Career Coaching: Weighing the Internal Versus External Decision

Corporate and business coaching has never been more popular. Today, 78% of LinkedIn’s top U.S. companies invest in career coaching. Now accounting for $14.2 billion annually, the corporate coaching industry is set to expand further in the coming years as organizations seek to boost retention and optimize their employees to gain a competitive edge.  

It’s no wonder coaching is so widespread among the corporate world’s heavy hitters. After all, organizations that use coaching report a median return on investment (ROI) of seven times the initial investment. The power of coaching is not in question. In fact, career coaching is widely recognized as a key lever in driving business outcomes and an integral component of any organizational culture. 

While the value of career coaching is largely settled, its implementation, however, is subject to debate. One of the big trends in corporate coaching implementation is the move toward internal coaching — coaches employed by the organization to develop employees from within. While HR leaders may cheer the cost savings and accessibility benefits of internal coaching, many may wonder if internal coaches provide the same level of confidentiality and ROI as external ones. These are valid concerns, and the answer to these questions may depend on many factors like organizational culture, company size, the role of the coach and the hierarchical relationship between the coach and the coachee.  

As a leading career coaching firm for over 40 years, Right Management has seen internal coaching go awry, especially when the above factors aren’t properly weighed. Below, we offer some key issues to consider when evaluating the merits of internal versus external career coaching services for your organization.  

Internal Versus External: Which Career Coaching Services Are Best for Your Organization? 

Here are five potential advantages of internal coaching:  

1. Cost Savings: The company can save money by paying someone already on the books to develop and coach employees.  
2. Walking the Talk: Bringing coaching in-house is a tangible demonstration that the company values employee development. Since career and talent development are key drivers of employee loyalty, according to our “Money Can’t Buy You Loyalty” report, having internal coaches on staff could be a key employee benefit for boosting retention.  
3. Accessibility: Internal coaches are easily accessible, providing continuous support and fostering long-term developmental relationships with employees. This accessibility can lead to increased trust and rapport, enhancing the effectiveness of coaching interventions.  
4. Institutional Knowledge: Internal coaches possess a deep understanding of the company's culture, values and internal dynamics, making it easy to provide guidance that aligns with organizational goals. They can quickly identify and address specific challenges employees face, given their familiarity with internal processes and structures. 
5. Less Burden on Management: Managing an in-house coach can be less time-consuming and costly than overseeing an external, private coach. 

With every pro, there is a con. Here are the potential disadvantages of internal coaching:  

1. Lack of Trust: Coachees are less likely to trust a coach connected to an HR function. As a result, the coachee will be hesitant to divulge information that may be critical to their success.  
2. Privacy Worries: Confidentiality, a key practice of coaching ethics, can easily get compromised when coaches play multiple roles in the organization.  
3. Limited Viewpoint: Because internal coaches are part of the organizational culture, they may be unable to contribute an outside viewpoint that can be crucial in helping the coachee gain perspective on key issues.  
4. Poor Return on Investment: Using individuals who have minimal training in career coaching can dilute the effectiveness of coaching.  
5. Not for High-Level Executives: Research shows that only 13% of top-line leaders are likely to use an internal coach. Executives, in particular, need the confidentiality and wide-ranging industry expertise that only external coaches can offer. 

Best Practices for an Internal Career Coach and Coaching Program 

If your organization has made the decision to implement an internal coaching program, here are 10 guidelines that can help you and your coaches avoid pitfalls and achieve organizational goals: 

1. Clarify the purpose and target audience of coaching and the boundaries around confidentiality among stakeholders. 
2. Define roles and responsibilities of the coachee, the coachee’s manager, the coach and other stakeholders. Go out of your way to demonstrate transparency.  
3. Create “small wins” to encourage those who are eager to grow and receive coaching.  
4. Use only ICF-certified (or equivalent) coaches. This will ensure you use high-quality coaching resources.  
5. Ensure coaches are solely dedicated to coaching or make coaching their top priority.  
6. Avoid designating internal coaches from the ranks of HR where this is just a side part of their job. Instead, consider having dedicated coaches within HR.  
7. Maintain distance by not assigning a coach from the same department or team as a coachee.  
8. Design a method of measuring ROI and IOB (Impact on Business).  
9. Integrate internal coaching with external coaches. The majority of organizations (67%) prefer this approach, finding it a valuable way to marry the best of both worlds.  
10. Use internal resources for lower-level leaders and/or independent contributors while dedicating external coaches to mid-level managers and above. 

In conclusion, while the debate between internal and external career coaching continues, it’s clear that both approaches offer unique advantages and potential drawbacks. For organizations looking to implement internal coaching, adhering to best practices and integrating internal resources with external expertise can maximize the benefits and mitigate the risks. Ultimately, the choice between internal and external coaching should be driven by the specific needs and goals of the organization and its people, ensuring that the coaching strategy aligns with its broader objectives for growth and success. 

To learn more about Right Management’s career coaching services and how we can help you design a coaching program that’s right for you, please visit our coaching solutions webpage.