Corporate Universities
from Summer 2000
by John Engen
These schools are hot. Fifteen years ago, 400 companies ran their own centralized learning organizations. Today, the tally is more than 1,600, according to Jeanne Meister, president of Corporate University Xchange, a New York City-based firm that tracks corporate learning trends. And those that have them, flaunt them. More than 50% of companies with in-house learning structures surveyed by Meister`s firm mention these corporate universities in their annual reports. "This is something that investors perceive a lot of value in and boards want to talk about," she asserts.
So if you`re a director of a public company that doesn`t have a corporate university, don`t be surprised if you`re asked to create one. Once the province of big, high-profile companies-think of McDonald`s Hamburger U-in-house schools that teach employees everything from proprietary skills to the nuances of corporate culture are sprouting up everywhere. And while overseeing corporate universities is a management job, their costs and strategic importance are board-level issues.
For a company to capitalize on the opportunities laid bare by a new technology, employees must understand in detail how it works. Increasingly, there`s no place except the organization itself that is capable of transmitting that knowledge through a corporate university. "Things are changing so fast that even if a traditional university did a great job of educating a new hire, their knowledge is obsolete within a year," Meister says.
Companies such as General Electric, Whirlpool, and Southwest Airlines regularly cycle employees through in-house education programs. Telecom giant Sprint offers nearly 3,000 courses through its University of Excellence; last year Sprint`s 78,000 employees attended an average of about six days of classes each-465,000 days in all.
Increasingly, corporate chieftains view in-house learning as central to business success. Sprint`s 10-year-old university was the brainchild of Chairman and CEO William Esrey. At Texas Instruments, Chairman and CEO Tom Engibous audits courses to gauge their quality and effectiveness-and perhaps even to learn a thing or two himself about the issues confronting employees.
The average annual budget of a corporate university is $17 million; some devour upwards of $100 million. As smaller companies join the trend, this average may fall, according to Meister.
The intangible nature of education makes board approval of such expenditures a complicated matter. Educators tout return on investment, and companies can measure pre- and post-course performance to determine what employees are garnering from classes.
"Any company`s competitive advantage is its people," says Sandy Price, head of Sprint`s University of Excellence. "If you want to boost the return on investment of your technical and personnel infrastructure, you need to build and leverage your intellectual capital."
Innovations are emerging in the ways corporate universities operate and how they`re paid for. "We used to have a `build it, and they will come` mentality," concedes Barbara Weinberger, manager of Texas Instruments` business education team. Now Weinberger`s account executives attend management meetings and talk with department heads to craft programs with TI`s business priorities in mind.
Likewise, new accountability standards-and profit opportunities-are emerging. The folks at Sprint`s U of E, for example, say they`ve been approached by other companies to provide training. A growing number of in-house schools are being structured as individual business units, with budgets, strategic plans, and targets. Who knows, perhaps one day some of these organizations for higher learning will be spun off as stand-alone profit centers.
