U.S. EMPLOYERS SPEND APPROXIMATELY $109 BILLION annually on employee learning and development, according to the 2006 State of the Industry Report by the American Society for Training and Development (ASTD). Out of those same dollars, the report estimates that roughly $29.5 billion is spent on external services, ranging from consultants to university contract education programs.
So less than a third of the nation's total training and development dollars are given to colleges and universities whose sole mission is education.
What does this say about higher education institutions? Plenty. Many educators believe schools must offer value-added services, such as customized programs, to employers. Some claim that schools need to develop effective sales or marketing strategies to build and reinforce relationships with potential employers. Yet others point to culture clash, comparing schools that are thought to be inflexible and resistant to change to businesses that routinely reinvent themselves to successfully compete.
Recognizing these lost training opportunities, some IHEs are changing how they do business and are stepping out of their traditional academic roles to meet employers halfway. Unlike in the past, they're partnering with companies to deliver bottom-line results that enhance employee knowledge and productivity. Their hope is not only to grab more of those training dollars but also to partner with employers to build and develop this country's workforce.
Timothy Sloate, director of research at the University Continuing Education Association in Washington, D.C., has already seen the signs. He says that in the past, the biggest complaint about IHEs from the corporate sector was that they were reluctant to modify their programs or create new ones based on employer needs.
"What we've seen in the past few years is more flexibility in when courses are offered and in the delivery format, especially online education," he says. "They'll go to the employer, help them do a needs assessment, then work with the employer to develop a more customized program to meet their training needs."
He adds that many schools are also developing post-baccalaureate programs in high need areas, such as information technology or human resource management. Some are for credit and can be applied toward a master's program, while others have been created mainly to meet the needs of local employers.
What's partially driving these changes is the hefty revenue often generated by contract education programs. For instance, at the Executive Development Center at Bryant University (R.I.), 60 percent of the center's gross revenues is contributed by contract education, says Annette Cerilli, the center's director.
Other reasons include the nation's talent shortage. She says companies are taking a serious look at their talent pool and exploring ways to develop and recruit more high potential employees and leaders.
"We're trying to help customers be competitive and solve problems," says Cerilli. "It's targeted training. That's why contract ed has grown."
Less than a third of the nation's total training and development dollars are given to colleges and universities whose sole mission is education.
The school has experienced a 10 to 15 percent growth in its contract education programs every year since 2002. The university even hired a business developer who calls on corporate clients, identifies their needs, and helps build and cultivate those relationships.
She says schools need to consider contract education as a product and to develop sales strategies that differentiate it from corporate training. The center's sales pitch is twofold: It focuses on how these programs teach both the how and the why as compared to corporate training, which usually just explains the how. The center also promotes the faculty. Because its professors teach courses to employees at different companies, they often develop a better sense of best practices throughout an industry, while corporate trainers may operate more in a silo.
Washburn University (Kan.) uses a similar sales tactic.
"What it comes down to is that 'academic' should not be a bad word," says Thomas underwood, assistant dean at Washburn, which establishes partnerships with roughly 10 different companies each year. "'Academic' should mean taking theory and research and applying it to practice. If you think about quality of learning, if you understand the why behind it, then transfer of learning is going to have a stronger impact."
He believes technology and economic conditions also drive the increased usage of contract education programs. As technology evolves, employees need to be trained on how to use different applications. That's especially true when the economy is good, when corporations tend to pay more for training. But when it's bad, he says it's the first to get axed from the budget.
Either way, he uses all sorts of conventional and unorthodox sales and marketing vehicles. The school publishes press releases, newspaper ads, flyers, direct mail pieces, and a semi-annual catalog that feature such programs, and it is planning to mail a pro-motional piece that introduces its programs to the area's top 100 companies. Recently Washburn's leaders also instituted a flexible pricing strategy where companies can send employees to any of its public courses and receive a training discount. Companies don't always need to train 30 employees at once on the same topic but rather tend to need to train a variety of workers in a variety of skills, Underwood points out.
The school takes nothing for granted, considering contract training provides 75 percent of the continued learning division's income. Part of its value-added services include furnishing companies with a report at the end of each program-explaining what was done well, what wasn't, and how it plans on improving the program in the future.
Business-to-business marketing definitely has its advantages. Doug Lynch, vice dean of the Graduate School of Education at the University of Pennsylvania in Philadelphia, attends trade shows-giving presentations of why businesses should partner with local schools, and networks with corporate executives-every chance he gets. "Don't start lecturing them," he advises. "Just show up and listen and talk to them. In the business world, it's called solution selling." But be patient. The sales cycle can take anywhere from a few weeks to 18 months.
Back in 2001, Lynch was pursuing a corporate education contract with WorldCom. The troubled company, which was plagued by corporate scandal, narrowed down its choices to UPenn and another school. He says the other school's solution was to fly the company's executives to the school's campus, then lecture them on corporate ethics. "That's not what the company needed," Lynch says, adding that his school was awarded the eight-figure contract. "We co-constructed the curriculum with them, which was grounded in their scenario, and shared their pain. You do it with them, rather than to them, We came to them in their workplace and offered the curriculum in 10 different languages."
Contract education programs contribute 18 percent of the university's revenue. Still, Lynch says, it's not only about the money but also the opportunity to expose your faculty to real business problems and to develop cutting-edge curricula.
'It's targeted training. That's why contract ed has grown.'-Annette Cerilli, Executive Development Center, Bryant University (R.I.)
