Is coaching worth it from a financial perspective? The Brogden-Cronbach-Gleser method can be used to model the benefits of coaching in euros. Our sample calculation for 20 executives—based on an effect size that was deliberately chosen to be conservative—yields a calculated ROI of approximately 459%. The break-even point is reached even with a minimal improvement in performance.
An HR department is planning a coaching program for 20 executives and has estimated the cost at 27,500 euros. Before the executive board gives its approval, it wants to know what economic value this budget will yield.
To answer this question, we need reliable evidence on the effectiveness of coaching. We also need a method for translating performance improvements into a monetary value.
This article shows how companies can calculate the ROI of coaching and highlights the limitations of such a calculation. We also provide insight into the impact of our own coaching journeys.
Contents
What specific benefits does coaching offer companies?
What Meta-Analyses Show About the Effects of Coaching
Coachees develop these skills most effectively in the thankscoach Coaching Journeys
How can you calculate the ROI of coaching?
Case Study: ROI of a Coaching Program for 20 Executives
Where the ROI Analysis Reaches Its Limits
How Companies Measure the Impact of Coaching
What specific benefits does coaching offer companies?
The benefits of coaching don't come from the coaching session itself, but from how they're applied in everyday work afterward. Here are three examples of what that might look like:
After coaching, a manager delegates more consistently. Their team makes operational decisions more independently, coordination cycles become shorter, and productivity increases.
A second manager continues to develop their conflict management skills. Tensions within the team are addressed earlier, collaboration improves over the long term, and shared results are achieved more quickly.
A third-level manager sets priorities more clearly. Resources are allocated in a more targeted manner, and projects are managed more effectively and efficiently.
Individual development can therefore influence organizational outcomes. In this context, three areas of impact are particularly relevant in coaching:
Work Performance and Goal Achievement: Goals are clarified and pursued more consistently. Results are evident in day-to-day work.
Communication and Leadership Skills: Leaders communicate more clearly, delegate more effectively, and make decisions more efficiently.
Self-Regulation and Well-Being: Improved self-regulation and targeted coping strategies enhance one's ability to effectively manage stress.
Whether and to what extent these changes will pay off financially depends, among other things, on the magnitude of the effect.
How effective is coaching?
Several meta-analyses provide strong evidence that coaching is effective. Our article provides an overview of the research literature Digital Coaching Is (Not) Effective.
To calculate ROI, we need a precise answer to this question. The key factor is the extent to which coaching improves professional performance, because it is precisely this increase in performance that we convert into monetary values in the calculation.
What is effect size?
Effect size describes how large a change—for example, resulting from an intervention such as coaching—actually is. The larger the effect size, the greater the differences in mean scores between two groups (with vs. without coaching) or between two measurement time points (before and after coaching).
A value of 0.24 means that the group that received coaching performed better on average. It is important to note that 0.24 does not mean a 24% improvement in performance, but rather a difference of 0.24 standard deviations. The effect size therefore compares a change to the extent to which results typically vary among individuals.
The monetary value of one standard deviation in work performance can be quantified using an established rule of thumb. Schmidt and Hunter (1983) estimated it at 40 percent of the average annual salary. This rule of thumb is known as the 40-percent rule. Thus, if individuals improve their work performance by one standard deviation, this corresponds to a monetary benefit of 40 percent of their annual salary.
With an annual salary of 80,000 euros and an effect size of 0.24, the corresponding benefit is 80,000 euros × 40% × 0.24 = 7,680 euros.
What Meta-Analyses Show About the Effects of Coaching
De Haan and Nilsson (2023) analyzed 37 randomized controlled trials involving 2,528 participants. They found a moderate positive overall effect of coaching (g = 0.59). Other meta-analyses also confirm the positive effects of coaching on various work-related outcomes. The findings can be categorized into three outcome areas.
1. Coaching helps you achieve your goals
Coaching helps people define their goals more clearly, develop courses of action, and reflect on how they are implementing them. Research shows positive effects on goal-oriented self-regulation (g = 0.74; Theeboom et al., 2014) and goal attainment (g = 1.29; Wang et al., 2022).
This enables employees and managers to pursue agreed-upon development, project, and performance goals more systematically. In this way, coaching aligns individual development with the organization's goals.
This is also evident in our coaching journeys. According to our coachees, goal-setting improves by an average of about 9% (dz = 0.40). This is measured both before the start and after the completion of each coaching journey.
2. Coaching strengthens professional skills and effective behavior
Coaching can support the development of work-related competencies and effective behavior. In their meta-analysis, Nicolau et al. (2023) found that the effects on behavior (g = 0.73) were generally greater than those on attitudes, for example. The effects on performance (g = 1.11) were particularly large.
Bachmann and Willermann (2024) also report positive effects of professional systemic coaching on communication and leadership-related competencies (g = 1.12). Through coaching, leaders can develop new behaviors and apply them in their professional practice.
