Raymond Madden, Executive Director of Education and Training at the Institute of Chartered Accountants in England and Wales (ICAEW), Believes That Corporate Universities Will Offer Their Own Degrees. but They Will Remain Reliant on Academic Institutions
Madden, Raymond, European Business Forum
In 1993, there were corporate universities (CUs) in around 400 companies worldwide. By 2001, that figure had jumped to 2,000. Today, the proliferation continues, and, for many companies, the establishment of a CU is beginning to look like best practice. Why the growth? In a nutshell, Western firms have come to realise that the old platitude "people are our greatest asset" demands a strategic response.
As our heavy industries have been replaced by services, so our economies have become dependent on the exploitation of knowledge. In this context, workforces with creativity and initiative have a competitive advantage.
One way to recruit and retain talented staff is, of course, to continuously improve their knowledge. This can be achieved through outsourced education. However, during the nineties, many large companies decided their training budget would be better spent if it were focused on skills with a direct impact on the bottom line, rather than on, say, the generic toolkit provided by an executive MBA.
At the same time, the idea of the "learning organisation" - under which internal knowledge was shared and reused more efficiently - was becoming a best-practice model. Moreover, branding was gaining recognition as a powerful force that needed to be at or near the centre of company strategy; it followed that a CU could help to permeate the values behind a brand among staff, aligning them to a strategic vision.
More recent drivers for growth in CU numbers include the growing popularity of "just-in-time" training (bite-sized learning that enables workers to learn on the job), which traditional universities are not equipped to provide; and the rise of highly educated workforces in Asia, which are putting pressure on Western firms to find home-grown talent.
Of course, the term CU has several meanings. It can refer to nothing more than a glorified training department. However, most CUs are now strategically positioned to enhance business performance through tailored development. Ultimately, their goal is to increase shareholder value by upgrading skills more effectively than external training.
A few specific case studies offer a glimpse into the future of the CU. At IBM, for example, the "Centre for Advanced Learning" aims to achieve a quantifiable return on investment (ROD in addition to its educational goals. It developed a skills course for new managers called "Basic Blue" in response to exit interviews that showed dissatisfaction with management was a key factor behind many resignations. The programme involved 5,000 staff but cost only $5m because it was "blended" - it was 75 per cent distance-learning and 25 per cent classroom-based. The ROI was reportedly 2,285 per cent, with a cost avoidance of $88m based on a three-year projection.
In many companies, the desire for quantifiable results is coupled with the treatment of the CU as an "intrapreneurial" cost centre. At ABN AMRO, we fully charged out our services to the business and developed a cost-neutral position. By providing external client training, we generated revenue and helped the business win new mandates.
CUs at other major firms such as Sun Microsystems and Motorola have similar financial structures. …