Talent Management and Corporate Universities
The Intersection of Two Levers
Talent management is a tool to leverage value from an organization’s most valuable asset: its people. This emerging field encompasses many functions: workforce planning, talent acquisition, development, deployment, engagement, and retention.
Corporate universities are strategic levers typically thought of as having a major role in employee development. But what if corporate universities can be used to provide value in all of the talent management functions? We could gain the power of applying a lever to a lever to propel our organizations forward. This article explores that notion and provides real-world examples of corporate universities that are being used in a variety of talent management functions beyond employee development.
The emerging field of talent management has been defined as “an integrated set of processes, programs, and cultural norms in an organization designed and implemented to attract, develop, deploy, and retain talent to achieve strategic objectives and meet future business needs.”
The Human Capital Institute, a non-profit organization that provides research and education in the field of talent management, offers the following diagram as an illustration of the talent management process:
The logic of the diagram is simple: every organization starts with a strategy. Within that strategy, there should be financial plans, marketing plans, and of course a people plan—described above as a human capital strategy. A human capital strategy consists of the talent practices depicted in the wheel at the center of the diagram. These are the practices, processes, and programs from the Silzer & Dowell definition. If an organization executes its talent strategy and performs these functions well, it will get good talent results. And if you get good talent results, you will get good business results. This illustration offers an excellent visual representation of the link between talent management and business outcomes.
While the discipline of talent management is a relatively recent phenomenon, corporate universities date back to World War II with the establishment of Northrop University to assist in the war effort. Corporate universities really proliferated in the United States in the 1990s and throughout Europe and Asia in the following decade. Not only have the numbers of corporate universities increased over the past couple of decades, but their sophistication and the ways in which they have contributed have also grown.
As a basic definition, a corporate university is “an educational entity that assists its parent organization in achieving its mission by conducting activities that cultivate individual and organizational learning, knowledge, and wisdom.” The key differentiator between a traditional training department and a corporate university is the focus on organizational mission. For a learning department (regardless of what it is called) to truly live up to the definition, it needs to be strategic in nature and focus on achieving organizational goals.
Corporate universities exist in many different types of organizations throughout the world. We have all heard stories of large companies that have famous corporate universities such as Disney University, McDonald’s Hamburger University, and GE’s Crotonville facility. However, corporate universities are not limited to large, public companies. Corporate universities reside in non-profits and governmental organizations. One of the largest corporate universities in the world is Defense Acquisition University, part of the United States Department of Defense. And corporate universities can be effectively deployed in small and privately-held organizations. One of the case studies in this article, Enclos Corp., started its corporate university when the organization had a mere 600 employees.
The remainder of this article offers real-world examples of different types of talent management activities undertaken by corporate universities that go beyond traditional training and contribute to the overall talent management efforts of their organizations and result in measurable business outcomes.
The Doctor of Thinkology: Engagement, Retention, and Development
With more than 5,000 rooms, the MGM Grand Hotel and Casino in Las Vegas was the largest hotel in the world in 1993. But rather than growing into its industry leadership, the MGM Grand was the largest hotel in the world the moment it opened its doors that year. Hiring staff prior to opening was a massive undertaking, made all the more difficult by the knowledge of how large the turnover problem is among Las Vegas Strip hotels. Knowing that high turnover would be an especially expensive proposition for the hotel with the greatest number of employees, the executives at the MGM Grand came up with a unique solution: they asked the corporate university to get involved in employee retention.
The university, then known as The University of Oz, developed an internal degree program. The program awarded the degree of Th.D. This degree, also known as the Doctor of Thinkology, is the same degree the Wizard of Oz awarded to the Scarecrow at the end of the movie. In order to earn a Th.D. at the MGM Grand, employees would take a specified sequence of courses developed by the University of Oz. Upon completion of these courses, the employee would be awarded the Th.D. with all the rights, privileges, and responsibilities thereto appertaining. The president of the property would award the degree in a big graduation ceremony and the graduate would get a diploma to hang in his or her office and could attach the letters Th.D. to business cards and name badges.
In addition to the obvious benefit of employee development through the sequence of courses, the program also drove engagement as employees who participated in the program showed a high level of commitment. But perhaps the greatest benefit was retention. Once you earned the Th.D., you were afforded a certain level of prestige as the degree was well-respected within the walls of the MGM Grand. However, if an employee left the company, the degree did not have much portability. At best, it was a point of curiosity on a résumé.
By encouraging employees to pursue this degree, the University of Oz was developing its employees as well as engaging and retaining them. Five years after opening its doors, the MGM Grand still employed more than 5,000 of its original 8,000 employees and boasted the lowest turnover of any major hotel casino on the Las Vegas Strip.
A Path in Space—Career Planning at Northrop Grumman Space Technology: Engagement, Retention, and Development
We have all seen this scenario: there is a team of engineers with an opening for a manager. All too often, the executives reward the top-performing engineer with a promotion, regardless of whether he or she possesses the skills and qualifications (or even the desire) to be a manager. I used to think this was a mistake, but I have come to realize that I was wrong—this is really two mistakes. The first is creating a manager out of someone who may lack the requisite competencies. The second is to subtract the top-performing engineer from that role. And while this may defy logic and common sense, it is a common practice that we see all too often.
