Scaling microcredential programs through employer partnerships? Minimize risk with these 3 practices

Microcredentials are short and inexpensive for students to complete yet costly for professional, continuing, and online (PCO) units to build and support. Without enrollment at scale, it is difficult for units to achieve positive margins, or simply break even, on their microcredential offerings.

One of the clearest ways to achieve enrollment at scale is through business-to-business (B2B) partnerships. Partnering directly with an employer that will provide a consistent stream of students for your microcredential programs can help ensure you recoup your development and operational costs. Employers benefit from these partnerships as well as they enable employee learning and development without the employer needing to build training internally.

But these partnerships can also be risky. Employers may express interest in partnering but change direction while you’re developing the program, or simply fail to provide the expected number of students once the program launches. Before embarking on any B2B partnerships, it’s worth investing in structures that will reduce these risks. Here are three practices that institutions use to mitigate risk by guaranteeing employer participation and minimizing the cost of new builds.

1. Ensure buy-in from employer partners by sharing the cost of development

Universities take on the most risk in B2B partnerships when they cover all program development costs themselves. If program enrollments for the partnership never materialize, the institution is out those costs and may not be able to successfully offer the program to other audiences.

One way to mitigate this risk is to share the cost of program development with the employer partner. This approach reduces the institution’s initial outlay and also fosters mutual buy-in for the program. New Mexico State University (NMSU) invests heavily in partnerships with local/state governments and local employers for their microcredential portfolio. In many of these partnerships, NMSU splits development costs with the partner. This model has been one factor in NMSU’s doubling of their total microcredential enrollment in just two years.

2. Secure guaranteed student enrollment to cover costs

Many employers will not be willing to pay for program development up front, even when splitting the cost with the institution as in the NMSU approach. The University of Melbourne addresses this challenge by recouping its costs in another way.  They ask employers to guarantee a number of students who will enroll in the program over a specific period. Melbourne then determines the full cost of developing the program and divides those costs across the number of enrollments the employer has committed to and the agreed-upon timeframe. This calculation provides a price-per-student that the employer will pay that is specifically built to recoup all of Melbourne’s development costs.

This model has several exciting characteristics. It mitigates risk for the PCO unit and minimizes the upfront risk for the employer, removing what they might see as a potential barrier to partnership. The employer need not pay anything until they can start enrolling students in the program, so they don’t feel as though they are investing in something that may not come to fruition or that will occur in a different budgetary year than the one where they invested. This formula also incentivizes the employer to send more students to the program; with more enrollments, the price-per-student is lower. For the university, more students mean better word-of-mouth within the company as well as a larger number of potential leads for other programs.

3. Meet employer needs while minimizing custom content

Many PCO units assume that employer partnerships mean a custom build for each partner. But creating custom content for each partner is not only expensive; it’s also unnecessary. A significant amount of the content employers want universities to provide in specialized programs is the same across employers. Innovative institutions have found ways to meet employer needs while minimizing how much custom content they build.

The least customized approach is for institutions to offer a “menu” of existing content from which employers choose. With this practice, employers create their custom program by the specific combination of content that they select. Still, the PCO unit does not create anything new for any particular employer. Simon Fraser University uses this model and has found success targeting content to specific industries rather than optimizing for a single employer.

A middle-of-the-road approach to customization might use a plug-and-play approach. Institutions taking this route design core course content that is used for all partners, but they leave space to build in employer-specific scenarios, projects, or specific skills and details. Rutgers University uses this model for their partnerships, describing their approach as “our content in their context.”

Many institutions do a lot of custom work for employers, but custom work is costly and labor-intensive and can prevent institutions from achieving scale in their B2B offerings. Successful institutions that engage in customization land at a maximum of an 80/20 breakdown, with at least 80% of the content standardized and at most 20% custom for the specific employer. Institutions with more customization may struggle to achieve positive margins.

B2B partnerships are often the key to financial success in the high-risk microcredential space. Entering those partnerships with risk mitigation in mind will help ensure your partnerships serve employers well and attract new students to the institution without requiring over-investment in their development.

Looking for more ways to enhance your approach to employer partnerships? Check out our Toolkit to Grow Successful Employer Partnerships.