Some employers kept investing in executive education, even in the downturn
By: John T. Slania
Published: January 31, 2011
If you’re looking at corporate spending on executive education as a barometer for business activity, here’s a little lesson:
“It’s a pretty poor economic indicator. Going into a recession, executive education is the first thing to go. Coming out, it’s the last thing to come back,” says William Scheurer, executive director of the International University Consortium for Executive Education, a Minneapolis-based association of more than 90 business schools offering executive education programs.
Over the past two years, Chicago-area companies have been all over the board on financial support for executive education, with some making cuts, some making increases and others holding steady. Still, local companies report that the recession has brought universal changes to executive education, including an increased use of technology and a greater reliance on in-house training.
And, as a sign of restrained optimism, more companies say they plan to spend slightly more on executive education in 2011 than they did last year.
Consider the experiences of Advocate Health Care, the Oak Brook-based system with nine hospitals in Illinois. A longtime supporter of training for its 30,000 employees, including 1,700 in management, Advocate began assessing its spending on executive education when the recession started to tighten its grip in late 2008.
Advocate reduced the number of trips executives made to off-site education programs and scaled back on the trainers it invited to its hospitals. Instead, it began selecting executives to receive training and then serve as in-house trainers to their peers.
Additionally, Advocate started to offer more computer-based education programs, allowing one trainer to lecture managers at all its hospitals.
“We didn’t say, ‘Let’s abandon everything.’ We tried to look at how these sessions were being delivered and see if we could do them in a more cost-effective way,” says Melissa O’Neill, Advocate’s director of leadership planning and selection.
Ms. O’Neill could not provide a figure for how much Advocate, with nearly $4 billion in annual revenue, saved as a result. But she believes the hospital group will offer more education and training programs in the coming year.
“Development of leaders is important, especially in health care, where there are so many changes happening,” Ms. O’Neill says. “You can’t wait for the economy to improve.”
That philosophy seems to play out nationally, according to a recent survey of some 1,500 companies by Chief Learning Officer, a Chicago-based trade publication. For 2011, 43% of the companies surveyed said they planned to increase spending on executive education. Meanwhile, 31% planned to spend about the same, while 13% expected a decrease. This indicates an improvement over 2010, when 37% of companies reported increased spending, while 28% stayed the same and 32% spent less.
Radio Flyer Inc., the Chicago-based maker of wagons and riding toys, never stopped spending during the recession, says Robert Pasin, the CEO who goes by the title “chief wagon officer.”
The private company, with $85 million in annual sales, requires each of its 70 employees to attend classes at its “Wagon U,” an internal classroom facility. Radio Flyer spends $7,000 a year on training for each of its employees for a total cost of $490,000, including $105,000 for its 15 executives, Mr. Pasin says. He plans to spend slightly more in 2011.
“We’re in a very creative culture. Coming up with creative toys means you really need to get people who are life learners,” he says.
Similarly, U.S. Cellular Corp., the Chicago-based wireless company, plans to spend a little more after contributing $5 million each of the past two years on training and education for its 9,000 employees. The company, with $4 billion in annual sales, was not able to calculate how much it spent on its 140 executives.
U.S. Cellular sends its executives locally to management programs at the University of Chicago, Northwestern University and Loyola University Chicago, as well as to seminars in Colorado and North Carolina through the Center for Creative Learning, says Jeffrey Childs, executive vice-president and chief human resources officer. The company also is using more online training as a way to reduce costs, he says.
“When the recession hit, we were all asked how we could manage costs and increase revenues. We never looked to cut back on training. Still, there are ways to be more efficient,” Mr. Childs says.
“In our business, you can have good products and good technology, but at the end of the day it’s about delivering the best customer experience,” he says. “That message begins with how you train your leaders.”
Original URL: http://www.chicagorealestatedaily.com/article/20110129/ISSUE02/301299994/some-employers-kept-investing-in-executive-education-even-in-the