Mentoring: Measuring a return on investment

by HCA01 Jul 2009

"Over the last three years I have grown our revenues by over 30% pa and increased profits significantly, exceeding plan each year," said the European CEO of a leading computer company. With revenues in excess of $3 billion and operations stretched across 11 countries, he had been facing significant challenges. He went on to say that the insights, wisdom and guidance gained from his Merryck & Co. mentor delivered a return far in excess of 10 times his investment.

"If the Board asked me to demonstrate where we have got a return on our investment in mentoring, I could not easily point to any one thing," remarked another business leader who was CEO of a FTSE 100 company.

"But," he continued, "I could put my hand on my heart and confidently attribute one third of our profit to the work and insights I gained from the relationship with my mentor." His company had been the worst performer on the FTSE when he accepted the role and, under his leadership, went on to become one of the top performers.

Although both CEOs experienced a tangible return on their investment in Merryck Mentoring, one was able to point to specifics, while the other could only talk in generalities. This can pose a problem for people who want hard data, and invites a question about how companies engaging a mentor can measure a return on their investment.

Not all CEOs are able to readily identify measurable ROIs that could be attributed to their mentors. This is a result of an approach to mentoring which focuses on testing and challenging the business leader's thinking, and proposing new or alternative options. As these emerge the CEO will embrace these as their own insights and integrate them into their agenda. This is the correct outcome, and indicates the executive is developing their capability.

Good mentors recognise that the value they create for the client far outweighs any personal reward or recognition. These mentors focus on helping clients to be more successful. Increasing the effectiveness of the CEO pays premium returns across the whole of the company.

The examples of success abound. As a result of his work with a mentor, one client recognised they were carrying more than eighty million dollars in excess inventory. Another realised a written down business they were carrying on their books at two million dollars could be worth much more to the right buyer, eventually selling at just under ten million dollars. Another avoided a quick-fire decision that could have easily wasted five hundred thousand dollars. Still another saved more than one hundred thousand dollars on search fees because they were able to leverage the networks of their mentor to source a key employee.

Perhaps the most important thing to do is to be very clear at the start of any engagement about what success will look like in the future, from the perspective of each party involved. The other side of this same coin is to be equally clear about the 'way things are today', when the assignment commences.

The HR Director may want to see a shift in the way the candidate interacts with their team, and a greater level of confidence in the way they portray themselves to their peers. The Group CEO may wish to see the candidate developing greater strategic insight and executing against the strategy whilst managing their costs to achieve forecast profit margins. The candidate themselves may want to achieve all these, plus come to a deeper understanding of the various influencers within and without the organisation, build relationships with key people, and simultaneously get some more balance in their life.

Documenting these outcomes at the start enables all parties involved to check against progress. At the same time, regular conversations around the value being created keeps a focus on the commercial nature of the relationship and ensures mentoring is more than a general discussion about life and business. This reveals the true nature of successful mentoring: optimising company profitability by optimising the leader's performance.

About the author

Anthony Howard is the CEO of Merryck & Co. For more information phone +(612) 9231 8670 or email or visit



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