Corporate universities

In the modern economy, the value of tangible assets has declined relative to the value of intangible ones.

Summary

Companies that develop corporate universities believe that in focusing on employee competencies, skills, and abilities, they are ensuring their competitiveness and future success. Corporate provided education has been found to improve employee satisfaction and employee attraction/retention, as well as, provide a competitive advantage for many organizations.

Introduction

Why do people leave organizations?

Employees resign for different reasons. Sometimes they are 'pushed' due to unhappiness in their present jobs and seek other employment. Sometimes it is the attraction of a new job or the prospect of a period of not working which 'pulls' them. On other occasions it is both push and pull factors.

Another major reason for voluntary turnover is a lack of training and developmental opportunities. 44% of respondents in a survey by the CIPD (Chartered Institute of Personnel and Development, UK), cited 'promotion outside the organization' as a main cause of labour turnover, 40% pointed to 'change of career' and 37% 'lack of career or developmental opportunities'.

Employee turnover levels[1]

Leavers and the resulting new hires create costs that must be borne by the company. These costs are mainly management or administrative staff time (opportunity costs). Direct costs, such as advertisements and the use of agencies or assessment centres, can also be incurred, and can be substantial.

Employee turnover can, on occasion, positively benefit a company. Examples include when a poor performer is replaced by a more effective employee, or when a retirement allows the promotion of 'fresh blood'. Where business levels are unpredictable, moderate levels of staff turnover can also help to reduce staff costs.

"Turnover" is likely to cause particular problems, from a management point of view, where skills are relatively scarce, where recruitment is costly or where it takes several weeks to fill a vacancy. This is especially true of situations where staff are lost to direct competitors or even to customers, as is the case in many professional services organizations.

Improving employee attraction and retention

A central question is, 'Why would a talented person want to work here?' Organizations with better employee value propositions have an answer to this question. A McKinsey study (1998) looked at 77 companies to investigate talent problems, and suggested that creating a winning value proposition means tailoring a company's 'brand' and 'products' - the jobs it has to offer - to appeal to the specific people it wants to find and keep. It also means paying the 'price' it takes to attract and retain the best performers. Looking at attraction/retention problems against the perspective of enduring employee value propositions, it is important to focus on three dimensions: brand, products and price.

From the company's perspective, the following have a direct bearing on talent attraction and retention: its brand equity, philosophy, vision, mission, culture and values. Other company-related attributes that impact employee retention include high demand on performance, need for new competencies, broader, and deeper job expectations, need for re-skilling and re-deployment, career offerings and growth prospects, goal & role clarity, policies & processes and organizational communication.

As today's workers are more demanding, more diverse, more technically astute, and less likely than workers of a generation ago to believe that the employer has their best interests at heart, they obviously want to be compensated fairly. However, this is not all they want. Today's employees expect more than a job and a wage - they expect:

  • meaningful work
  • to be challenged
  • to see the "big picture" and know where they fit in(eg they want opportunities for career growth and professional development)
  • guidance and feedback
  • on-going education and training

Aggressive development strategies are needed to complement the attraction and retention strategies. Providing development opportunities to the employee (for both professional and career growth), and giving priority to this makes the company's position in the talent market attractive and compelling. Well articulated strategies of development and sourcing increase the attraction/retention strategies in creating a powerful employee value proposition that remains central to the problem of attraction and retention of talent.

Clearly the best way to retain people is to create and deliver a great employee value proposition. This encompasses the following:

  • building and sustaining a compelling brand image with an attractive culture and inspiring values
  • offering good jobs and career opportunities
  • building an effective learning framework
  • investing in workplace infrastructure
  • expelling poor performers,
  • instituting effective reward and recognition programmes
  • putting in place innovative compensation schemes.

But most importantly, attraction/retention works best when the organization is successfully able to convey the message that it cares for employees.[2]

Corporate University

Definition

A Corporate University is defined as the "the process by which an organization integrates strategic and results-driven and lifelong learning throughout its entire workforce chain"[3].

Considering the concept that in the modern economy the value of tangible assets has declined relative to the value of intangible ones, many companies have realised the strategic importance of investing in their human capital and recently they have realised the need to have a "teaching department" internally.

The phenomena started in the US, and most notably in large companies. People have become familiar with Disney University, Hamburger U at McDonald's, or Motorola University. The growth of the corporate university has been so strong that it has started to be commonplace all over the world.

In answer to the question, "what is a corporate university?", it has been stated that "a corporate university is a portal within a company through which all education takes place. It is an organization's strategic hub for educating employees, customers, and suppliers. Corporate universities link an organization's strategies to the learning goals of its audiences"[4].