Several years ago, the Space Technology sector of the Northrop Grumman Corporation implemented a new career path management (CPM) program. The process was led by Space University, the division’s corporate university. The program allowed employees to choose paths based on their expressed career desires. Those who wanted careers in people management and leadership would be in the L-path (leadership). People who wanted to focus on contributor roles followed an S-path (skills). Those who wanted to explore new options or were not yet sure of their career goals would be placed in the R-path (rotation). And those who were seeking new challenges or a change in functions were assigned to the X-path (crossover), which enabled them to move from one silo to another. These paths are summarized in Table 1 below.
Table 1: Summary of career paths
Once again, we see a program administered by a corporate university that not only helps with employee development, but also helps to drive engagement and retention. Once an employee decides on a path, development plans can be customized. Those on the L-path would get management and leadership programs to prepare them for future roles, while those who choose the S-path would develop their skills for greater contribution in the current job function. Meanwhile, Northrop Grumman enjoyed greater employee engagement as workers were on the path they chose and being developed in ways they wanted. And as we know, greater engagement leads to higher retention. As an added bonus, the company was doing something nice for its employees by providing them with career counseling and a defined path.
Building Managers at a Construction Company: Development, Deployment, Engagement, Retention, and Business Results
Enclos is a subcontractor in the construction industry specializing in high-end curtainwall projects—the outside of large buildings. One day the general manager was called into the office of the owner of this privately held company and told the new strategy—the plan was for the company to double its revenue in the next five years. Like any smart GM of a privately-held company, he gave the appropriate response: “Yes, sir.”
Now that he knew the what, it was time to consider the how. It seemed clear that in order to double revenue, the company would have to work on twice as many projects. So our hero undertook the appropriate talent management step of considering what the strategic roles were at the organization. Clearly at Enclos, the job was senior project manager—the person who was out in the field overseeing the project for a year or two. It seemed obvious that to accomplish the required doubling, the company would need twice as many senior project managers.
So the next important talent management step is to do some workforce planning. He looked at the current supply of senior project managers and deducted the number that might retire or exit the company through normal attrition over the next five years. When he added up how many more he would need, he realized the problem. No combination of buy and build would get him the right number. When he looked at the market supply of experienced high-end curtainwall project managers, he realized that there were not nearly enough on the market, even if he poached a sizable number of his competitors’ best talent. On the build side, he looked at how long it was taking Enclos to develop talent and he was shocked: it had been taking a staggering 12 to 15 years to develop talented graduates of construction management programs into productive senior product managers. While he had a few people who were pretty far along the pipeline, there was not going to be nearly enough to meet his demand. If it took 12 to15 years to build a senior project manager and they needed a bunch within five years, there was no way they could have enough to meet the owner’s timetable. The short-term answer was a tough conversation with the owner about the impossibility of doubling in five years.
The longer term solution involved the corporate university. They did an in-depth investigation of what was going on during the 12 to 15 year development period. Not surprisingly, most of the development happened on the job. So people were going through a series of job rotations, many of which lasted two or more years. Most development happens during the first 6 to 12 months on the job, so a lot of time was spent working, but not developing. By focusing on development via the process of wisdom management, the company was able to reduce the development time down to about 7 to 8 years, nearly halving the time it took to “build” a senior project manager. They still could not meet the five year timetable, but they no longer had to wait more than a decade.
Wisdom management involved focusing not only on teaching skills, but on ensuring that the skills were actually used and applied on the job. By doing this, they were not only able to accelerate development, but were able to more effectively and strategically deploy talent. And not surprisingly, by accelerating promotions, Enclos was able to see benefits in engagement and retention. And on top of all of this, they were able to enjoy greater productivity and growth, so there were not only talent results, but improved business results.
While the case studies presented in this article describe very different companies with very different issues, the common theme is that in each case, the corporate university was utilized not only for its traditional function of employee development, but for other talent management outcomes. MGM Grand developed its people and drove retention improvement. Northop Grumman developed its people and drove retention improvement along with engagement, and career path management. Enclos developed its people and drove retention improvement along with engagement, more effective deployment, and accelerated succession management.
While it is true that corporate universities can be expensive, the examples in this article clearly demonstrate that there can be quite valuable returns on that investment. True, you can send individuals to traditional universities and seminar companies to develop their knowledge and skills, but the secondary and tertiary organizational benefits described in this article can only derive from a well-designed internal learning organization.
The author is frequently asked about the differences between a training department and a corporate university. The answer is that a training department does training, while a corporate university does training and a number of other things to develop people. As we have seen in this article, when utilized strategically, a corporate university can contribute not only to development, but to other talent functions and ultimately to improved organizational performance.
About the Author(s)
Mark Allen, PhD, is practitioner faculty at Pepperdine University’s Graziadio School of Business and Management. He is the author of The Corporate University Handbook (2002), The Next Generation of Corporate Universities (2007), and Aha Moments in Talent Management (2014, forthcoming).