The corporate world largely underuses four-year universities and community colleges as resources. The Chief Learning Officer magazine Business Intelligence Board survey shows that almost half of the companies surveyed have no relationship with a unive
by Michael Ph.D.
March 1, 2006
The corporate world largely underuses four-year universities and community colleges as resources. The Chief Learning Officer magazine Business Intelligence Board survey shows that almost half of the companies surveyed have no relationship with a university, and 62 percent of companies Bellevue University surveyed are not satisfied with the relationship they do have. The challenge to corporations is to learn how to tap university resources successfully.
Universities have significant learning expertise and assets that they can rely on to develop and deliver curriculum to corporate employees. However, in a historical sense, many universities believe that their mission is to create knowledge and deliver that internally developed know-how primarily to recent high school graduates. Thus the term “continuing education” often refers to adults, as though the primary role of education is something other than adult learning.
The U.S. military partners extensively with universities. West Point, the Naval Academy, the Air Force Academy and the Coast Guard Academy are the accredited degree-granting institutions benchmarked for real-world results. The elements of their military-university partnership define several best practices for organizations to consider.
Best Practices in Partnership
ROI provides a useful framework for assessing specific best practices. In the ROI calculation, the “R” represents the returning value of the learning outcome to the company. Most ROI calculations lose credibility when subjectively defined outcomes are assigned numerical values. Fortunately, it is possible to improve business outcomes even without the assignment of numerical values.
In the case of the military and its academies, the return value of the subject matter studied is defined by the goals of the branch that funded the education. Students enrolled in a bachelor’s program at the Naval Academy in Annapolis, Md., study naval science, command and control, and tactics and skills related to naval combat. They do not major in psychology or even the geometry of artillery shell trajectories, a subject that might be taught at West Point.
The curriculum of each academy is targeted to impact the strategic outcomes that it supports. As a result, the academies enhance the return to the specific branches of the military they supply with leadership talent. The military model should be examined in the context of how most private enterprises manage, or more accurately, don’t manage, their university partnerships.
The first priority for best practice in university partnerships is to make sure the employee’s degree program aligns with the needs and business goals of the corporation providing the tuition reimbursement. This sounds obvious, but it’s not something the human resources departments managing tuition reimbursements usually do. In its most effective form, the HR department has to use the same best practice as the military. Under this policy, students are only reimbursed with corporate capital when they secure degrees in certain qualifying areas. If students choose an area that the corporation hasn’t authorized, the corporation won’t invest in their education. Through this policy, corporations avoid non-productive investments with little to no return to the enterprise.
This best practice requires a change in culture and language at most corporations. The relationship with the university needs to be a partnership, not an arms-length vendor structure, which is the case for many U.S. corporations. It also requires companies to view educational expenditures as strategic investments, not employee benefits. Employee benefits, such as health insurance or pension plan contributions, are meant for all with no exceptions. The company provides these values to employees without expectations of future return, other than continuing employment. The migration from employee benefits to investments requires the companies to define areas of curriculum that relate to the goals of their organizations.
An additional component of the partnering model worth investigating is the continuing obligation of the employee receiving the education funding. It is the policy of all the U.S. military academies that students receiving education benefits are obligated to serve in the military branch paying for the education. That is not the case with most U.S. corporations. Few corporations that offer tuition reimbursement have a policy requiring repayment of the investment in the event the employee voluntarily terminates employment during the obligation period. The majority of corporations impose no continuing obligation on the part of the employee, largely because corporate payment is viewed as an unrecoverable short-term expense instead of a long-term investment that retains value over time.
If a private firm has an annual turnover of 14.4 percent per year (the average for U.S. corporations), departing employees reduce the return on educational investment by 14.4 percent each year, independent of the specific value of the return. Any return on investment made in the first year of investment, on average, is reduced by more than half within five years. This exposure for the corporation can be significantly reduced through policies that shift the payback responsibility to the employee.
The first activity of a university partnering relationship should be the development of a targeted curriculum. At a minimum, a discussion between the company and the university is required. If the university is not willing to engage in substantive dialogue around curriculum, there is a low potential for the educational partnership. Specifically, the conversation needs to link the company’s desired outcomes to the learning investment being made. For example, if the investing organization needs leadership, then the partnership discussions should focus on what leadership means in the context of the business challenges the organization faces.
