The bad education

It’s the company that creates perfect employees, not the government.

For decades, Latin American managers have complained about the gap between their companies’ needs and the training provided by universities and vocational colleges. For decades, experts have tried different ways to bring the two sectors closer together, though results so far have been disappointing.

The business community, through more action and less complaining, is capable of providing the solution to this discussion, in which governments almost always come out badly. Workplace training has been shown to provide an enormous return on investment. Researchers from the Inter-American Development Bank (IDB) have found that, in Latin American companies with more than 100 empoyees, an increase of 1% in the proportion of personnel trained increases productivity by 0.7%.

That’s why the answer to employee training could be found within companies and unions, and not in universities or finance ministries. It’s an old formula. In the 1980s, Citibank was a sophisticated school for bankers. Recently hired staff received rigorous theoretical training while focusing entirely on practical issues. The result was that “Citibankers” were almost without peers, the best in the Latin American financial system.

The bank knew that only a few recruits would stay on. It was also aware that countries were benefitting from this at no cost, because many of the bank’s “alumni” became presidents of local banks. Even so, Citi maintained its investment. The bank benefitted by producing excellent professionals among its middle managers and burnished its reputation of being better than the competition.

Fast-forward to 2017. That year, Cemex integrated its four corporate schools. The new Cemex University is conceived as a training center to act as an educational consultant for the entire company, especially on digital issues. Many other companes are following that lead and taking the task of training employees seriously.

Companies should therefore devise the best way to invest in training – while designing  contracts that guarantee a return for them – rather than wait for universities to produce the perfect employee in response to government demands.

Along similar lines, Google, Apple, IBM, Bank of America and EY have all decided not to require that job candidates have university degrees. IBM, for example, now seeks programmers among those with real experience in “boot camps,” or in courses organized by the industry. This strategy creates more diverse groups of employees and opens the door to those who have gone through non-conventional education systems.

To paraphrase something I heard at a meeting of CFOs: the point isn’t to calculate what might happen if you invest in training and the employee leaves, but to calculate what would happen if you don’t invest and the employee stays.

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This article was published in Bravo 2018 edition of Latin Trade


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