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The ROI of Coaching: Measure your Leadership Development Efforts

The average large company with 10,000+ employees budgets nearly $20MM annually on learning and development, with employees spending more than one week per year in training. Based on data from McKinsey, Gallup, and the Center for American Progress, for a company this size, the hidden annual costs of skill gaps, disengagement, and turnover are estimated conservatively at -$135M. Following the status quo will undoubtedly cost your company, too.

It’s unrealistic to think that any organization can backfill a hole this big by staying the course on traditional learning and development solutions—for example, instructorfacilitated leadership training seminars—for which we might conservatively anticipate a 0x to 2x ROI. The problems with these solutions are well documented. In addition, a lack of personalization and fidelity to the work being performed further contribute to low impact.

Research on the forgetting curve, suggesting that newly learned concepts dissipate aggressively, with as little as 25% retention after 1 week. Estimates of the percentage of training that “transfers” reveal a similar decline over time, with as few as 34% 
 of trainees reporting sustained behavior change one 
 year later. Zooming in where the investment is greatest - on leaders and managers - exposes real gaps in our historical failure to prepare people to play these crucial roles by any measure of success, with the estimated fall- out rate for managers ranging from bad (6 in 10) to unforgivable (8 in 10).

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