European Innovations

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European higher learning may call to mind images of caped dons and ancient mist-enshrouded ivory towers, but at least one British educational institution operates on a more modern plane. The BAE Systems Virtual University (VU), launched three years ago, offers everything from foreign language instruction to engineering design via the company's intranet as well as in traditional classrooms. To date, nearly half of the company's 100,000 employees have taken advantage of these programs.

BAE Systems is just one of a growing number of companies spurred to action by Europe's increasing shortage of skilled workers. While eurocrats ponder strategies for dealing with the widening gap between labor demand and supply, companies are forced to struggle with an issue that has a direct impact on the bottom line. Especially in the fast-paced technology sector, where the shelf life of working knowledge can be as short as a few months, recruiting and training an up-to-date workforce is essential to productivity and profitability.

But it's not just firms in the burgeoning tech field that feel the pinch. Companies as diverse as automotive giants and pharmaceutical conglomerates are taking a more active role than ever in employee education. "In the past training was fragmented," says Jeanne Meister, president of the New York-based Corporate University Xchange and author of Corporate Universities: Lessons in Building a World-Class Work Force. "Now companies want a prescribed curriculum for each job family."

Employers have adopted a range of approaches for imparting that knowledge to their work forces. Some employ minimally enhanced training programs while others run full-fledged corporate universities that may operate in conjunction with accredited educational institutions, as is the case with BAE Systems VU. Although Europe has nowhere near as many corporate universities as the U.S., which has nearly 1,600, the trend is catching on on this side of the Atlantic. The International Institute of Management Development in Lausanne, itself the result of the combination of two corporate universities, and the Esade Executive Development Center in Barcelona are among institutions hoping to take advantage of Europe's growing interest in corporate education by working with industry to develop corporate curricula.

Part of the reason for the lag may be that Europeans are more conservative about affixing the university label than less status-conscious Americans. "There are a lot of activities in a lot of companies which are not called corporate universities but could easily be," says Colin Carnall, director of executive development at Henley Management College in the U.K., which has developed programs with dozens of companies. "If you look at the training and development activities in most large German companies, they have many of the features of corporate universities, but not the name." Among the companies that have applied both the concept and the name are the Swiss engineering and technology group ABB, which launched its ABB Academy near Zürich last year, and DaimlerChrysler, whose corporate university has been touted by co-CEO Jürgen Schrempp as a key element in forging the international auto giant's revamped corporate identity. The cross-border merger boom that DaimlerChrysler helped launch has fueled the growth of corporate universities by creating the need for a forum in which the culture, goals and values of the new company can be articulated and propagated.

Along with hefty share options and generous benefits packages, training and development options are increasingly necessary not only to attract and train, but to retain skilled staff. And although a state-of-the-art program does not come cheap, the enhanced retention rate can yield significant dividends. Carnall notes that this was one of the justifications for Ernst & Young Management Consultancy Services' new virtual business school. "The average retention of a consultant is about three and a half years, and the first year is mostly training." he says. "If you can keep them an extra year, you make a mass of money out of them."

But it's not just companies that are poised to boost income. Because individuals with the right qualifications are in such demand, Europe's labor mismatch has given skilled workers unprecedented leverage to set the terms of their employment. In addition, although in the past the path to employment was rigidly circumscribed by educational requirements mandating a specific degree or qualification for a given job, the current shortage of workers has helped popularize a number of alternative qualification schemes. In the technology field, for example, having the latest Microsoft or Novell certification can be as much of an asset as a university degree.

Sometimes finding the right workers means being willing to dispense with formal qualifications. "There are people who have unique experience that companies are looking for but for which no certification exists," says Dirk van Hahnrath, founder of Braincapital, a new online job clearing house that hopes to have 30,000 job seekers registered by next year. Hahnrath cites musicians who know more about MP3 files than most programmers. In Europe's fast-changing employment landscape, innovative solutions to the skills shortage abound. For both employers and workers, half the challenge is being prepared to recognize them.