It differs from a corporate training department, in that training departments tend to be fragmented, reactionary and decentralized, with a wide array of open enrollment programs for a wide audience. By contrast, a corporate university pulls together all learning in an organization by managing education as a business project. It has one head (a dean or a chief learning officer), clear goals, objectives, and long-term strategic plans. It works to get the best deals with both outside universities and training vendors on behalf of all the organization's employees. It also moulds corporate culture by encouraging problem-solving, creative thinking and leadership.

Thus, a corporate university provides strategically relevant learning solutions within a corporation. A strategic learning organization functions as the umbrella for a company's total education requirements. This includes all employees and the entire value chain, including customers and suppliers. In a corporate university, employees build individual and organizational competencies, and this improves the company's overall performance.

As we move into the 21st century, corporate education is taking on new dimensions. During the 20th century, organizational education has moved through technical and vocational training to a greater focus on managerial and leadership education. Corporate education has focused on increasing the number of managers and on improving their skills, for a manufacturing-driven business world.

Employee skills do not endure as they have in the past; for example, most of the knowledge an engineer acquires in school is largely obsolete within 5 years of graduation. Most employees find that they undertake continuous learning throughout their career. Markets are changing rapidly, and the change is no longer evolutionary but revolutionary. Organizations are therefore constantly dealing with change, trying to cope with new markets and products, endeavouring to understand changing consumers, and learning to live in a multi-cultural, world.

These factors are the drivers of the 21st century corporate university.[5]

Brief History of the Corporate University

As stated above, organizations have, from the 1990's onwards, begun to feel increased pressures from the global marketplace, a more discerning consumer, and an increasingly diverse and difficult competitive environment. Previously earned profit margins have been far more difficult to maintain.

As time passes, the shortages in talent, briefly experienced in organizations in 1999-2000, will begin to return in certain areas and will only increase thereafter.

As a response, the amount of training available to all employees increased. Extra effort was placed on executive development. Examples of this included executive MBAs, management offsites and strategic development seminars.

At the same time as this focus on executive and other employee development, some organizations began to place training under an umbrella called a corporate university.

How a Corporate University Works[6]

It is necessary for a Corporate University to consider 3 main issues.

It needs a strategy that will allow it to determine who its best employees are, how to retain them, how to reward them and whether new blood needs to be hired from outside the corporation or whether an internal reshuffle of personnel can suffice. The decision makers need to be aware of the goings on in the Global labour market place, what type of skilled workers are available and where they can be found, as well as having a strong understanding of the skills offered to them by their current employees. Knowing future potential and current employees skill-base will ensure corporations keep up with new market trends.

The marketing and strategy department needs to keep an up to date database of what is happening in the marketplace in terms of the corporation's own performance, that of its competitors and on any external events that may cause an impact on the organization. The marketing and strategy department has therefore a research and data gathering function but the corporation also needs to have strategic in-house short term goals to keep ahead of competition, they need to be able to determine whether an internal skills or knowledge gap exists that would prevent these goals from being achieved to be able to address the problem.

The Corporate University can offer internal classes and courses to help develop employees learning, this can be done through traditional classes, through e-learning or via the web through web-seminars. This is a low cost way of developing employee's skills and an easy way of transferring skills to teams and project groups.

Attracting and retaining the best workers with a Corporate University [7]

By setting up corporate universities, organizations can create a clear competitive advantage as employers. They help attract high quality applicants for vacant positions and also help to ensure that recruits are retained.

Various studies have shown reduction in employee turnover rates with the establishment of Corporate Universities, with reductions in the range of 10% common. For example, High Mark Blue Cross Blue Shield's Information Services Group (ISG) University was instrumental in reducing employee turnover from 16% to 5% over two years. University of Chicago Hospitals Academy measured its success in its first seven years by the reduction in its employee turnover rate from 25.6% (1993) to 15.5% (1999).

Employees rate highly the ability to further their academic learning while developing their careers. Accenture research "showed that learning was among the top three things that people consider when deciding where they want to work. Furthermore their internal research, a survey of more than 2,300 new hires, suggests that learning opportunities were a top reason why they ultimately chose to work for Accenture"7.

Further, where Corporate Universities reach down to the dependants of employees, they can nurture the 'next generation' of employees as well as encourage the attraction and the retention of existing employees. For example, Wochovia Bank, in the United States, gives 10% tuition discounts from Capella University to the family members of all 80,000 employees.[8]

Comparative Analysis

Models of Corporate University. [9]

For a company, as well as having clear what its strategic goals are, it is necessary to focus on the development of the organization and its people. To build a Corporate University, a company should align the staff plans and requirements to the strategic goal, in a way to determine the skills needed to execute the plans; "it's very important to speak the language of your executives. You can't expect executives to get excited about the number of learning objects completed. They want to hear about money and time saved and other direct business results".

