Executive Coaching Fee Survey - conference-board.org

1 Council Perspectives TM. Insights from The conference Board Council on Executive Coaching Executive Executive Diversity Coaching &. Fee Coaching Fee Inclusion Survey Survey Global Challenges andfee Opportunities An An analysis analysis of 2008. of 2008 structures fee structures used by used by executives Executive coaches coaches CP-006 2008. Council Perspectives TM. Members of The conference Board Councils are among the most experienced and savvy executives in the world. Their private deliberations produce rich insights on the most challenging business and societal issues of our time. With their permission, we have channeled their energy and expertise into a platform to voice their views that platform is Council Perspectives. Council Perspectives is based on sessions from selected Council meetings, post-meeting interviews, and other pertinent data, and may sometimes include original content written by Council members. It is not intended to be a research report; rather, Council Perspectives provides a unique look into the minds of executives from leading global organizations as they assess, analyze, and develop ways to address critical issues.

2 Executive Coaching Fee Survey An analysis of 2008 fee structures used by Executive coaches The first and second annual Executive Coaching Fee Surveys were fielded in 2006 and 2008 to determine the rates organizations pay for Executive Coaching services and how that Coaching is administered. Responses indicate that the Executive Coaching industry as a whole remains healthy, is growing globally, and is moving toward increased standardiza- tion. The respondents represent a wide range of industry segments, and include global firms and large to very large organizations in terms of both revenues and number of employees. This report offers an analysis of the 82 organizations including council members, previ- ous conference attendees, and special interest groups from the International Coach Federation surveyed by The conference Board Council on Executive Coaching in 2008, as well as the 31 companies surveyed in 2006. The participants who answered the question- naires are directly involved in hiring coaches no coaches or executives being coached participated in the Survey .

3 It provides insight into: 4 Costs of Executive Coaching 10 Terms of Coaching Engagement 15 Internal Coaching 4 C o u n c i l Pe r s p e c t i v e s - E x e c u t i v e C o a c h i n g Fe e S u r v e y w w w. c o n fe r e n c e - b o a r d . o r g Costs of Executive Coaching Key Findings Hourly Rates for Coaching of CEOs Survey results indicate that, generally, the use of coach- and Direct Reports ing increases with the level of the Executive , and the rates Organizations that coach their top layer of executives pay that organizations are willing to pay for such services a wide range of fees anywhere from under $200 per vary Highlights of findings include: hour to more than $500 per hour with most spending in the higher price ranges. On average in 2008, organiza- The hourly rates that companies pay for Coaching tions report paying between $301 and $400 dollars for services range from under $200 to more than $500 Coaching services at the C-suite level, with a median rate for services at all levels of an organization.

4 Of $ The most commonly stated fee, however, is greater than $500 per hour. The biggest range in rates paid can be found among organizations with small revenues. Fees have increased since 2006. In 2008, more than In general, coaches' hourly rates tend to rise as the one-third (37 percent) of respondents who use Coaching Executive being coached reaches the higher levels of services at the C-suite level report paying more than an organization, and as a company's revenues increase. $500. In 2006, only 26 percent paid more than $500. (Chart 1). However, not everyone at a company's top level is receiving Coaching . Some respondents say they don't A small portion of respondents in 2008 report paying less pay to coach the CEO or other members of the C-suite, than $200 to coach a company's CEO and his/her reports. therefore leaving a number of leaders without exposure And 12 percent of all respondents in both the 2006 and to such development. 2008 surveys report that they didn't provide any kind of Executive Coaching is reaching junior Executive levels Coaching services to their top level of executives.

5 Of some organizations, and includes leaders more than five levels below CEO. Chart 1. Large organizations are the least likely to provide Coaching services to executives two to five levels Average Hourly Coaching Rate below the CEO and his/her direct reports within the for CEO and Direct Reports C-Suite, and companies with revenues of $20 billion 2006. N=27. or more do not coach their lowest remaining leadership levels. $250 $400 $401 $500 > $500. Executive Coaching is also being used outside the 30 44 26. United States. Approximately 60 percent of rates 0 20 40 60 80 100%. around the world match those of the United States, which is used as a benchmark in this Survey . When 2008. N=68. they do not match rates, they are most often $200 or under $201 $300 $301 $400 $401 $500 > $500. lower. 1%. 9 29 24 37. 0 20 40 60 80 100%. 1 The rates-per-hour section of the Survey was revised between 2006 and 2008, with the 2008 Survey providing a more specific hourly fee breakdown than the 2006 questionnaire.