In our coaching journeys, conflict management (+13.3%, dz = 0.58) and delegation (+12.3%, dz = 0.55) show the greatest improvement. Feedback also shows significant improvement (+12.6%, dz = 0.50).
3. Coaching improves self-regulation and well-being
Managers often have to navigate conflicting expectations, make decisions under uncertainty, and cope with heavy workloads. Meta-analyses show that coaching can have positive effects on coping skills (g = 0.43; Theeboom et al., 2014; g = 0.68; Burt & Talati, 2017), self-regulation, and well-being (g = 0.46; Theeboom et al., 2014).
Coaching can thus strengthen an individual’s ability to take action and their resilience. This supports leaders, especially in challenging situations.
In our coaching journeys, emotional regulation increases by an average of about 14% over the course of a journey (dz = 0.63). This makes it the competency that shows the most significant improvement.
Coachees develop these skills most effectively in the thankscoach Coaching Journeys
At thankscoach, coachees rate a range of competencies on a scale of 1 to 10 before the start and after the completion of each coaching journey. The following table shows the competencies that show the greatest improvement over the course of a coaching journey at thankscoach.
| Expertise | Change in % | Effect size (dz)* |
|---|---|---|
| Emotional Regulation | +13,7 % | 0,63 |
| Conflict Management | +13,1 % | 0,58 |
| Delegation | +12,5 % | 0,55 |
| Feedback | +12,6 % | 0,50 |
| Motivation | +11,0 % | 0,50 |
| Problem Solving | +9,6 % | 0,42 |
| Resilience Under Stress | +6,9 % | 0,41 |
*Effect size for paired samples
The most significant changes are evident in areas that research also highlights and where managers face immediate challenges in their day-to-day work: dealing with emotions, resolving conflicts, and providing feedback.
How can you calculate the ROI of coaching?
Return on investment describes the ratio between the net financial return on an investment and its cost. It is expressed as a percentage:
ROI (%) = (Gross Benefit − Investment Cost) / Investment Cost × 100
The cost of a coaching program can be quickly estimated. There is an established method from the field of industrial and organizational psychology for calculating the gross benefit.
The Brogden-Cronbach-Gleser Method Explained Simply
The Brogden-Cronbach-Gleser model, or BCG model for short, originates from the field of personnel psychology's cost-benefit analysis. It estimates the economic value of a performance improvement, such as that resulting from a staff development initiative.
The basic idea: If a development initiative measurably improves job performance, the value of that improvement can be quantified. In addition to the effect size, this requires the number of participants, the duration of the effect, and the performance variance: Gross benefit = N × T × d × SDᵧ
| Variable | Meaning |
|---|---|
| N | Number of people coached |
| T | Duration of effect in years |
| d | Assumed effect size on job performance |
| SDᵧ | Monetary value of one standard deviation of annual work output |
Subtracting the program costs from the gross benefit yields the net benefit. As explained above, we estimate the monetary value of one standard deviation of work performance (SDᵧ) to be 40 percent of the average annual salary (Schmidt & Hunter, 1983).
Case Study: ROI of a Coaching Program for 20 Executives
Let's go back to the HR department from the beginning. It is providing 20 managers with personalized business coaching, consisting of five 45-minute sessions each.
Step 1: Calculate the cost of the coaching program
| Cost item | Calculation | Amount |
|---|---|---|
| Coaching Sessions | 20 × 5 × 230 € | 23.000 € |
| Participants' working hours | 20 × 3.75 hours × 60 € | 4.500 € |
| Total Investment | 27.500 € |
The company thus invests 1,375 euros per manager. The internal hourly rate of 60 euros is a calculation assumption.
Step 2: Determine the gross benefit
| Key figure | Assumption |
|---|---|
| Executives (N) | 20 |
| Average Annual Salary | 80.000 € |
| Monetary Performance Bonus (SDᵧ, 40% of annual salary) | 32.000 € |
| Effect size for externally assessed performance (d) | 0,24 |
| Duration of action (T) | 1 year |
We have deliberately set the duration of the effects conservatively at one year. Many of these effects are likely to persist beyond that.
Self-assessments are often higher than external assessments. Furthermore, improvements in motivation or emotional regulation do not automatically translate into an equally large increase in economic work performance. To calculate the ROI of coaching, we therefore use the specific effect on externally assessed job performance from the meta-analysis by Wang et al. (2022). This effect size is g = 0.24 and is based on eight studies with a total of 443 participants. The external evaluations come from sources such as 360-degree feedback. The value was thus deliberately chosen conservatively for the cost-benefit analysis.
Gross profit = 20 × 1 × 0.24 × 32,000 € = 153,600 €
Based on the assumptions listed, the model yields a gross benefit of 153,600 euros per year.
Step 3: Calculate the ROI
After deducting the investment, the net profit is 126,100 euros: 153,600 € - 27,500 € = 126,100 euros.