In the military “business,” what leadership means in the context of combat goals is very specific—command and control. The military designs its curriculum to specifically target those leadership elements. The military makes large investments in complex simulations where a multitude of variables are changed in time-compressed learning exercises. Successful leadership is defined as those command-and-control actions that produce the best combat outcomes for those simulations. Those same high-cost simulations would be of zero value to Wal-Mart in the development of its leaders.
Command-and-control leadership curriculum would be inappropriate for developing leadership skills for an organization such as Google, where the success of the enterprise depends on the free-spirited innovation of individual employees. The command-and-control curriculum also is ill-suited for an intellectual property company, such as Accenture. The point is that even in the domain of “soft skills” development, such as leadership, the value or return from a specific curriculum a university offers depends on how well that curriculum aligns with the goals of the investing organization. It is definitely appropriate for the partnership to involve discussions about curriculum design and content to maximize the productivity of the learning experience. In those discussions, the university has the authority and responsibility to ensure that the agreed-upon curriculum fulfills regional accrediting body standards.
Although it has not been the historical precedent of many American universities to engage in curriculum-design discussions with corporations, times are changing. Several economic factors are forcing universities to reconsider their historical position. State legislatures are reducing significant taxpayer funding while the cost of tuition to the individual learner rises at rates far above inflation. In addition, aggressive investment in private universities is supplying capital to fund new curriculum development largely unencumbered by the culture restrictions typically imposed on their land-grant counterparts. The result is an increase of universities willing to seek alignment with customers in their target markets.
It is also appropriate for the investing organization to seek alignment between the tuition-payment policies of the university and the tuition-reimbursement policies of the corporation. There are many actions the university can take to integrate its payment policies with the financial needs of the investing organization. Some of the more obvious are the timing of payments, the verification of student attendance, documentation of performance and the contract obligations of the employee. With this last policy, many companies might be reluctant to impose a repayment contract on employees for fear that it would require the company to invest in an aggressive and potentially expensive collections process—hardly a core competency of most human resources departments. However, there are many readily available policy options that are attractive to the internal collections organization.
The corporation is not required to take on the financial risk associated with the collections activity. The financial obligations of the educational investment can be transferred to the employee by requiring that the employee sign a contract obligation with the university. This allows the company to dispense tuition reimbursement directly to the employee once the university supplies documentation of completion. This removes the financial risk associated with retention and the corollary collections activities from the company. In this arrangement, the partnering university must be willing to carry receivables based upon the promissory note of the student.
The Benefits of Partnership
There is substantial real-world benefit to a corporation that successfully partners with one or more universities. Where the learning largely involves targeted skills and compliance training, the corporation often has to revert to using work time for delivery. This scheduling removes the employee from normal productive duties and involves direct costs. In the case of learning in pursuit of an undergraduate or graduate degree, employees are motivated to invest their own time in the study activity because they are investing in a personal asset as well as creating an asset for the company.
According to College Board research, potential career advancement is the motivation for more than 85 percent of the adults who pursue a degree. In general, the first desire of the employees is to advance within their own company. Failure to have career-opportunity discussions concurrent with the learning activity puts both the employee and the educational investment at risk.
In addition to the benefit of leveraging existing university development and delivery assets, university partnerships have one additional benefit not normally available within corporations. Almost all universities have well-trained and motivated enrollment and advising staffs. Those professionals can assist employees to design a learning plan that has a wide range of options and benefits to the employee and the company.
Overall, universities have a multi-billion-dollar investment in learning assets that offer potential to companies willing to explore ways to access those resources. In the absence of proactive management of the partnership, those assets largely remain inaccessible to the corporation. On the other hand, through discussions with the right university partner, those resources can be tapped to enhance the ROI on the company’s learning investment.
Michael E. Echols, Ph.D., is vice president of strategic initiatives at Bellevue University. Prior to joining Bellevue University in 2000, Echols worked for General Electric Corp., General Dynamics Corp. and Inolex Chemical Company. He can be reached at mechols@clomedia.com.