Corporate universities are no longer just a big-company phenomenon. Small companies can use in-house training programs to improve recruitment, increase revenues, and reduce turnover.
In-house training is helping companies attract and retain people, but it also helps employees keep up with the information onslaught
You might think that where there's a corporate university, there's a big company with an even bigger institutional ego bent on molding men and women into company clones. Not so fast. An increasing number of growing businesses are starting their own "universities"--ongoing skill-enhancement programs that draw on both internal and external resources to train new employees and keep veteran ones current with a rapidly changing business environment. "Training isn't just a nice thing to do anymore," says Laurie Bassi, vice-president of research at the American Society for Training and Development, in Alexandria, Va. "Companies are now thinking of training as a strategic imperative."
There are at least two reasons for that: Employees are now keenly aware that training is essential to their future marketability and are making career choices based on opportunities for learning. And CEOs are beginning to realize that the burgeoning amount of new information--combined with the speed with which it bombards the marketplace--makes learning through osmosis increasingly difficult.
Companies with in-house universities report several benefits, including--
Improved recruitment. Edward Beaumont, CEO of CoreTech Consulting Group Inc., in King of Prussia, Pa., says that his technology-consulting company uses training as a key recruitment lure. "We needed a robust training and education facility to be competitive," he says. So two years ago he started "CoreTech University," which offers short training sessions to help employees hone both technical and interpersonal skills, such as quality management and team building. The program, which draws upon employee instructors as well as professors at Pennsylvania State University and Drexel University, is now not so much a differentiator for the company as it is a requirement, says Beaumont. "We're finding that compensation is less of an issue for employees and that growth and career development are more important," he says. "Most consulting firms have something like this in place."
Increased revenues. Bob Kirkpatrick, CoreTech's chief people officer (yes, that's his real title), estimates that the company spends approximately $4,500 per employee each year on training but says that it's ultimately money well spent. Employees can use CoreTech's training to become officially certified as, say, a project manager or a Microsoft Certified Systems Engineer. Every employee is required to attend, primarily on company time, technical and "soft skills" training courses that are linked to the company's overall mission. For instance, a course in project management is tied directly to the company's quality goals.
If CoreTech University sounds like an extravagance, consider this: the company used the curriculum to create CoreTech Institute, a separate for-profit training organization that offers courses to the general public--participants are mostly chief information officers and information-technology managers. It has generated $325,000 in revenues so far and will break even by the end of this year, says Kirkpatrick.
Reduced turnover. Douglas Palley measures the success of his company's university through the significant drop in turnover at Unitel, his call-center company in McLean, Va. Since he started Unitel University two years ago, average monthly turnover has dropped from 12% to 6%--a dramatic change for a company staffed primarily by low-wage employees. "Unemployment in our area was 1.5%, and we were looking for ways to improve retention and morale, and to give people a career track," says Palley. As part of Unitel U., entry-level employees can take such courses as computer training and customer service through a variety of self-directed study programs or at a local university. Palley spent $150,000 on the program the first year, and based on the decrease in turnover, he believes that Unitel U. is "very close to the break-even point."
Better employee advancement. After 90 days at Unitel, newcomers are eligible to become "freshmen" at the university and can take several more hours of classes beyond their initial orientation courses. If they pass, they receive a raise of up to 8% of their pay. Then every 90 days, employees can take more in-depth courses in telephone sales, customer service, and computer skills. When they successfully complete each level (sophomore, etc.), they earn another raise of up to 8%. Criteria for passing are rigorous, says Palley, and "if they're late twice in a 90-day period, they have to start that level over again." The program isn't mandatory, but employees know that training is the quickest path to increased pay and responsibility. "It's been an outstanding recruiting tool," says Palley. Amanda Brust confirms that. "When I took the job, I thought the university would help me move up more quickly than at another company," she says. And it has. Brust, who finished her "sophomore" level at the university last August, started at Unitel in May 1997 as a telephone-sales representative and within eight months was promoted to team leader.
A wider talent pool. Jane Callanan, vice-president of human resources at i-Cube, a Cambridge, Mass., information-technology consulting-services company, credits her company's internal university with easing the heavy burden of recruiting 155 people in the past two years. "The hiring landscape was pitiful," she recalls. "We wanted to tap into college recruiting, to hire people who were very bright but didn't have several years of work experience." A five-week, 9-to-5 program, called i-Altitude, staffed primarily by senior managers, allowed the company to hire workers with little experience and then give them the technical training they needed to serve clients. "It really opened the labor market for us," says Callanan. "We can hire a physics major with a 3.8 but with no computer-science training. After five weeks, they're ready for a project. You can't do that without a good educational program."
When i-Cube employees complete i-Altitude, they can then choose from more than 80 additional courses to help them develop professional and managerial skills to move up the i-Cube ladder. The cost: more than $50,000 annually, which also includes courses at Outward Bound and the Browne Center, two outside experiential-learning programs. Callanan can't quantify the benefits of such generous spending but insists that "people are our product, and we'd be crazy not to continue to invest in them."
Donna Fenn is a contributing editor at Inc.
DONNA FENN is the author of Upstarts! How Gen Y Entrepreneurs are Rocking the World of Business and 8 Ways You Can Profit From Their Success (McGraw-Hill, 2009), about ways Gen Y is changing the entrepreneurial landscape.