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Dear Workforce How Much Can We Expect to Spend Launching a Corporate University?

How do we analyze startup costs for a corporate university? —Starting From Scratch
October 28, 2008
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Related Topics: Career Development, HR Services and Administration, Employee Career Development, Workforce Planning, Dear Workforce
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Dear Starting From Scratch:

First, let's address your question on the need for a corporate university. When done right, the corporate university puts the company's senior executives in the role of a governing board to define business priorities for learning leaders. The governance structure increases the likelihood that learning investments will be targeted on initiatives that can deliver measurable performance improvements and therefore provide a real return on investment. The structure also organizes tactical work under a shared-services model to reduce costs and free up time for your learning staff to serve as strategic advisors working in partnership with managers to accomplish business objectives.

The investment required depends on the following factors:
  • The scope of the initial design.
  • The organizing structure as a centralized, decentralized or federated model.
  • The degree to which you must augment your own staff with contractors to implement the corporate university.
Let's look at three examples to see a cost comparison.

The scope of one global foods company with 37,000 employees added three new people to run the corporate university. Business leaders were designated as college deans that devoted several hours per month to oversee the curricula for each functional group (i.e., sales, purchasing) and technical discipline (R&D and lean manufacturing). The scope of the design effort included:
  • Implementing an enterprise learning management system, or LMS.
  • Standardizing on a single global competency model for each job role in each functional/technical area.
  • Eliminating redundancies from the curricula and developing new courses, when required, to close curriculum gaps.
Each "college dean" assembled a curriculum-design team from training staff in the business units to do the implementation work.

The design team asked its governing board, which included the CEO and corporate vice presidents, for a $1 million startup fund and allocated $100,000 to each of 10 corporate-university colleges for curriculum design. The LMS license and consulting fees for corporate university design work (about $100,000 over a 12-month period) had already been allocated before the start of the project.

A health insurance firm with 2,500 employees designated two training staff members to design and implement its corporate university. Their scope included setting up a governance structure, assigning functional and technical business leaders to define current and future skill needs, expanding the scope of a learning and development team (dedicated to call-center training) to support other areas, creating a new protocol for hiring outside trainers, and purchasing course materials for several subject areas to be taught in house. Total investment included $35,000 for consulting and $100,000 for new programs. Learning and development staff salaries moved from the call center to the HR budget.

The final example includes a global petrochemical firm that had no central training function. The initial scope included adding a new role for a chief learning officer and establishing an executive-level governance structure. It also included adding contracted staff to conduct needs analysis; design curricula in marketing, finance and supply chain; deliver the first weeklong program for each curriculum; and build and launch a learning portal as part of a broader branding strategy. The firm invested $1.5 million to accomplish those prelaunch activities.

As the three examples illustrate, investments can vary significantly based on scope. In many cases, new efficiencies and business performance improvements can quickly pay back the original investment. It's important to ensure that your learning and development staff members understand how their roles change from tactical support group to strategic partner, and equally important that the initial design achieves that transformation.

SOURCE: Sue Todd, president and CEO, Corporate University Xchange, Harrisburg, Pennsylvania, August 29, 2008

LEARN MORE: Since their inception in the 1970s, corporate universities increasingly have been used by companies to enable them to accomplish numerous learning goals.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.


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 The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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