Although contract education has been around for decades, schools still make mistakes. Lynch says they view employers as cash cows instead of partners. "They see it as a transactional nature. The second it's over, they say, 'See ya.'" The partnerships that work are those where schools establish trust, maintain ongoing dialogue and communication, and develop a relationship, not a one-time transaction, he says.
Another problem is pricing. Lynch says many IHEs don't figure out the direct costs of contract education and instead base pricing on padded or fixed university costs. For example, they may charge $1 million when they're only delivering $400,000 in services.
To help promote UPenn's programs, Lynch is currently exploring how to leverage federal training dollars that may be available to corporations. "I'm one of the early adopters of this," he says. "I don't think many schools are doing it well, and they aren't seeing the bang that they want."
Online institutions have a different set of promotional challenges. One of their biggest problems is procrastination, explains Chantell Cooley, vice president of partnership at Columbia Southern University, an online school based in Orange Beach, Ala. Unlike professors who can encourage or inspire students to attend and actively engage in classroom discussion, she says employees must motivate themselves to go online and complete coursework.
But the school found a solution that's especially appealing to employers. Its student service retention department contacts every employee at different intervals, often more than five times throughout a program. She says the department offers assistance and reassurance and makes sure the employee understands the content. If there's a problem, then the department involves the faculty, who do a little bit of handholding and move the employee right along the program.
Meanwhile, the school helps employers conduct needs assessments, waives employee application fees, and offers 10 percent discounts off standard tuition rates for employees, their spouses, and their children. It also customizes marketing collateral for employers to help promote the online programs and creates a website portal for each employer.
Cooley believes these tactics-combined with executing e-mail and direct mail marketing campaigns, attending conferences, and exhibiting at trade shows-has helped her department grow by 70 percent since 2006. Within the last two years, she says it has formed partnerships with 90 different organizations.
Although traditional sales tactics are effective, nothing comes close to differentiating a school's programs from its competitors like face-to-face sales calls that build relationships, explains Linda Glessner, director of continuing and professional studies at Texas A&M University.
Glessner believes corporate training departments and contract education programs are both needed. If the topic is very niche oriented, like lien management systems or tier one supplier training, she says companies can probably do a better job than schools at employee training. But universities and colleges can handle the rest. She says schools may be better vehicles to deliver all other training if they understand the employer's culture, which is learned through face-to-face meetings.
Texas A&M markets its programs to companies within a 200-mile radius. Glessner says she's currently courting several major employers. If the school wins their business, she says the contracts will add roughly 25 percent to her department's revenues.
Glessner is also active in what she calls "bridge marketing," where schools partner with a company's training vendors, suppliers, consultants, and even community colleges. Together they build hybrid programs that enrich and customize curricula specific to a company's needs. "That's a strategic way of ensuring that we'll still be in the game in some capacity," she says, adding that her school always retains the rights to independently market the template for the program, courseware, or technology to other employers.
In the future, Glessner expects that university offices will be physically located within corporations, just like Starbucks is present in hotels and supermarkets. Those institutions will exclusively provide educational and training services to improve employee performance and productivity. Progressive universities will also form regional consortiums to go after "uncontested market space" by developing sophisticated programs in new areas such as ecotourism, biodiversity, and fuel or energy recovery. Programs delivered by stand-alone institutions, which won't be able to keep up with the fast-paced demands and changes of business, will begin to dwindle.
Until then, companies are seeking IHEs that can address their evolving business needs. "They want added value, just for them, just in time, and in their backyard," Glessner says. "That's exactly what they're looking for."
BACK IN 2003, MIKE BARGER CONTACTED ABOUT 10 UNIVERSITIES in New York in search of one that could help 180 operational experts become better teachers. Barger, vice president and chief learning officer at JetBlue University and JetBlue Airways in Forest Hills, N.Y., says these experts were the airline's employees who were responsible for training a variety of workers ranging from pilots to customer service representatives.
But what happened next surprised him. "The response I tended to get from universities when I started my search was either, 'We don't do that kind of thing,' or my personal favorite, 'Do you know who we are?' " he says. "It was very frustrating. I wasn't even getting to the point where I could talk about numbers or dollars or anything. It was just the fact that I had the nerve to show up on their doorstep and ask them for something."
Only one school-New York University School of Continuing and Professional Studies-accepted his challenge and formed a partnership with the airline that worked well for several years. However, the school's new administration is reassessing its programs and priorities, which includes contract education, and can't yet confirm if it will continue along the same path, says Ken Brown, the school's spokesperson.
So Barger may resort to Plan B-subcontracting four of the school's professors who were with the partnership from the beginning. If that doesn't work, he'll use Plan C-find a new school.
Barger believes some universities are out of sync with corporate America and need to change the way they do business. Some of his suggestions include:
Clarify services. Identify the kinds of educational products and services you're offering so that companies can develop an accurate shopping list when comparing schools.
Escape from the traditional higher education framework by creating value-added services. For example, deliver programs on the campus of a business. Budgets are tight, he explains, and it's very difficult for companies to send employees off to programs that last several months or years.
Immerse yourself in the company's culture. Meet with different people to learn about the organization. "It's not about pulling old content off the shelf, dusting it off, and delivering it," he says.
Break down barriers. He says he's "amazed" at how difficult it is for faculty from different colleges or departments to work together on corporate projects. "We need the opportunity to hear about what universities can do for us and how they're willing to meet us in the middle to support us," says Barger.