Benefits

Investing in Employees Through Education Programs

Everyone knows how higher education is supposed to work. You graduate from high school and then attend an accredited college or university for two, four, maybe six years. You might attend graduate school for even more education. Then, equipped with a terminal degree that’s perfectly suited to the job you want, you get hired immediately upon graduation and spend the next 40-odd years working in your chosen field.

As we all know, things rarely actually work the way they’re supposed to.

Many people skip a step or two on the path, and others finish college only to find that jobs in their field of study are scarce. Many people change fields or return to school mid-career. Others find progress in their chosen career is stymied by the lack of a crucial skill or certification.

“An investment in knowledge pays the best interest.” – Benjamin Franklin

Many companies are finding that helping their employees get college degrees, obtain professional certifications, or simply close gaps in their skill sets can be beneficial to both the employee and the employer. The idea is simple: since it can be difficult to find the perfect candidate for a particular position, sometimes it’s actually easier to take an existing employee and turn him or her into the right person for the job.

As Benjamin Franklin put it, “An investment in knowledge pays the best interest.” This can be especially true with respect to developing employees.

Basic Training

Employee education isn’t always about college degrees and professional certifications. Sometimes it’s about helping supplement employees’ most basic educational needs. For example, according to some estimates, almost 40 million adults in the U.S. didn’t earn a high school diploma. Companies who employ lower-skilled workers can foster loyalty while improving their employees’ basic skills by connecting them to adult education programs.

The fast-food chain Taco Bell is a great example of promoting education fundamentals. Acknowledging the reality of young people dropping out of high school to help support their families, the company piloted a program that encouraged workers to finish high school or obtain a GED. In addition to providing prizes and other incentives, the company paid the $1,300 per-worker cost for GED training.

According to the National Adult Literacy Survey, sponsored by the U.S. Department of Education, between 40 and 44 million adults in the United States (21-23 percent) are functionally illiterate. These numbers include both native speakers and immigrants. Not being able to read and write is obviously a career-limiter, but it can

also be a workplace hazard. Employees who can’t read warnings on equipment and chemicals are more likely to create hazardous situations. In many places in the country, businesses team up with government agencies and non-profits to give their employees opportunities to improve their language skills.

In-service Training

Many jobs require some kind of specialized training, and incoming employees generally get instruction regarding how to do the job they’re hired for. But what happens when the job itself changes, or when a person moves to a different position?

When job requirements change, many companies are moving to “retool” existing employees rather than seeking to replace them. Moving from a manual to an automated workflow, for example, may require upgrading a worker’s computer training. Changing from one tool or system to another may necessitate significant upgrades to an employee’s skills.

Many companies promote from within, but throwing an undeveloped employee into a managerial role can be problematic. A management training program, whether developed internally or outsourced to a professional training vendor, can go a long way towards helping new managers and supervisors spread their wings in their new roles.

Some companies encourage employees to look for areas where they could provide additional value to their organization or to find areas where they make lateral moves to create new career paths. A call center employee, for example, may be given computer training in order to transition into the company’s tech support department. A marketing employee with an interest in data analysis may be provided training in working with databases.

Job-Related Certifications

Certain jobs are easier to do if you have a few extra letters after your name. Sometimes it’s mere “office cred,” and other times a certification is a requirement for advancement. Many companies are finding that sponsoring their employees’ efforts to acquire professional certifications can be beneficial both to the company and employees. Sometimes this involves paying for (or subsidizing) required training or even footing the bill for the credential itself.

Here are just a few examples of certifications that can provide a boost both to the employee and the employer: 

  • SPHR – Senior Professional in Human Resources, awarded by the Human Resources Certification Institute
  • CFP – Certified Financial Planner, awarded by the CFP Board
  • CHT – Certified Hospitality Trainer, awarded by the American Hotel & Lodging Educational Institute
  • CIA – Certified Internal Auditor, awarded by the Institute of Internal Auditors
  • CRISC – Certified in Risk and Information Systems Control, awarded by the Information Systems Audit and Control Association
  • PMP – Project Management Professional, awarded by the Project Management Institute

In addition to a few more letters on a business card, many of these certifications are associated with organizations that publish information and hold events specifically for those who hold the certifications. In this case as in others, one educational opportunity can lead to others.

Tuition Assistance Programs

The Holy Grail of employee education is the tuition assistance program (TAP). Many companies offer some kind of higher education benefit—whether it’s a partial tuition reimbursement or full tuition assistance—but industry data suggests that only five to ten percent of eligible employees actually take advantage of them.

There are plenty of possible reasons. According to HR Magazine, “Tuition has soared in recent years, making it hard for employees to pay up front for expenses, a common requirement of TAP’s. Employees in full-time positions have little time to take off for classes or to study. And employees may not have incentive to pursue additional education if they can’t see the payoff for their hard work in bonuses or promotion opportunities.”

“…Employees may not have incentive to pursue additional education if they can’t see the payoff for their hard work in bonuses or promotion opportunities.” – HR MAGAZINE

Starbucks, the ubiquitous coffee shop chain, made headlines in 2014 when it announced it would foot the bill for employees wanting to complete an associate degree. The program, offered through Arizona State University’s online studies program, could cost up to $30,000 per employee.

