Like teaching or instructing, mentoring is essentially development through exchange of wisdom; with the wisdom moving from the more experienced, usually older manager to the less experienced, usually younger protégé. To be a mentor therefore requires us to have 'been there, seen it, done it' so to speak. Mentoring is very popular amongst businesses that seek quickly to guide talented employees into the top jobs. It often fits hand in glove with highly structured fast-track development schemes.
Mentoring is seldom concerned with day to day operational issues as these are the responsibility of the line manager. Mentoring is normally more focused on long-term development matters and as such mentors are often selected from outside the direct reporting line of the mentee. This has a particular advantage of course if it is relationships within the reporting line that are proving problematic for the mentee. As with most one to one help, the chemistry within the relationship is key and not every mentoring partnership will work. It's important that there's at least some element of choice in terms of who ends up working together.
Coaching - as I've set out in detail in other articles - does not rely on the coach being more experienced than the coachee. In fact coaching does not require any background knowledge of the issue at hand at all. I'd go further by saying some of the best coaching I've witnessed happens when the coach knows nothing of the situation their coachee describes and consequently their coaching is more pure; uncontaminated by the coach's own experience.
Coaches too are often selected from outside the reporting line although I personally believe it is often easier to combine the roles of manager and coach than it is of coach and mentor.
In the end perhaps it is more useful to consider the similarities than the differences. Coaches and mentors are both concerned with the growth of other people. Their rewards come from seeing the people they work with grow and develop; they are not driven by ego. Coaches and mentors both set store by their ability to listen and to ask questions designed to help people think. The skills and attributes of coaches and mentors are very similar. A mentoring session may provide opportunities to coach and a coaching session a chance for mentoring. Good coaches usually make good mentors and vice versa.
I know for a fact that The European Mentoring and Coaching Council (EMCC) has given up trying to separate the two; hence the name. The Coaching and Mentoring Network similarly combines the two and organizations concerned with utilizing coaching and mentoring may be best advised to adopt a similar tactic.