Corporate Universities Graduate to the Next Level

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Corporate Universities Graduate to the Next Level

The concept of the corporate university began in the 1920s, when General Motors purchased a school that trained automotive workers in engineering and management skills. The next major corporate university was General Electric’s Crotonville campus, which opened in 1955.

By the early 1980s, more than 400 companies had opened their own universities. Over the past 15 years, the number has quintupled as more corporations prepare themselves for competition in a knowledge economy.

According to The Chronicle of Higher Education, there are now more than 2,000 corporate universities in the U.S. alone, and the number is still growing rapidly.1 According to Fortune magazine, most of the Fortune 1,000 companies now have them.2

Why are they so popular? A survey of corporations that have their own universities by Corporate University Xchange, or CUX, a corporate education and research firm, reveals five major contributions that corporate universities have made to their organizations:3

  • Enhancing employee performance and productivity.
  • Elevating the importance of education by providing a formalized learning process.
  • Communicating the corporate vision and philosophy to employees.
  • Establishing uniformity and consistency throughout the organization.
  • Supporting change in the corporate culture.

Another CUX survey found that more than half of the 170 corporate universities “significantly improved their [organization’s] business performance.” Companies with corporate universities have an annual voluntary turnover rate of about 13 percent, according to CUX, compared with an average of 21 percent for all other companies.

The emphasis on corporate universities is the result of a fundamental change in management theory. It used to be that companies recruited candidates from the best colleges and expected them to arrive at work with the education they needed to perform their jobs. Receiving an MBA was the equivalent of reading every book in a business library, in which the titles never changed.

But in a time of globalization, relentless changes in technologies, and hypercompetition, a college degree issued five years ago is worth little more than a five-year-old newspaper. The knowledge that managers need today changes constantly, so their need for education never ends.

In the words of Christopher Galvin, former CEO of Motorola, “Motorola no longer wants to hire engineers with a four-year degree. Instead, we want our employees to have a 40-year degree...

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