In 2015 the company doubled down by announcing tuition assistance for four-year degrees, offering to pay up to 58 percent of tuition for employees who want to turn their A.A. or A.S. into a B.A. or B.S. This expanded offering does carry some restrictions. For example, it’s not available to workers in “licensed stores,” such as those embedded in grocery stores or big-box retailers. Workers would be required to pay their own tuition up front, and then would be reimbursed at the end of the semester. Those who drop out or leave Starbucks before the semester ends would not receive the reimbursement.

According to U.S. News and World Report, employers offering TAPs vary widely on how the programs work. “Some employers develop their own educational programs while others outsource to colleges and universities. One company may cover the full cost of tuition while another might cap reimbursement at a dollar amount.” Since education benefits over $5,250 per year are taxed by the federal government, many companies limit offered benefits to that precise amount.

Some companies justify their TAP offerings by the potential increase to their own bottom line. Others see education more as a community responsibility. As Starbucks CEO Howard Shultz told CNN: “The rules of engagement for running a company that is people-based like Starbucks, and so many other companies: you just cannot continue to leave your people behind and only focus on shareholder value.”

Strings Attached?

There are no federal requirements for tuition assistance programs, and companies are not in any way obligated to provide them. Aside from the limits imposed by tax regulations, businesses are free to put their own restrictions on the programs they offer. Here are a few of the common restrictions:

DEGREE FIELD: Some companies will only subsidize a degree program that directly relates to the work an employee performs (or may perform) within a company. For example, a junior bookkeeper might get help in obtaining a B.S. in accounting, but not one in underwater archaeology. Other companies, like Starbucks, allow workers to choose any course of study that interests them.

ACHIEVEMENT REQUIREMENTS: To maximize their investment, some programs require that employees earn specific letter grades (a B or higher, for example), or maintain a specific GPA. Those employees who fail to do so either lose their reimbursement or get dropped from the program.

Service requirements: One of the most common TAP restrictions relates to a qualifying employee’s time on the job—both before and after receiving tuition assistance. Some companies require an employee to have worked there for a minimum specified time before applying to receive help with college. Others require employees to stay with the company for a certain amount of time after taking advantage of TAP benefits.

“The rules of engagement for running a company that is people-based like Starbucks, and so many other companies: you just cannot continue to leave your people behind and only focus on shareholder value.” – Howard Shultz, Starbucks CEO

Factors to Consider

Companies thinking about establishing or modifying a tuition assistance program should consider a number of factors before making decisions about how their program should be structured and managed.

Which employees are eligible?

Is the TAP accessible to both full-time and part-time workers? How long does an employee have to be employed by the company in order to apply for the program?

What and how much is covered?

What is the yearly and total benefit of the program? Is all tuition covered, or does the program require that employees share costs with the employer? Does the company want to provide the full $5,250 benefit—or less, or more? Also, is the TAP limited to tuition, or are other expenses like fees and books also included?

What institutions and programs?

Does the program cover both bricks-and-mortar and online institutions? Is assistance limited to a specific college, or can workers choose? Are there accreditation requirements? Does the TAP apply to any field of study, or does the degree program have to relate specifically to the worker’s job responsibilities?

Is there a completion requirement?

What happens if the employee withdraws from classes mid-semester? Does the worker have to hit a specific GPA goal? What happens if he or she fails the course?

Is there an employment obligation?

Does the TAP require that the person receiving the benefit remain to be employed at the company for a certain period of time after completion of coursework? If the person leaves voluntarily, does he or she have to repay all or a portion of the tuition that was subsidized by the company? What if the employee is fired or laid off?

How will you balance work and school?

If the employee opts for a traditional (as opposed to online) college or university, how will both employee and employer balance job duties with school responsibilities? Does the worker have a job that is flexible to allow him or her to attend daytime classes, or will only evening and weekend classes be allowed? Is the worker permitted to study or attend classes during working hours? How about labs and exams scheduled during working hours?

What’s the process?

How does a worker find out about and apply for TAP benefits? How far in advance of registration must approval be given? Who has the ultimate say regarding whether approval is given? What documentation must the employee provide to justify enrolling in the program? What are the deadlines for reimbursement?

Implementation

If your company is ready to provide education programs as a benefit for your employees, make sure to establish a documented program that includes information employees and company administrators will need. This should include specific requirements for qualifying for benefits, a description of what educational costs qualify (books, tuition, fees, etc.) and details regarding the specific dollar amounts available for each employee. Once you have a program in place, make sure your employees are aware of it by including details of the program in your regular employee benefits communication strategy.

References:

http://nrn.com/blog/taco-bell-motivates-employees-customers-finish-high-school

http://bits.blogs.nytimes.com/2012/01/31/a-1-billion-model-employee-education-program/

http://www.shrm.org/publications/hrmagazine/editorialcontent/pages/0306bolch.aspx#sthash.CRxJUFpc.dpuf

http://money.cnn.com/2014/06/15/news/economy/starbucks-schultz-education/?iid=EL

http://money.cnn.com/2015/04/06/pf/college/starbucks-college-tuition-arizona-state/

http://www.usnews.com/education/best-colleges/paying-for-college/articles/2015/02/02/what-to-know-about-employer-tuition-benefits-for-college

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