Although there are numerous compelling reasons for businesses to invest in corporate universities, they are not without their drawbacks. The danger of creating an echo chamber is one of them. Managers who attend a university business school are exposed to ideas from peers in different organizations. Students can also address uncomfortable questions without fear of jeopardizing their careers. Even more concerning is the fact that, despite the millions spent, it appears nearly difficult to quantify the impact of a corporate university on the bottom line. Companies frequently do little more than ask people who have completed a course to fill out a survey about how valuable they found it. Few companies attempt to track employees’ efficacy for up to two years after they have completed a training program. Corporate colleges are frequently run by human-resources departments, which aren’t always equipped to perform a more in-depth review of what they do.
Another advantage of bringing management development in-house, according to some companies, is that it saves money. Companies have been known to offer a prominent business school education, whether a “Executive MBA” (EMBA) degree or a shorter leadership course, to keep its rising stars pleased. Even though the business requirement wasn’t always obvious, splurging on an EMBA from an Ivy League institution made such executives feel valued and, hopefully, loyal. Unfortunately, it often had the opposite effect, providing a highly marketable qualification to a firm’s brightest and greatest, making them more susceptible to poaching by competitors. Competitors are less interested in certificates from corporate institutions since they are more focused on the needs of the sponsoring corporation.
Many companies have stopped paying for managers to attend external business schools. Following the financial crisis, many businesses determined that they were an unnecessary expense. Few people have returned to their old ways once the economy has improved. According to an official long-running poll of EMBA students, the number of students who have their tuition costs paid for by their companies has dropped dramatically. 69% of students were sponsored in 2021; this year so far, only 39% have been sponsored.
Which EMBA? Yet, the overall demand for EMBAs does not seem to have fallen. Despite steep tuition fees, many managers think it is worth paying for themselves, having a massive impact on their average earnings after graduation. Some 82% say they were promoted soon after graduation. Of course, they may have been destined for higher things regardless of their sojourn in academia, but most who took our survey believe that their EMBAs played a part in their rise. For those managers willing to pay, there now seem to be two types of business education: the one they want, and the one their firm wants to give them.