focusing on their (and their organization’s) resilience was also helpful.
8. Leveraging CEO Coaches as Thought Partners
As Rebecca and the group of HR executives wrapped up their conversation, someone mentioned that their CEO had thanked him for providing her with someone she could really talk to — about anything, with absolute confidentiality. Others said their CEOs had made similar comments.
Rebecca summed it up nicely. “My CEO’s executive coach became his ‘thought partner.’ He could talk about what was on his mind, what he struggles with — what keeps him up at 2:00 am — in complete safety and confidentiality. And better yet, with an experienced expert who challenged his thinking, but in a safe space.”
The cliche, “It’s lonely at the top” is a reality for CEOs. And CEO coaching is an expert, confidential, and objective thought partner. There are certain things a CEO can discuss with their senior team… and certain things they cannot. Or perhaps, not yet — for example, a CEO may be exploring an issue or an opportunity and working through what they want to bring to their senior team.
Many in Rebecca’s group said that after their initial coaching engagement, their CEOs plan on continuing monthly, quarterly, or semi-annual meetings with their executive coaches to continue their progress and their journey as leaders.
What are you looking for in CEO Coaching that has the necessary impact?
In other words, if you are looking for the CEO to be more inclusive and mentoring to her direct reports, what impact do you say that will have on her and the work of all those direct reports? If you’re looking for a CEO who’s recently taken over the role to clearly define his mission and re-create the company vision, what impact do you say that will have over the next 10-20 years?
These are all questions that are important to work out as you enter the coaching agreement: be sure to discuss these factors with the coaches you are considering. If you’re stuck or need assistance in determining this for your own company, please contact us for a complimentary consultation regarding your CEO Coaching.