6 The 2008 price breakdowns: less than $200, $201 to $300, $301 to $400, $401 to $500, greater than $500, and not applicable. The 2006 rates were broken down as follows: below $250, $250 to $400, $400 to $500, greater than $500, and not applicable. w w w. c o n fe r e n c e - b o a r d . o r g C o u n c i l Pe r s p e c t i v e s - E x e c u t i v e C o a c h i n g Fe e S u r v e y 5. Chart 2 Chart 3. Average Rate Paid to Coach CEO Average Rate Paid to Coach Employees and Direct Reports by Industry 2 to 5 Levels below C-suite by Industry Non-financial services pay the widest range Financial services firms pay at all price points of rates to coach their C-suite executives. to coach executives two to five levels below C-suite. Manufacturing 23 38 38 Manufacturing 6 6 71 18. N=13 N=17. Financial services 14 21 14 50 Financial services 14 21 29 29 7. N=14 N=14. Government/ Government/. public administration/ 50 10 40 public administration/ 10 20 60 10.

7 Non-profit non-profit N=10 N=10. Non-manufacturing 25 12 12 50 Non-manufacturing N=8 14 57 29. N=7. Non-financial services 6 12 29 35 18 Non-financial services 5. N=17 26 53 16. N=19. Other 50 17 33 Other N=6 33 17 33 17. N=6. 0 20 40 60 80 100%. 0 20 40 60 80 100%. Chart 4. Average Rate Paid To Coach at Remaining Leadership Levels by Industry The most common hourly rate to coach remaining leadership levels is $400 and less, regardless of industry. Manufacturing 17 42 42. N=12. Financial services 33 44 11 11. N=9. Government/. public administration/ 29 57 14. non-profit N=7. Non-manufacturing 17 50 33. N=6. Non-financial services N=13 31 31 31 8. Other 14 43 29 14. N=7. 0 20 40 60 80 100%. $200 or under $201 $300 $301 $400 $401 $500 > $500. Note: Percents may not add up to 100 exactly due to rounding. 6 C o u n c i l Pe r s p e c t i v e s - E x e c u t i v e C o a c h i n g Fe e S u r v e y w w w. c o n fe r e n c e - b o a r d . o r g Cross-Tabulation Breakdown by Revenue Size Chart 5 Chart 6.

8 Size of Companies That Pay to Coach Size of Companies That Coach Employees the CEO and CEO's Direct Reports 2 to 5 Levels below C-suite The smallest companies pay the widest range of fees The most common hourly rate to coach executives to coach their CEOs and direct reports. two to five levels below C-suite is between $301 and $400, regardless of revenue size. Annual revenues $20 billion or more 5 Annual revenues 26 21 47. N=19. $20 billion or more 10 16 47 21 5. N=19. $10 billion $20 billion 17 17 42 25. N=12. $10 billion $20 billion 7 14 57 14 7. N=14. $5 billion $10 billion 11 22 67. N=9. $5 billion $10 billion 9 64 27. N=11. $1 billion $5 billion 9 54 18 18. N=11 $1 billion $5 billion 33 50 17. N=12. Less than $1 billion 8 17 25 17 33. N=12. Less than $1 billion 17 25 33 25. N=12. 0 20 40 60 80 100%. 0 20 40 60 80 100%. Chart 7. Size of Companies That Pay to Coach Remaining Leadership Levels The largest organizations are the least likely to coach remaining leadership.

9 Annual revenues $20 billion or more 15 46 31 8. N=13. $10 billion $20 billion 9 45 36 9. N=11. $5 billion $10 billion 43 29 29. N=7. $1 billion $5 billion 22 33 44. N=9. Less than $1 billion 40 40 10 10. N=10. 0 20 40 60 80 100%. $200 or under $201 $300 $301 $400 $401 $500 > $500. Note: Percents may not add up to 100 exactly due to rounding. w w w. c o n fe r e n c e - b o a r d . o r g C o u n c i l Pe r s p e c t i v e s - E x e c u t i v e C o a c h i n g Fe e S u r v e y 7. Between 43 and 63 percent of organizations, depending The greatest range of fees paid belongs to companies on industry, will pay more than $400 per hour. In 2008, with revenues of less than $1 billion. Eight percent pay the industry sectors least likely to engage in Executive less than $200 to coach their most influential executives, Coaching at the C-suite level are manufacturing and non- while no companies in any other earnings category pay financial services2 19 percent of all respondents in both at that price point (Chart 5).

10 Industry sectors report that they do not provide Coaching services for their CEOs. When companies in the non- financial sector do provide Coaching , the fees paid reach Hourly Rates for Executives every price point (Chart 2). Two to Five Levels below the CEO. When sorted by revenue size, companies with profits Organizations that pay to coach these levels of employees between $5 and $10 billion are least likely to coach the did not pay much more for such services in 2008 than C-suite 18 percent of organizations in this revenue they did in 2006. Note that the middle ranges ($201 to range indicate that they do not provide Coaching for their $300, and $301 to $400) in the 2008 Survey are about the top layer of executives. When companies do provide same as the range of $250 to $400 in the 2006 Survey . Coaching , the most common rate paid to coach top execs varies by company size. For example, companies with About two-thirds (70 percent) of respondents who do revenues of less than $1 billion, revenues between $5 bil- pay to coach executives two to five levels below the lion and $10 billion, and revenues of $20 billion or CEO report spending between $201 and $400 in 2008.