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ROI on the 8-Step Coaching Model

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Every training program should be examined for cost effectiveness; that is, the value of the program to the cost of implementing that program. The 8-Step Coaching Model taught by CMOE is no exception. The following story is an example of how one manager determined the worth of the program.

A National Sales Manager, Jim, contacted me to discuss a problem with one of his field reps, Fred, who lived in another part of the country. Fred’s performance had been seriously declining and, despite Jim’s best efforts, their relationship declined as well. Jim was losing patience and was on the brink of firing Fred. Jim realized that a more structured approach to coaching Fred was needed, so he asked Fred to fly to corporate headquarters for a talk.

The first time a manager talks with an employee about his/her poor performance, it is usually a “watershed” conversation. If the conversation does not lead to reconciliation, the employee is likely to create considerable ill-will toward the manager through water-cooler talk. Meanwhile, the manager may say that s/he is trying to turn the person around, but actually, the manager may have closed an emotional door. The manager, tired by the hassle, may be focused only on getting the employee out of the organization. Either way over time, the situation will get worse.

The question then is, “What financially is at stake when an employee doesn’t work out?” In this case, Jim estimated that with headhunter fees, cost of relocation, plus lost revenue from no one working the territory, the minimum cost of turnover was $150,000 not to mention the emotional strain for searching for the right replacement. Fortunately, by using the steps in the 8-step coaching model of CMOE, we were able to put together a plan Jim could use to change Fred’s perspective. Over time, Fred not only turned around but also generated an additional $100,000 in revenue.

So in this instance, what was at stake was really $250,000, and based on the outcome of a conversation. When you compare the initial cost of the coaching skills training program, the ROI with Jim and Fred was tremendous; and applied over time by the same manager to multiple situations, the investment becomes even more lucrative.

Beyond the financial considerations, the cultural implications of effective performance coaching are huge. When management consistently uses the 8-step coaching model, the message to all employees is the same: If you’re not performing, then we’ll coach you and give you every opportunity to be successful. Those who can and want to perform get to stay. Those who refuse to improve will have to go. Gradually this support creates an assurance that due processes are based on performance, not on politics or personal preferences. This is a culture where management’s processes and intentions are transparent for the employee. While the direct payback of successful coaching can be in the hundreds of thousands of dollars, the indirect payback in terms of cultural predictability, retention, and performance is immeasurable.

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