Corporate Colleges

Dramatic changes have occurred in the scale of corporate investment in employee education since the end of World War II. Business and industry leaders have recognized that an educated workforce is essential to remaining competitive in a global economy. It is estimated that organizations in the United States with 100 or more employees spend approximately $60 billion annually for employee education. This estimate does not include the costs of informal on the-job education, nor does it include indirect costs, such as the wages and benefits paid to employees while they are participating in educational programs.

Some corporations, such as Arthur D. Little and General Motors, have created and sustained their own in-house educational institutions that offer accredited academic degrees just like traditional universities. These are known as corporate colleges. Most of these institutions were created to offer accredited degree programs that were not available elsewhere. Indeed some were established because their parent corporations were unsuccessful in their efforts to forge partnerships with established universities and colleges to create programs that met their corporate needs.

How do corporate colleges compare with traditional universities? Corporate colleges offer degrees ranging from the associate to the doctoral levels with most offering graduate degrees. The curricula offered by corporate colleges varies widely, although each corporate college offers a limited range of programs. Examples of the curricula include insurance, architecture, financial services, business management, health sciences, textile technology, policy analysis, and various types of engineering. These institutions are fully accredited by state authorities and regional accrediting bodies. Their governance models, administrative structures, and academic and administrative titles are very similar to those of traditional postsecondary institutions. Tuition fees charged by corporate colleges are similar to those of traditional institutions, but in some cases, such as the New England College of Finance (NECF), the banks that are member institutions of the NECF may offer tuition reimbursement to their employees.

At the same time there are significant differences between corporate colleges and traditional universities. Corporate colleges make far greater use of part-time faculty, mostly practicing professionals, than is common at traditional postsecondary institutions. Even full-time faculty members do not have tenure; limited-term appointments are the norm. Corporate colleges offer a limited number of highly specialized programs and lack the diversity of programs of traditional universities and colleges. This is not surprising since they have typically been established to respond to a particular need.

The Evolution of Corporate Colleges

One of the earliest corporate colleges in the United States was the General Motors Institute (GMI), which was founded in Flint, Michigan, in 1919. In 1945 the Institute's Board of Regents approved a proposal for GMI to award degrees in engineering. Accreditation was received in 1962. GMI changed its name to Kettering University in 1998.

In the 1970s and 1980s there was a significant expansion in the number of corporate colleges. Their rapid growth prompted the prediction that hundreds of corporate colleges might be created in the years to come.

In 2000 a total of twenty-six institutions had been identified as corporate colleges. Their existence was found to be tenuous. A number of these institutions, such as the Wang Institute of Graduate Studies, closed after only a few years in operation: it was created in 1979 and ceased operation in 1987. Others, such as the Arthur D. Little School of Management and Kettering University, evolved into free-standing private institutions that were independent of their original corporate sponsor. Only five of the twenty-six met the definition of a corporate college and continued to exist in 2001 (Clarkson College, the Institute of Paper Science and Technology, the Institute of Textile Technology, the New England College of Finance, and the RAND Graduate School of Policy Studies). No corporate colleges were created in the 1990s. The impetus for corporations to create corporate colleges appears to have passed.

The Decline of Corporate Colleges

The most likely causes of the lack of growth in the number of corporate colleges are corporate outsourcing of training, the demands of accreditation, and an increased willingness by traditional universities to cooperate in corporate education.

Outsourcing. One of the primary corporate strategies for successfully competing in the global economy involves focusing on the core business of the corporation and the core competencies supporting it. Accordingly, many corporations have chosen to rely heavily on outsourcing to meet their educational needs. It is estimated that approximately one-third of corporate training budgets is spent on training products and services supplied by outside providers. These corporations prefer collaborative arrangements with universities and colleges to creating and sustaining their own corporate colleges.