This results in an ROI of 459%:
ROI = 126,100 € / 27,500 € × 100 ≈ 459%
According to the model, every euro invested yields a gross benefit of approximately 5.59 euros.
Important: The result describes a theoretical potential based on specified assumptions; it is not a measured return on investment, nor is it a forecast of success for a specific program.
How does the ROI change with different effect sizes?
When planning a budget, it is worth running through several scenarios. The investment, duration of effect, and SDᵧ remain the same; only the assumed effect size varies.
| Effect strength (d) | Gross Benefit | ROI |
|---|---|---|
| 0,10 | 64.000 € | 133 % |
| 0,20 | 128.000 € | 365 % |
| 0.24 (Wang et al., 2022) | 153.600 € | 459 % |
| 0,30 | 192.000 € | 598 % |
| 0,40 | 256.000 € | 831 % |
| 0,50 | 320.000 € | 1.064 % |
The scenarios show just how much the result depends on the assumed improvement in performance. For budget decisions, therefore, another key metric is particularly interesting: the break-even point.
The Break-Even Point: At What Point Does Coaching Pay Off?
With the selected parameters, the program recoups its costs starting at an effect size of d = 0.043. This is the modeled minimum effect required for the gross benefit to equal the investment.
Where the ROI Analysis Reaches Its Limits
An ROI figure may seem precise, but it depends entirely on the assumptions used to calculate it. Anyone who uses it in budget discussions should openly acknowledge its limitations.
The calculation reflects only the portion of the benefits that can be quantified in euros as improved performance. Effects on well-being, collaboration, or employee retention remain unaccounted for, even though they may be relevant to organizations. Greater well-being can, for example, reduce sick days, while stronger employee retention can lower the costs of hiring replacements. Furthermore, the effect sizes come from studies whose programs and target groups may differ from a specific initiative. Their applicability to one’s own program therefore remains an assumption.
The model calculation is thus no substitute for an evaluation. It provides a reasoned expectation that HR can subsequently compare with real data.
How Companies Measure the Impact of Coaching
The BCG calculation demonstrates a program’s economic potential. Only a streamlined, three-step evaluation can reveal whether that potential is actually realized.
1. Align Development Goals with Company Goals
Before the program begins, HR works with the relevant stakeholders to determine which competencies should be developed. For example: Managers should delegate more consistently so that operational decisions can be made more quickly.
2. Tracking Behavioral Changes
Suitable tools include pre- and post-assessments, structured feedback sessions, or 360-degree feedback. The key factor is whether managers actually apply the skills they have developed. In our coaching journeys, we therefore assess how coachees rate themselves at the beginning and at the end.
3. Examine organizationally relevant key metrics
Which metric is appropriate depends on the coaching goal. The following overview shows typical pairings.
| Coaching Goal | Behavioral Change | Possible metric |
|---|---|---|
| Leadership Effectiveness | More Targeted Delegation | Decision-Making and Processing Times |
| Collaboration | Early Conflict Management | Escalations, Team Feedback |
| Achievement of Objectives | Consistent Prioritization | Project Goals, Adherence to Deadlines |
| Employee Development | More Regular Feedback | Progress in Development, Team Feedback |
| Self-Management | A More Mindful Approach to Stress | Workload indicators, overtime |
It is a good idea to take a measurement before the program begins and another after it ends. A third measurement taken a few months later will show whether the changes have become part of daily life.
Why Executive Coaching is particularly relevant
Managers don't just influence their own performance. They also shape the conditions under which their teams perform.
If a manager improves their communication skills, coordination processes can become clearer. If they delegate more consistently, employees can take on more responsibility. If they develop their conflict resolution skills, collaboration can benefit.
This creates a potential multiplier effect. The BCG calculation above takes into account only the performance of the 20 executives themselves. Team effects could increase the overall benefit, but would need to be demonstrated separately and evaluated without double-counting.
Conclusion: View coaching as a financial investment
Coaching can strengthen skills, support goal achievement, and facilitate behavioral changes in the workplace. These effects have been substantiated by scientific meta-analyses. Our own coaching journeys paint a similar picture, with particularly noticeable changes in emotional regulation, conflict management, feedback, and delegation.
The Brogden-Cronbach-Gleser method allows for the transparent modeling of the economic value of coaching. Based on a conservatively chosen effect size of 0.24, our example involving 20 executives yields a calculated ROI of approximately 459%. The break-even point is at an effect size of 0.043.
The result is a scenario analysis. Its strength lies in the fact that every assumption is transparent and can be adapted to your own organization.
The calculation becomes most meaningful when it is linked to a systematic measurement of actual behavioral changes. This transforms a model into a robust business case for coaching.
Would you like to strengthen leadership development in your company and strategically integrate coaching into your HR development efforts? thankscoach helps organizations offer personalized business coaching that is tailored to their needs and grounded in practical experience.
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