Say one of your rising stars wants to enroll in a six-month training class for executives that is being given at a prestigious business school. It means she will have to miss work every other Friday. (No problem.) But it will also cost your company $14,000. (Gulp.) Should you sign off?
This is a decision that managers and human-resources execs are often asked to make. A growing number of universities offer short-term-learning programs that appeal to up-and-coming executives looking to hone their management, finance, or marketing skills. Many schools have seen double-digit enrollment increases over the past five years, which has encouraged other institutions to join the fray.
University-based executive education is a $400 million business that has increased an estimated 30 percent a year, according to Josh Bersin, chief executive of Bersin & Associates, a research firm in Oakland, California, that tracks corporate spending in the areas of leadership and talent development. This year, the Thunderbird School of Global Management in Glendale, Arizona, derived 39 percent, or $23 million, of its revenue from corporate students, up from 14 percent, or $7 million, in 2002. At Harvard Business School, executive education accounts for 22 percent of overall revenue, slightly more than the 20 percent generated by the full-time M.B.A. program.
A brief spell of nondegree study at a school with a distinguished name may appeal to an executive's pride and intellectual curiosity, but what are the true advantages? Those may have less to do with education than with career development. Executives who attend such quick-hit education programs "feel singled out and are given the message 'I must be special,'" says Jim Dean, senior associate dean of academic affairs at the University of North Carolina's Kenan-Flagler Business School. "That gesture alone helps instill a sense of commitment." And companies can benefit by increasing the number of candidates in their leadership pipeline. "Someone might be a star in the sales area but deficient in marketing. These programs can provide excellent cross-function skills training," Bersin says.
Susan Schott, a senior director at the specialty-pharmaceutical company Hospira, a spinoff of Abbott Laboratories that's based in Lake Forest, Illinois, is grateful that her bosses said yes. Last year, she enrolled in a six-month executive-education program called the Management Institute at the University of Chicago School of Business. The courses consumed every other Friday and three full Saturdays for Schott and her 35 classmates, some of whom flew in from Denver, Dallas, and Baltimore to attend. The wide-ranging curriculum covered accounting and financial analysis, negotiation, and decision-making strategies and skills for managing an international workforce. The homework is steady but manageable, she says.
Schott, who never attended business school (her undergraduate degree is in mechanical engineering), says the practical yet intellectually challenging content "scratched an itch" she'd had for years. "Taking the class was great for my morale and my sense of engagement with the company," she says, adding that the experience also made her a sharper manager. "My views are broader. I have a greater awareness of global issues."
And that's crucial to her job as an R&D program director, which involves overseeing 25 people in offices as far away as England and Australia. Her duties include assessing the value proposition of new products for the company. She frequently trots out applicable case studies from the course to share with her colleagues when comparable R&D or management issues come up at work. Her boss has noticed a difference too. "He told me that I ask better questions now."
More and more business schools are offering executive-education programs. One sign of that growth is that membership in the International University Consortium for Executive Education has doubled over the past 15 years and now extends to 90 schools, including Duke, Emory, and Stanford.
"Our goal is to deliver superb programs. They are more than just perks," says the consortium's executive director, Bill Scheurer. "Executives don't have a lot of time, so we have to offer something that can be a strategic tool."
Even as businesses try to hold down employee-related costs, many companies -realize that it's worthwhile to spend money on workforce development in the management ranks. A 2005 survey of 270 human resources directors found that most employers were primarily interested in how these programs helped their employees rather than in how they benefited the bottom line. Only 10 percent of those surveyed said they assessed courses' effectiveness by attempting to measure the financial value of any business changes the courses may have incited.
In determining whether a particular university is a good choice for their rising managers, employers should be wary of the scores of Johnny-come-latelies. "It's hard to find a school that's not trying to get into this field," Bersin says, "but enrolling in a newly developed program just because it's nearby can be risky." Because they are so new, these courses have yet to produce many graduates, who could be asked to provide candid feedback.
Bersin also notes that some bosses instinctively endorse executive-education programs at schools where they themselves received degrees. This could be a mistake. "Loyalty to an alma mater is understandable, but in this case it may not be for the right reason," he says.
When choosing programs, employers can give preference to those with professors with real-world business credentials, rather than acclaimed scholars who are removed from the corporate world. "A pure academic may not be the right fit," says Bersin. "Since companies are spending a lot of money on these programs, the smart ones are taking more time to make sure they are signing on with programs that make sense for their people."
Vetting instructors is just the beginning. No longer satisfied to leaf through business-school catalogs to choose so-called open-enrollment programs, more and more companies are partnering directly with schools to tailor curricula to their own strategic needs. If a firm needs to rethink its pricing strategies or jump-start innovation, courses can be developed specifically to -address those issues. Customized programs are now the fastest-growing segment of the executive-education field, which originally was conceived to offer practical, though generic, training for mid- and upper-level managers. Teaming up with big corporations to design specialized classes for executives can be an extremely lucrative move for business schools, one that can reap as much as $500,000 for a tailor-made course.
Such classes make the most economic sense for a company when several dozen workers enroll as a group. But, notes Jim Dean, of the Kenan-Flagler Business School, customization does contain a potential downside: the missed opportunities for interaction with executives from other companies-and possibly other countries-whose varied backgrounds and cultural viewpoints can add breadth to the classroom experience.
Mark Yim, already armed with an M.B.A., had specific goals in mind when he enrolled in a four-day management class at the University of Chicago nearly a decade ago. Yim, then an executive director with Brinson Partners (now part of UBS Global Asset Management), was preparing to transfer from the company's Chicago headquarters to Tokyo, where he would be charged with restructuring the Japanese branch.
"I was looking for help with my people skills and with dealing with people's emotions," says Yim, who anticipated having to lay off several workers at the branch. He says he enjoyed the open-enrollment class, which cost his company about $4,000. "It was worth the money just to step out of the corporate situation and gain a new perspective," he adds. Still, Yim was hard-pressed to recall any lessons that ultimately aided him in his overseas mission, saying, "The class was pretty touchy-feely, as opposed to quantitative or rigorous." For their part, his bosses in Chicago never got the chance to benefit from his newfound interpersonal acumen: Yim ended up resigning from the company once his Tokyo stint was complete a year later.
Yet Susan Schott, the pharmaceuticals executive at Hospira, says she has no doubt that her employer benefited as a result of her class time, in ways both concrete and intangible: "I got a lot of confirmation that our processes involving new-product development were appropriate and made sense."
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