Accreditation. This process involves at least two, and in some cases three, separate stages of evaluation and approval. The first stage requires state legislative approval to receive authority to grant degrees. The second stage requires acceptance by one of six regional accrediting associations in the United States. In order to be recognized as an accredited degree-granting institution approval must be obtained at both of these levels. Some specialized programs also have national accrediting bodies that constitute a third stage of evaluation. For example, business schools are accredited by the Association to Advance Collegiate Schools of Business (AACSB), and engineering schools are accredited by the Accreditation Board for Engineering and Technology (ABET). Each stage of the accreditation process requires an extensive application that must be thoroughly documented. Moreover, accreditation is not a one-time matter. Accredited institutions are periodically reviewed and reassessed. Applying for, receiving, and maintaining accreditation is costly and time-consuming. The expectations of accrediting bodies are quite demanding with extensive requirements regarding organization and governance, programs and instruction, faculty, student services, library and information resources, physical resources, and financial resources. Establishing a corporate college is a substantial, long-term commitment. Corporations must be prepared to relinquish a high degree of independence and autonomy of operation if they want their programs to be accredited. For many corporations these expectations are sufficient to dissuade them from such a course of action.

Cooperation. One of the primary reasons that led corporations to create corporate colleges was the unwillingness of universities and colleges to accommodate corporate training needs. A number of the corporations that sponsored the creation of corporate colleges did so after unsuccessfully attempting to cooperate with existing universities and colleges. Much has changed since the early 1980s as a growing number of corporations have established strategic partnerships with universities and colleges and jointly develop degree and certificate programs tailored to meet corporate needs.

In summary, the combined effects of these three factors have contributed to a greatly reduced inclination on the part of corporations to establish their own corporate colleges. If universities and colleges continue to be willing partners in meeting corporate education needs there are likely to be few, if any, new corporate colleges created. A related, and relatively recent development, is the emergence of corporate universities.

Corporate Universities

One of the major developments in corporate education that emerged in the 1980s and 1990s was the creation of corporate universities. Indeed, the concept of corporate universities may well have its roots in corporate colleges.

Corporate universities are distinguished from corporate colleges in that the latter are accredited degree-granting entities whereas the former are not themselves degree-granting but frequently partner with traditional degree-granting universities and colleges. Corporate universities are essentially refashioned corporate training departments that have adopted some of the superficial characteristics of traditional universities, such as terminology. For example, a "dean" usually administers a corporate university. Corporate universities are similar to traditional universities in that their mandate includes training and the dissemination of knowledge, but unlike traditional universities they are not dedicated to the creation of new knowledge.

Most corporate universities serve the training needs of employees of the parent company but some also provide training to employees of corporate suppliers and corporate clients. They are a rapidly expanding creation. It is estimated that in the United States, there were about 400 corporate universities in 1988 and ten years later their number was estimated to be more than 1,000.

A majority of these corporate universities have created partnerships with accredited universities and colleges that lead to degrees and certificates. Such partnerships are founded on a willingness by the educational institutions to design curricula appropriate to the training needs of the corporations and to continually update those curricula as needed. Typically, the corporate partner will pay some, if not all, of the costs associated with the development and delivery of the training program. While the corporate partner will expect to have some input to the curricula, the instruction is given and the degrees and certificates are awarded by the academic institution. This allows corporations to access training programs relevant to corporate needs while coincidentally allowing their employees to earn university credentials. It also allows corporations interested in offering such training to their employees to avoid the complications associated with accreditation of "in-house" corporate colleges because the university partner is responsible for ensuring that the program is an accredited offering.

Conclusion

Corporate colleges and corporate universities represent major investments by corporations to achieve corporate objectives through education. Corporate colleges evolved on a limited scale but were a highly visible development that peaked at the end of the twentieth century. Corporate universities are the emerging major development in corporate education at the start of the twenty-first century.

Finally, it is important to note the increasing presence of for-profit educational institutions in postsecondary education. These institutions may come to play an increased role as providers of corporate education.