A case for corporate university 2.0
Companies cannot afford to manufacture their employees, but they can pay for online repair or upgrade
Asked to specify his education, Abraham Lincoln wrote a single word “defective”. Asked how many people work at his steel company, Andrew Carnegie said “about half”. Both comments could have been made today by many Indian companies.
Regulatory cholesterol over decades in education delivered poor employability because of poor trade-offs between cost, quantity and quality. But last week saw important and progressive regulations from the University Grants Commission (UGC), which will enable, legitimize and expand online university education. While companies cannot afford to manufacture their own employees (prepare), we would like to make the case that this reform and technology will enable companies to repair or upgrade their employees by thinking about Corporate University 2.0.
Financing employability faces a market failure; companies are not willing to pay for training or candidates, but are willing to pay a wage premium for trained candidates. Candidates are not willing to pay for training, but are willing to pay for a job. Banks or microfinance companies are not willing to lend till a job is guaranteed. And training companies are unable to fill up their classrooms.
Policymakers all over the world often ask; since employers benefit the most from training, why are not employers willing to pay for it? But the inability of companies to manufacture their own employees was explained by Nobel laureate Gary Becker; the upsides of learning usually do not go to individual companies, but to society or the individuals. Companies cannot sustainably finance long-term training because of three holes in the bucket; 1) You pay for training, the kid does not get hired, 2) You pay for training, the kid gets hired, but is not productive, and 3) You pay for training, the kid gets hired, is productive, but she leaves for another employer.
Yet nurturing human capital continues to be the most important driver of value, productivity and resilience for a modern corporation. If strategy is defined as the art of creating an unfair advantage, the only sustainable advantage is a culture of learning. Corporate Universities 1.0 involved setting up in-house physical learning centres—the highest profile being GE’s at Crotonville, the largest being Infosys at Mysuru, and the most effective being Oberoi Hotels in Delhi. But there are challenges; many companies but cannot afford the investments or costs in physical centres, most do not have the size for them, many do not want to do it in-house, and many find them fiscally unsustainable. But the new UGC online regulation combines Apprentice Act reforms and technological progress to enable Corporate University 2.0.
Corporate University 2.0 will deliver learning on-campus, on-site, on-the-job, and online. On-campus could be captive or outsourced to a university and is the most expensive. On-site will involve a teacher coming to office or factory premises periodically. On-the-job means apprentices; only 30,000 enterprises of our 63 million appoint apprentices (UK with a third of the population of UP has 250,000) and we only have 400,000 formal apprentices (Germany has 3 million, Japan 10 million and China 20 million).
Learning-while-earning and learning-while-doing are powerful ways of learning. Online learning has so far disappointed because repackaging textbooks or PowerPoint did not exploit the challenges of physical classrooms (one size fits all, costs, uneven teacher quality, etc) or leverage the upsides of technology (personalization, on-the-go, on-demand, crowdsourced, gamified, smartphone, machine learning, natural language search, translation, etc). But we are starting a multi-decade ed-tech cycle that will make online learning more effective, engaging and affordable.
A skill crisis is never national or universal; it always arises in a specific state, city, company, industry or function. Companies have dealt with this gap by encouraging migration and lowering hiring standards, but suffered the inevitable consequences of lower productivity and higher attrition.
The new online regulations by UGC create an overdue race for innovation in cost, product, content and delivery among Indian universities. Great companies —those who recognize their equity, does not sit on their balance sheets, but goes home every day —will use this opportunity to create the only sustainable competitive advantage by re-imagining their people supply chains, creating a culture of learning, and giving their employees another reason to stay.
Manish Sabharwal and Shantanu Rooj are with TeamLease Services and Schoolguru Eduserve, respectively.
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