Published on 2012/10/01
Providing employees with support to complete ongoing higher education allows employees to improve their abilities and provides the employer a competitive advantage over competitors.

Tuition Assistance Programs (TA’s) offered by employers are often seen as a necessity, given the competition over attracting and retaining talent. In today’s marketplace, future and current employees expect not only challenging work but also assistance in growing professional knowledge, skills, and abilities in order to enhance performance and advance their careers. While most employers offer tuition reimbursement, few have linked their educational benefits to a well-planned talent development and learning strategy that can provide strategic advantage over their competition. With 32% of U.S. workers considering leaving their employers [1], enhancing TA programs can give organizations reason to rethink their engagement and retention strategies.

For decades, TA programs have been a mainstay in most benefit portfolios. The standard approach has been to bundle tuition reimbursement with the usual benefits offered to employed associates. Often considered a perk, these benefits sit alongside medical, disability, and life insurance programs including retirement and paid time off.  With TA programs isolated from their natural connection with organizational development, learning, and talent management functions, companies often lose the advantage that tuition reimbursement brings when leveraged in a focused way that aids retention, job satisfaction, and engagement.

While many employers offer training courses focused on developing job skills, few have linked their tuition reimbursement efforts to the overall workforce development strategy. A recent study undertaken by the ROI Institute revealed nearly 64% of employees using TA programs indicated a significant or very significant improvement in overall engagement while the same percentage reported significant improvement in commitment to their employer [2]. With productivity, engagement, and retention at the top of most employers’ minds, Human Resources and learning leaders should take note of these findings.

Instead of putting learning at the forefront of workforce development efforts, many employers administer their TA programs as a secondary benefit, minimizing the value brought when such programs are managed by their company’s learning leaders. Chief Learning Officers might best serve their organizations by overseeing these benefits and integrating them into the overall learning strategy. Doing so can enhance the organizational and talent development efforts of their Human Resources counterparts.

How can organizations rethink their TA strategy to impact engagement and retention efforts? Consider the following:

1)    Tier Annual Caps: Employers offering TA programs generally have annual caps on how much they will reimburse each employee. Caps tend to be standard regardless of the field of study an employee seeks. Instead of having a single cap of perhaps $3,000 per fiscal year, employers should consider a tiered cap that gives associates incentive to pursue educational skills that aid them in advancing into hard-to-fill jobs that typically have a high degree of turnover. Employers must be sure to stay under the IRS minimum of $5,000 in tuition reimbursement per employee per year.

2)    Incentivize Programs of Study: Many companies will reimburse employees for fields of study that have no link to the core business or to the organization’s learning and development strategy. Instead of viewing tuition reimbursement as a perk, employers should define the top five degree and certificate programs the company requires to remain competitive and then incentivize employees to obtain them. To gain the best ROI, continuing education should be linked to the company’s enterprise-wide engagement strategy. Employers should communicate to employees that the successful completion of degree programs, when combined with an effort to maintain high performance ratings, will advance a person’s career more rapidly. Associates who maintain these standards can be placed into talent pools that get first dibs on internal promotion opportunities.

3)    Guarantee Full Tuition Coverage in Exchange for Service Commitments: Employers rightfully understand that if they are footing the bill for an employee’s education, then associates receiving the benefit should guarantee their service commitment or pay back some portion of the cost when leaving for greener pastures. Companies can mitigate their turnover risk by creating a policy that rewards employees with 100% tuition coverage for a guaranteed minimum stay of 36 months, a period close to the typical length of tenure younger employees have in any one job [3]. If an associate breaks the agreement, employers can withhold from the employee a full or pro-rated portion of the cost.

4)    Have the CLO oversee the Tuition Assistance program: One way of ensuring that tuition reimbursement is linked to the broader workforce development strategy is to place it under the auspices of the company’s CLO or functional equivalent. While many companies tend to separate organizational development, talent management, and learning functions, most employers would benefit by having one area oversee the TA program. Allowing these professionals to manage the tuition reimbursement provides ample opportunity to link internal talent development efforts to continuing education strategy leveraged as one integrated plan.

If the goal of tuition reimbursement is to provide eligible employees with the opportunity to obtain, maintain, or improve their professional capabilities through participation in courses of study at accredited colleges and universities, then employers, regardless of industry, can gain advantage by smartly leveraging these benefits within their overall workforce development efforts.

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References

[1] “One in Two US Employees Looking to Leave or Checked Out on the Job, Says What’s Working Research,” Mercer Corp. press release, June 20, 2011, on the Mercer Corp. web site; http://www.mercer.com/press-releases/1418665, accessed Friday, September 28, 2012.

[2] Caroline Hubble, Jason Mulrooney and Andrew Nelesen, “Offering Money for School Pays Off, ” Chief Learning Officer, June 2012, p. 74-76.

[3] “Employee Tenure Summary; Employer Tenure in 2012,” Bureau of Labor Statistics press release, September 18, 2012, on the Bureau of Labor Statistics web site; http://www.bls.gov/news.release/tenure.nr0.htm, accessed Friday, September 28, 2012.

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Readers Comments

Otto Greiss 2012/10/01 at 10:23 am

Bringing tuition reimbursement under the sole purview of the CLO is a great idea, Brian. Why not line external training with the goals of internal training?

Shazia Ahmed 2012/10/01 at 1:19 pm

A lot has been said recently about the idea of asking employees to sign service agreements in exchange for tuition reimbursement. I don’t think that’s fair. Employers have the ability to terminate an employee at any time for any number of reasons. Employees should have the same freedom to remain vigilant for opportunities to further their careers elsewhere.

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