Most of the times, we use coaching and mentoring interchangeably. Philosophically the two terms are the same. Both have an inherent focus on development of an individual. At the base, it is about relationship between two people, the methods to guide or train may differ.
Talking of organisations, a mentor is someone who is a senior colleague or a team member who is a buddy and guides, supports and advises you on products, processes and even conduct. A mentor helps in understanding your challenges, problems and issues and gives you guidance accordingly. It is natural to feel motivated and inspired in the company of a mentor. Mentorship is often encouraged in companies at different levels. It not only helps to guide newcomers and fishers but also helps to create bonds that cultivate a better culture, leading to a holistic organisational development.
Coaching on the other hand is a long drawn process. A coach can be someone within or outside the organisation. A coach attempts to understand the strengths and weaknesses of the coaches and then creates a development plan. The aim of the the development plan is to help the individual realise his true potential. Coaching is more of a consultative process with full participation from both the ends.
Mentorship and coaching both are ideal for an organisational set up. The company management must be adept at deciding the levels of the two processes.