Companies around the world have realized that implementing a tuition program has various organizational benefits, and serve many diverse functions. In fact, approximately 85% of companies have some form of tuition assistance program, according to a 2008 Bersin & Associations Tuition Assistance study. Often, companies have set up their tuition program to serve as a standard benefit offering - an entitlement, so to speak. However, forward thinking companies are becoming more strategic with their tuition assistance programs, and are using them to assist in meeting other organizational goals and objectives. Specific needs are varied in nature, depending on the current focus of the organization. Examples could include:
- Attracting and retaining certain types of talent
- Developing employees for succession planning and other growth opportunities
Investing in your employee's future is mutually beneficial for both the employee and the employer. The employee garners the chance to increase knowledge and skills, while the company has the opportunity to invest in molding a "desired" employee. Training, formal education, certifications, experience, coaching, and mentoring all play key parts in molding a person into a desired employee. Organizations that recognize and appreciate this often will utilize all resources available in their attempt to develop career paths and succession plans.
While using a tuition assistance program strategically is a wise decision, many organizations struggle with doing so. Transforming your organization's philosophy on tuition programs from an entitlement program to a strategic tool can be challenging and a lot of work. It requires planning, resources, and time to be invested across all levels of the organization- starting from the top. Unfortunately, not everyone is able to do this quickly and efficiently. In addition, it is often hard for Human Resources to be able to put a hard ROI on the strategic benefits, therefore creating a harder sell to upper management. Because it is such a challenge to change gears, it makes sense to break the process into smaller steps.
Step 1 Why Do You Have a Tuition Program?
The first step an organization should take seems like an easy one- why do you have a tuition assistance program? What is the overall objective that you are trying to achieve by offering tuition benefits? As the program manager, ask yourself if the reason for the program can be defended all the way to the top of the organization. Tuition programs are expensive, although when compared to traditional health benefits, amount to only a fraction of the total company spend. It is typical, however, to see anywhere from one million to fifty million dollars in annual tuition spend. A few questions to keep in mind when developing the goal and purpose of the program include:
- Recruitment- Is there an area within your organization that will be affected heavily by retirements, or an emerging sector that you will need to attract talented people to?
- Retention- Are there employees that you need to retain in order to manage your daily business? Do you need employees to stay a certain length of time with the organization in order to receive a return on investment for hiring and training costs?
- Development- How is your bench strength? Will you have mass retirements in the next two to three years? How is your organization positioned to handle the loss of knowledge that could result? Does your company follow a recruit from within philosophy?
Once you have asked yourself these questions, it is time to begin formulating an action plan based on your answers.
Recruitment
The recruitment strategy is the simplest of the three corporate goal concepts, as it relates to tuition assistance programs. Companies who utilize this strategy may be trying to fill a large number of open positions, or they may be using the strategy to quickly attract top industry talent by becoming the "Employer of Choice". A former Director of Benefit Strategies for Best Buy, stated they use this recruitment strategy to attract employees who can provide excellent customer service, and who will have enough longevity at Best Buy to achieve a positive ROI for the extensive product and service training required. Normally retail operations are less likely to offer tuition benefits than other industries, which allows Best Buy to be an "Employer of Choice" in the industry, and to attract and retain top talent.
Retention
It is obvious that employee retention is important to all organizations - even in a turbulent economy such as this. However, what is even more important is that the "right" employees are being retained. An employer can strategically create a plan design that is specific for certain degrees, or one that provides a higher tuition dollar cap for certain majors. Health systems often create programs that help to achieve a specific "crop" of employees. One health care system has developed their program based on current job class/type, and the specific degree/major that the employee is pursuing. This allows the organization to utilize their tuition program strategically in the daily management of their human capital resources. Benefits of this type of plan design include increased retention, increased loyalty, the ability to quickly respond to resource gaps, and career advancement opportunities. The difference in turnover percentages for those that utilize a tuition program versus those that do not is significant - often 20% or more based on research completed by EDCOR. This difference results in real dollar savings and adds to the company's bottom line.
Development
Utilizing a tuition program strategically for development goals is the hardest to obtain. It also happens to be the most difficult to measure and maintain. Despite the challenges that this particular strategy provides, when employing this strategy an organization should focus on using all of the tools available to them, including in-house, on the job training, external training, and college educations to help determine the planning and development needs for an individual. One of the key steps is to secure buy-in from the employee up front, as the employee will be an active participant in the development and success of the overall plan. In addition to helping to ensure success, buy-in from the employee also helps to develop a long-term and meaningful employee-employer relationship. Results have shown that those employees that participate in tuition programs consistently perform better that those that do not. This ultimately results in greater job mobility. All learning, both formal and informal, should be tracked and reviewed by the employee and the company to ensure that short and long term goals are being met along the way. These goals should then be rolled up into the overall departmental, division, and company goals to ensure that they are properly aligned.
