Three imperatives for corporate universities

Written by Hervé Borensztejn on 13 September 2016 in Features
Features

Far too many internal training programmes waste money and align poorly with the company’s long-term strategy. They can do better.

Since the late 1950s, dedicated training centers have become standard fixtures for ambitious global companies. Corporate universities mimicking famed centers such as GE’s Management Development Institute in Crotonville, New York, and McDonald’s Hamburger University, near Chicago, have opened at thousands of companies worldwide. 

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But today, many of these learning centers are missing the mark, and corporations are wasting billions of dollars on programmes that don’t align with their long-term strategy.

Case in point: At one company, about 90 per cent of managers who attended leadership training said the program was outstanding, but still about one-third said they didn’t perceive any real change in their work habits or attitudes after going through the program. More troubling still, a year after attending the program, about 40 per cent said they couldn’t identify any business impact from the effort.

Nonetheless, some companies are getting more from their training programmes. Indeed, successful companies have used a variety of methods to ensure that corporate learning aligns with business strategy, and the details for each program must match the contours of its corporate host. But we find that adjustments across three broad areas are the most powerful tools for improving the value delivered by corporate universities: organisation, scope, and metrics.

Organisation

If a corporate university is to play a central role in advancing long-term strategy, it cannot be isolated from the rest of the organisation. On paper, corporate universities usually fall under the purview of the heads of human resources or, at times, the CEOs themselves, but, in practice, they are too often distanced from the centers of power.

The deans of corporate universities must have clear and frequent access to the CEO and other senior executives and must attend executive committee meetings and other high-level gatherings, such as executive retreats.

Such close relationships are beneficial because the agenda priorities of the board and executive committee should be the guiding lights for shaping the curriculum at corporate universities.

Ultimately, the curriculum at corporate universities should reflect not just the needs dictated by human resources but also the needs demanded by corporate strategy. For example, a high-level workshop on finding the right balance between products and services should be designed to attract eager participants ready to have open conversations around the challenge, explore a wide range of scenarios, and introduce new ideas. Only if there are actionable results from such a workshop would human resources be brought in to support the effort.

Close links with senior management would also help shift the focus of corporate universities. Many follow a bottom-up approach to learning, filling capability gaps that hinder ongoing business. But this perspective must be leavened with top-down thinking, addressing capabilities needed to implement new strategies.

Career paths through the organisation also augment the link between learning and strategy. Often the deans of corporate universities come from a background in education and have little experience in business management.

To attract the best candidates and help ensure that leading a corporate university is seen as a valuable step in an individual’s career path, deans of corporate universities should go on to senior positions, such as heads of human resources, strategy, innovation, or digital strategy.

Among many examples, Susan Peters led GE’s Management Development Institute before becoming the company’s head of human resources and Immanuel Hermreck ran Bertelsmann University before rising through the ranks to become the company’s chief human resources officer.

From a broader organisational standpoint, corporate universities that teach next-generation managers to face new challenges and pursue opportunities can help a company minimise the need to recruit externally. Retained talent returns greater value from the investment a company has made in their training, builds loyalty, and helps maintain a valuable institutional memory.

Scope

In principle, the scope of corporate universities can be almost limitless, so long as it contributes clearly to strategic success. Temporally, the scope must encompass today’s needs as well as those likely to arise tomorrow. Programs offered by corporate universities should be reviewed at least once a year to ensure that they reflect the agenda of senior managers. In addition, topics that are controversial or lack consensus should be given special attention.

In addition, corporate universities must be prepared to develop capabilities in individuals, teams, and entire organisations. Individual development follows a well-known path: formal programmes supplemented by informal efforts, such as peer-to-peer coaching, to develop skills and behaviours.

Corporate universities can also be effective in building trust and a team spirit among participants and senior managers by maintaining relations with alumni and monitoring and supporting their progress.

As part of an organisational transformation, corporate universities can use tools such as scenario planning around a variety of topics, from portfolio and risk management to mergers and acquisitions, to build capabilities and a company-wide understanding of these key areas. In one example, a global oil company asked its corporate university to develop a program around volatility and uncertainty.

As one part of the program, the university ran a business simulation that assumed global oil prices had dropped 50 per cent, a possibility that seemed inconceivable at the time. When the price of crude oil subsequently fell by more than 75 per cent later that year, the company was better prepared than its competitors and reacted more quickly to contain costs.

Metrics

As with any aspect of business, the impact of corporate universities must be clear if companies are to justify the investment. Unfortunately, common metrics, such as hours of instruction or number of students, measure effort rather than impact.

This is a mistake. One IT company in the United States assessed its corporate university solely on the number of attendees each year. In response, the university expanded its scope to induction and health and safety programme, essentially ensuring that everyone in the company passed through its classrooms at least once a year. Its performance metrics were outstanding—on paper—but its real impact on corporate strategy was minimal.

Useful metrics should focus on results and will vary based on corporate priorities. For example, one European electrical engineering company believed senior management needed to be more diverse and that succession for top positions required better planning.

In response, it developed specific key performance indicators to track progress in meeting these challenges: age, gender, and background of company leaders; the number of senior managers with potential successors in place; and promotions earned by leadership course alumni, among others.

To face the challenges inherent in the modern global market, corporate universities must understand and confront their own internal tensions. Development programmes that address current and future needs compete for limited corporate resources, and it is often tempting to accumulate short-term wins to justify investment in training.

But the most successful corporate universities reflect the intrinsic link between development and strategy, address future needs, and focus on organisation, scope, and metrics to ensure a balanced program that contributes to ongoing success.

About the author 

Hervé Borensztejn is a partner in Heidrick & Struggles’ Paris office and a member of the Leadership Consulting Practice. You can contact him via hborensztejn@heidrick.com.

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