  1. Models by purpose[10]:
  2. Development of an organization is achieved through a series of business strategies but also through the development of its staff. If staff is not developed then strategies cannot be implemented and only remain bright ideas. That is why it has become popular for companies to adopt the "Three Prototypes of Corporate Universities Model".

    Reinforce and Perpetuate

    If companies have a winning formula they ensure that formula is followed, the University has a role in reinforcing the formula. Federal Express and Disney are two examples of this, the University enforces their "way", one that has had proven success. They stress the operational excellence that is key to each corporation's success. They perpetuate proven practices.

    Manage Change

    The Corporate University can help a company manage change, sometimes practices need to be adjusted, strategies altered or values are deemed in need of a change. Essentially the method used is one of unfreezing past methodologies, introducing new methods and then freezing these new methods. Amoco and Knight-Ridder have adopted this Prototype.

    At the Amoco learning centre every 12-18 months top managers spend a week discussing the changing nature of their industry and the strategies and practices they will need to implement to achieve success. The Knight-Ridder University has helped executives understand and consider the changing context of the newspaper, media and financial information industries.

    Drive and Shape

    This kind of Corporate University is a primary force for driving and shaping the corporation. This is present when a corporation's future can be best discovered by gathering knowledge and wisdom from the companies' current management team. Its mission states that "learners" explore the ambiguous and the unknown.

    This is where staff issues, budgets, and processes and considered against missions and charters, Motorola has adopted this prototype and has managed to achieve this by offering learning initiatives and focusing on the companies' future growth. "Our Six Sigma methodology is a proven tool set for driving and achieving transformational change within an organization. It is a business improvement process that focuses an organization on customer requirements, process alignment, analytical rigor, and timely execution....... Ultimately, Six Sigma is about more than numbers. It's a highly disciplined methodology and practice that provides the tools you need to achieve consistent, high-performance results from your products and processes.....By increasing performance and decreasing variation, Six Sigma allows organizations like yours to make customer-focused, data-driven decisions that ultimately yield a reduction in product defects, increased profits and employee morale, and high-quality products - a win-win situation for everyone involved."[11]

  3. Models by way of teaching[12].
  4. Three primary organizational models for Corporate Universities have been identified. These models include Classic, Education Portal and Tailored Training.

    The Classic model (also known as the Hybrid model) refers to tuition support from the employer, where employees pursue a degree from a college's standard curriculum. Here, students apply to the college, are accepted and complete required credits to graduate. Sometimes the student's coursework is done via distance learning such as the Internet or mail and videos. Using this type of model has also encouraged corporate universities to provide their curriculum to non-employees. In this model it could be considered also consortia among several corporations, e.g. Talent Alliance (among AT&T, DuPont, GTE and Johnson & Johnson) and LearnShare (among General Motors, Owens Corning and 3M)"

    Through Education Portals, corporations work with training businesses or traditional universities to provide on-line college courses. They may provide the corporation with its own corporate website (portal), and provide students with a company logo-branded virtual campus. This model of the corporate university "offers a seamless blend of courses designed by colleges, commercial training suppliers, and the company's own training staff'. "Many corporate universities have on-line training and training administration systems to connect geographically disparate employee-students and teachers/mentors. For example, Arthur Andersen Knowledge Enterprises operates its Virtual Learning Network. Boeing has FlightSafety Boeing Training International. Eli Lilly has its global Virtual Information System or ELVIS"[13].

    The Tailored Training model refers to those traditional universities and corporations who are "working in tandem to develop distance learning courses designed to address a company's specific needs". Here, corporations direct universities on which components of their standard curriculum should be passed on to their employees. This partnership allows corporations to add their own input and information into the training materials. Examples of collaboration with a university or business school are: Sun University (of Sun Microsystems) and University of California at Sta Cruz' Corporate Training Department; British Aerospace with Oxford and Cambridge; and Daimler Chrysler with Harvard, Insead and Hongkong University. About two-thirds of corporate universities surveyed in 1999 had such alliances;

Accreditation of Corporate Universities[14]

The American Council on Education's Program on Non collegiate Sponsored instruction (ACE/PONSI) was founded in 1974. It evaluates instructional courses and programs offered by business and industry, labour unions, professional and voluntary associations, and government agencies and makes recommendations for college credit based upon such instruction. By 2000, ACE/PONSI recommended that courses from over 250 companies receive college credit.

It could be believed that accredited institutions can threaten traditional universities as they compete for students and faculty. However, it was found that corporate funds have become increasingly important to traditional universities, making up more than 20% of the voluntary support for higher education in the United States. With universities, corporations are able to customize higher education needs to fit their "just-in time skills development". Accordingly about 16% of all corporate education partnerships today are with traditional universities. As an example, Intel now offers its employees the opportunity to enroll in a MBA program through Babson College which offers students a degree that primarily focuses on Intel cases. Similarly, Valencia Community College earns revenue of between $1.5 to $2 million by supporting the college education of Walt Disney World and Universal Studio employees.

