Insider training

For many aspiring corporate leaders, an MBA from an august business school or completion of an external advanced management programme are achievements proudly displayed.

In reality, however, most executives’ business education takes place on their employers’ premises, as many big companies operate extensive internal “corporate universities”, “learning centres” or “academies”.

To demonstrate that corporate education need not play second fiddle to academic alternatives, 15 of Europe’s best-known multinationals have had their internal programmes accredited by the European Foundation for Management Development (EFMD), a networking platform for companies and business schools.

The number of participating companies remains small, partly because selection criteria are stringent. But members include big names such as Allianz, Deutsche Bank, Siemens and Volkswagen from Germany, French energy companies EDF and GDF Suez, and Spain’s Santander Group.

Three of the 15 in EFMD’s Corporate Learning Improvement Process (Clip) are Swiss. That such a high number comes from a small country testifies to Switzerland’s disproportionately large number of multinationals. It also shows, perhaps, the broader relevance of management education in Switzerland, home, after all, to both IMD, the business school, and the executive education programmes of the University of St Gallen.

The participation in Clip of Novartis, Credit Suisse and Swiss Re is particularly relevant as an impartial testimonial to the scheme. Unlike their French, German or Spanish counterparts, the Swiss do not have a big domestic talent pool to draw on, meaning recruitment and training are highly international. And given the country’s size, there is no automatic bias to any particular domestic seat of learning. So Swiss interest in accreditation arguably carries special weight.

The motive for the companies involved, irrespective of origin, is to ensure internal training meets expectations and holds its own against external alternatives. Allocating resources between internal and external options has always been tough; now, with budgets stretched, the choices are even harder. Clip reassures corporate education heads that their internal courses are up to scratch.

“We do send executives to business school and bring in individual experts. But our people prefer to attend internal courses,” says Frank Waltmann, head of learning at Novartis, the pharmaceutical group.

Think big

Novartis has capacity for up to 7,000 employees a year, attending courses lasting between one day and a year. Credit Suisse provided a staggering total of 83,000 training days last year, while Swiss Re, with only 10,800 staff, says around 90 per cent of them have attended training at its academy.

Prisca Peyer-Ehrbar, head of the academy at Swiss Re, the reinsurer, echoes this. “We do send people for MBAs and shorter courses. But we really prefer to invest in building our talent internally.”

“Generally, we are moving to a model of using our leaders of today to teach those of tomorrow,” explains William Wolf, global head of talent development at Credit Suisse, the bank, and previously a partner responsible for talent development at McKinsey, the consultancy, in Washington DC. “We want to emphasise the involvement of our top people and do a lot more of that.”

In-house education has three advantages, they say. First, it instils corporate culture and know-how that cannot be replicated externally. Second, it avoids concerns about confidentiality, especially intellectual property. The third factor is convenience. Multi-nationals may offer executive education across their international networks, rather than just at headquarters. But wherever courses are held, corporate premises are generally preferred to off-site locations.

Novartis, for example, by far the biggest of the three Swiss Clip participants, operates a “two-pillar” corporate education system, says Waltmann. “There is a core portfolio, involving about 20 programmes in what we call a ‘leadership pipeline model’, aimed at the top 10-15 per cent of employees. Then, since 2008, we’ve been creating what we call ‘Novartis corporate universities’ in key growth markets.”

The “corporate universities”, currently operating in China and Russia and planned for India and Latin America, are more commercially focused and concentrated on their home markets. But in both cases, teaching is always in-house.

Waltmann says employees’ preference for internal courses reflects the fact that “they tend to be more flexible, convenient and time efficient”.

That does not exclude bringing in outside experts, or offering external courses where appropriate. Big groups distinguish between “company-specific” programmes, where internal resources are preferred, and “generic” subjects, such as languages or certain information technology functions, where adequate external options exist.

But even topics involving outsiders are tailored to company needs, says Peyer-Ehrbar of Swiss Re. “We design the bulk of our courses ourselves, and we do also depend on external faculty. But I never bring in an external product ‘as is’, whether it is an individual professor or a business school.” Waltmann agrees: “We customise the content.”

Cost, of course, plays a part – though it is mentioned surprisingly seldom. As a rule, in-house training is cheaper than external alternatives. But more important – notably at Credit Suisse, battered, like other big banks, by the credit crunch – is the extra flexibility internal options provide. Every year, about 25 of the company’s bankers attend business school courses, primarily at Columbia and Harvard universities. But the majority are educated internally. “We want to keep costs as variable as possible in our training and development functions”, says Wolf.

Accreditation is very valuable. An external seal of approval may reassure some managers they are not being fobbed off with second best. In the case of Novartis’s Chinese corporate university, the externally accredited training has even generated enough buzz outside the company to be a positive factor in recruitment, says Waltmann.

But the prime benefit of external accreditation lies in making corporate heads of learning reflect hard on their programmes. Participation in Clip requires taxing assessments every five years. “The EFMD auditors speak to everyone from the chief executive down to ensure what you are saying is correct and cohesive. It’s huge,” says Payer-Ehrbar. The process not only helps to build the brand externally, but also adds credibility to executive education within the company, she adds.

Benchmarking is the other big benefit adduced by all concerned. Participating companies learn from the EFMD’s experts how their programmes stack up, and can compare and contrast their offerings, picking up best practice along the way. “It’s diagnostic. It’s extremely helpful, and it comes at a reasonable cost,” concludes Waltmann.