Corporate Universities: An Engine for Human Capital

The engines of economic growth are shifting from financial to human capital. In the past, capital-intensive physical assets drove competitive advantage in many sectors of the industrialized world. Today the sources of advantage are changing quickly from plants and machines to the people who make businesses work. In this postindustrial society, talent scarcity is looming as the next major corporate challenge.

In the coming years, businesses will face a graying workforce, the high expectations of Generation Y, globalization’s unique demands on leadership, and growing employability gaps in emerging markets. Corporate universities are emerging as a powerful vehicle to surmount these challenges.

• A Graying Workforce. By 2050, the dependency ratio of those 65 and older will more than double in most G7 countries and in the BRIC nations (Brazil, Russia, India, and China).¹ 1 The dependency ratio is the population aged 65 and over divided by the working population (aged 15 to 65). With the exception of India, these societies will be “grayer” than even Japan, currently the country with the oldest population.² 2 World Economic Forum and BCG,  Global Talent Risk—Seven Responses, 2011. Although many companies face an aging workforce, few offer lifelong learning opportunities to keep skills current. Corporate universities are primed for this role.
• Generation Y’s Expectations. Many in this generation place a higher value on development opportunities than they do on cash bonuses.³ 3 PriceWaterhouseCoopers,  Managing Tomorrow’s People: Millennials at Work—Perspectives from a New Generation, 2008. Lack of development opportunities is the major reason given by Generation Y employees for leaving a company.⁴ 4 Creating People Advantage 2012: Mastering HR Challenges in a Two-Speed World, BCG and World Federation of People Management Associations report, October 2012. Corporate universities are turning their attention to attracting and developing the members of this generation.
• Globalization’s Demands on Leadership. As dispersed global operations integrate, leaders must have keen cross-cultural skills and the ability to adapt. Corporate universities have a track record in developing global leadership skills and creating a culture of common values across borders. Equally important, corporate universities are becoming strategy partners in developing the talent, skills, and behaviors needed to drive strategy creation and execution.
• Emerging-Market Employability Gaps. In the BRICs and many other emerging countries, the percentage of prospective employees with sufficient education and skills, especially in middle management, will be a fraction of what is needed. In a 2012 study, we found that only 15 to 30 percent of university graduates in the BRIC countries are immediately employable.⁵ 5 “ When Growth Outstrips Talent: Five Strategies for Emerging Markets,” BCG article, April 2012. Corporate universities are stepping in to fill the emerging-market skills gap.