The Coming Educational Transformation

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The Coming Educational Transformation

In previous recessions, one of the first costs that corporations cut was the cost of educating their employees.  Training workers and developing new initiatives is expensive, and that expense was a big and easy target for companies under pressure to economize in hard times. 

But according to a recent study highlighted in Strategy+Business,1 despite layoffs and corporate restructuring, savvy executives are seeing education as the opportunity of the future for at least five reasons:

  • One reason is that education improves productivity — companies can get more output from each employee, so the cost is actually an investment that leads to higher profits.
  • The second reason is that companies can gain a competitive advantage by making their employees more competent and giving them broader "skill sets.
  • The third reason is that learning improves morale, because workers realize that the company is not only planning on being around, but it is planning on keeping its employees around, too.  It's not going to invest in them and then fire them. 
  • The fourth reason is the shift to a knowledge economy.  In the 19th century model of a corporation, employees were trained in a rote task and then simply repeated it until they retired.  Today, employees have to be able to think critically and analytically, to solve problems, and to innovate.  To do so, they often have to move out of their area of specialty and do completely new tasks — and they have to keep up with a rapidly changing technological landscape.
  • The fifth reason is the aging of the Baby Boomers.  As Boomers retire and take with them valuable skills and knowledge acquired over an entire career, those capabilities have to be transferred to younger employees who have not had a lifetime to absorb company-specific knowledge. 

Observing these factors at work in the economy led Booz & Company to conduct interviews in 2008 with senior corporate managers in Fortune 1000 companies.  This is important, because half of all the money spent in the United States on corporate education is spent by those Fortune 1000 companies, even though they account for just one percent of all businesses. 

The objective was to understand how these leaders were meeting the challenges.  Among the chief findings of the study was that corporations are more enthusiastic than ever about educating their workers...

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