Conclusion[15]

  • Corporate universities are founded on a system that understands that the chief concern for knowledge workers in nearly every industry and occupation is the short shelf life of their knowledge, causing them to have to constantly retool their skills.
  • Employees benefit from the corporate university, as more than simply being able to perform their assigned jobs better, they also learn skills and possibly earn degrees, making themselves more marketable to the workplace.
  • Corporate universities are the fastest growing segment of the adult education market. Additionally, those corporations that provide corporate universities tend to have an advantage over the "eligible employee pool," in that they can often be perceived as "employers of choice".

In conclusion, corporate universities try to achieve their mission of developing programs that are clearly linked to business objectives and strategy. These programs are designed to convey corporate culture and focus on learning beyond on-the job training. By doing so, many employees are offered educational opportunities that might otherwise not be available to them.

Case studies

Toyota University[16]

Developing and Launching e-Learning at the University of Toyota

Toyota Motor Sales USA was searching for a training solution that would:

  • provide all employees with immediate access to relevant technology and business training;
  • help maximize the performance of its 8,500 U.S. employees;
  • add an e-learning component to the University of Toyota (its existing corporate university);
  • offer 24 hour technology training to employees, regardless of their geographic location;
  • provide an e-learning curriculum that could be customized to meet any employee's skill level, allowing workers to learn at their own pace; and
  • give employees a variety of formats through which to learn, such as the classroom, at the workspace, at home or while travelling.

Toyota saw Element K as the best company to deliver fully-integrated and blended training. An e-learning curriculum was developed, offered through elementk.com, on topics ranging from personal computing to Web design and information technology. Access to a wide array of technical reference books was also provided.

"Element K's comprehensive choice of integrated solutions mapped perfectly to the learner-centric approach we were striving for," said Ellie Tymer, Associate Dean, College of Associate Education & Development, at the University of Toyota. "We didn't want to just issue our employees ID's and walk away. Element K helped us develop programs and events to make the learning process as engaging as possible, and to support our associates so they could take this new knowledge and maximize their potential at work."

Element K also worked with Toyota to create a system of in-classroom events, such as back-to-school "open houses" and focused workshops that helped groups of learners within the company to develop. The University also utilizes Element K courses as prerequisites for classroom instruction and post-skill maintenance.

The University of Toyota now offers more than 400 courses serving 4,500 registered students, following the integration of Element K's curriculum. Student enrollment has progressively increased since the launch of e-learning offerings in February 1999, "The response among employees to Element K's training solutions and approach to learning has been phenomenal," concludes Tymer. "There's no question that our e-Learning options are having a greater impact than ever before on job performance at every level in the company."

Case study 2: Motorola University in China[17]

MU China was established in 1993 to train and develop world-class staff for Motorola. However, Motorola's commitment to training and consulting does not end with internal employees.

Under agreement with 21 distinguished Chinese institutions of higher learning, MU China currently has 203 instructors to deliver 130 courses in Chinese. Some of Motorola's experienced senior managers also serve as consultants and instructors in MU China.

Motorola outlines the following corporate policies:

Vision: To effectively add values for Motorola customers, suppliers, partners and other potential customers through business consultations, trainings, quality management and leadership development.

Mission: To share Motorola's Best-in-Class experience and insight to its customers, suppliers, partners and other potential customers, through business performance improvement and sustainable fiscal results for clients.

Capabilities: Provide total solutions in Six Sigma business improvement, leadership development program, corporate university design, performance excellence and knowledge management.

Six Sigma is widely adopted today by many leading organizations to improve customer satisfaction. In the early 1990's, Motorola established a process for developing Six Sigma Black Belts (or experts) to perpetuate Six Sigma throughout the corporation. Motorola enjoyed US$ 19 billion in savings due to the overall impact of Six Sigma. Six Sigma Training, Consulting and Certification program includes: Jumpstart Program, Champion Training, Green Belt Training, Black Belt Training, Six Sigma Foundation Training, Green Belt Project Consulting, Black Belt Project Consulting, Green Belt Certification and Black Belt Certification.

MU partnered with a few reputed business schools of local and overseas universities to offer Executive Master degree of Business Administration, Doctor degree of Business Administration, and Advanced Management Programs for Executives in China. These provided audiences with global business prospective and transferred cutting-edge knowledge of leadership and business management. They have been well-regarded by participating executives and local enterprises.

Partnered with Illinois Institute of Technology, MU provides a short course entitled "recent Development in Telecommunications" to practicing engineers and technology managers in Telecommunication industry. The program benefits both internal Motorola employees and external customers.

Utilizing satellite transmission technology, training courses reach participants located across the country. MU partnered with a local technical service supplier to offer specially designed management programmes to middle level managers from manufacturing-based enterprises.

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