Step 2 What Will You Measure?
As most of us are aware, almost everything in life is measured by results, and tuition programs are no exception. The second step in converting a tuition program into a strategic tool is to do just that - determine how you will measure the results of the program. Depending on the overall goals, there are many facets that can be measured. For example, retention and turnover rates for those employees using the program versus those employees who do not use the program. Can you make an association between the tuition program and overall tenure of the participants? You may also decide to look at the length of time between promotions for participants versus non-participants, or the percentage of employees who achieve degree completion versus those who just sporadically enroll in courses. Another useful metric to track is the number of new hires who utilize the program. And finally, tracking the overall employee satisfaction and engagement is important. The results of all of these can be critical in determining the overall support for the program.
Step 3 Review Every Aspect of Your Tuition Policy
The third step to creating a strategic tuition program is to carefully review and analyze your current tuition policy in great detail. Key items to look for are the way that your policy ties to strategic organizational goals, and ways that your policy helps to save your organization money.
One example is to evaluate the idea of adding non-degree courses to your program. Are non-degree programs valuable to your organization, and to your employees? What benefits are to be gained in allowing an employee the opportunity to take courses using the tuition benefit that do not ultimately result in the attainment of a degree? How can the effectiveness of this be tracked? These are just a few of many questions that employers should be asking themselves when designing or re-designing a tuition assistance policy.
A recent analysis completed by EDCOR Data Services, LLC, indicates that 85% of organizations surveyed allow non-degree earning courses to be taken and paid for as part of the tuition assistance program. However, there are caveats that often come along with this. The course must be either job related, or help the employee with basic skills such as mathematics, writing and grammar, or English as a second language. Additionally, the courses typically must be taken at a national or regionally accredited educational institution.
Another example of areas to review in your organization's policy includes making a determination as to what degrees, majors, and schools are acceptable under your policy. For example, aggressively limiting the schools a student can receive their education from. Not all schools are equal. Company approved schools allow for greater visibility to the quality of education and the quality of performance for those employees versus others.
Are all degrees and majors required to be job related? Does your organization want to cover upper education degrees like Jurist Doctorates, MD's, PhD's, etc.? These are examples of important questions that need to be asked by the organization. If your organization is attempting to attract a large volume of people to fill hourly positions, it may be more beneficial not to require job relatedness. However, if you are looking to fill positions internally and develop people in certain job fields, you may want to consider restricting tuition benefits to certain majors and degree types. The flexibility and pliability of your program is what will help you achieve certain goals, and maximize the value of your program.
The College-Level Examination Program® (widely known as CLEP), is another program that you can increase the efficiency, while decreasing the cost of your tuition program. According to Collegeboard.com, a CLEP examination allows students to receive college credit for experience. There are currently 34 CLEP examinations available, and include a wide variety of topics such as Financial Accounting, Introductory Business Law, and Principles of Management. A CLEP exam costs approximately $72, as opposed to the $300- $1,200 normally charged for tuition. The savings are apparent, and the theory of the CLEP testing itself helps to motivate students because they can receive college credit for knowledge they already have by simply taking and passing an exam. Beyond the initial savings in tuition costs, both the organization and employee can also realize substantial savings in time, as the degree completion time will shorten. This creates a win for the employee, and allows organizations to more quickly capture their return on investment.
It cannot be stressed enough that every area of your tuition policy should be reviewed in detail, thoroughly analyzed, and evaluated against your organization's overall strategic goals. Having rules or parts of the program that are included because "that is the way it has always been" does not allow for a strategic plan. Continuously ask yourself how does this help the organization achieve its' strategic goals.
Although this may seem like a daunting task, there are experts available to help you do this. These industry experts will carefully analyze your policy, and make suggestions and recommendations to help you not only achieve your goals, but to develop creative methods for cost containment while doing so.
Sara Van Wagoner & Katie Claya, November 2010
About EDCOR Data Services, LLC.
EDCOR is the nation's most experienced manager of tuition reimbursement administration solutions for Fortune 1000 companies. Edcor specializes in analyzing and building customized, Client-centric solutions for organizations seeking a well defined, fully automated, streamlined, and centralized tuition program for participants and administrators.
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