Coaches, whether external or internal, support leaders by helping them navigate through change, manage transitions, and handle business and personnel challenges. Managers are often expected to add coaching to their leadership repertoire, and companies offer 360-degree feedback and individual development planning that incorporates components of coaching. But even in these instances, there is still a need for one-to-one coaching to guide individuals to improved performance. In response to the demands of today’s difficult economic climate and budget restrictions, companies are looking inward to identify talent who can provide coaching services to others.

How do you know whether external or internal coaching is better for your organization? Here is a guide to help you make that decision.

External coaches do not work in the same organization as their coaching clients. Typically, they have completed an extensive, accredited training program and have special expertise in a certain skillset that matches the needs of the coachee. Most work with executives and other high-level leaders. Since they are not affected by internal politics, external coaches more readily offer sensitive feedback and can focus exclusively on the coachee’s needs before, during and after coaching sessions. The openness of the relationship usually leads to significant performance results in a compressed timeframe.

Advantages of External Coaching

• Specialist skill and experience
• No distractions from other responsibilities within the organization
• Unaffected by company politics or culture, potentially making coachees more comfortable discussing delicate issues
• Offer sensitive feedback, crucial to performance improvement

Disadvantages of External Coaching

• High cost
• Unfamiliar with organizational culture and processes
• Coachee’s short-term needs may not align with the coach’s availability
• Changes may not be feasible within the company or team

Internal coaching programs are becoming more popular, especially because they are often more cost-effective. Internal coaching engagements are usually shorter, have a specific number of sessions and aimed at individuals who are early in their leadership journey. Engagements often are more targeted around a tangible deliverable, such as offering 360-degree assessment results, following up on talent reviews or as part of a larger development program. Internal coaches can leverage their knowledge of the company culture, processes and key leaders to help the coachee achieve improved performance or overcome challenges.

Advantages of Internal Coaching

• No direct cost
• More opportunities for the coach and coachee to know one another on a personal level
• Coaches understand the organizational culture and processes
• Coaching engagement can piggyback off a larger development program, which may help accelerate results

Disadvantages of Internal Coaching

• Coaching takes time away from day-to-day responsibilities
• Difficulty maintaining confidentiality in planning, conducting and sustaining relationships with the coachee
• Coachee may be more guarded and may not be willing to divulge sensitive information or question organizational processes
• The attitude of the coachee and the coach toward the organization
• Coachee may feel like his or her new ideas may not be well received

Internal and external coaches should share the following characteristics:

• Embody a certain level of responsiveness and core competencies
• Follow a coaching method or model
• Outline a clear contracting agreement
• Vet all policies and procedures around confidentiality and record-keeping with the client
• Establish role clarity for both the coach and coachee and discuss any potential conflict of interest that may emerge

Guidelines for Building an Internal Coaching Program

Human resources, talent management, organizational development and effectiveness, and learning and development professionals have many of the skills and knowledge that are crucial in effective coaching. To use internal coaching, gather these individuals and train them in a way that builds off their current skillset. Use a formal coaching model, such as GROW, to teach internal talent how to manage the coach-coachee relationship, structure a session, ask great questions and maintain confidentiality, and you’ll have a successful internal coaching program.

Here are some general guidelines for internal coaching programs:

• Define your goals. When there are clear and appropriate standards for who will participate and what the goals are, coaching engagements are more effective.
• Formalize the coach selection process, and select coaches based on specific criteria, such as a set of core competencies and skills.
• Set confidentiality policies and clearly communicate them with both the coachee and his or her manager.
• Create a continuous development program for internal coaches through communities of practice, a forum to share and ask questions, and a hub for exchanging resources. The cohort should observe the same confidentiality guidelines that the coaching engagement adheres to.
• Weave assessment tools into the program.
• Establish a pool of dedicated and capable individuals to manage the processes and coaching relationships.

Coaching can benefit both individual contributors and leaders. The process of choosing the right approach, whether it’s external or internal coaching or a combination of the two approaches, should involve thoughtful consideration by all parties involved.