Tuition Reimbursement Programs Deliver Powerful Results
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Evidence shows an improved bottom line and increased retention rates
Many companies have long recognized the value of helping their employees reach their personal and professional goals through tuition reimbursement programs, which are a win-win for both employer and employee. Employees sharpen the learning and skills needed to advance professionally, and employers benefit from a more skilled workforce with access to a deep pool of talent.
However, for smaller companies in particular, tuition reimbursement programs might seem out of reach given what is perceived to be the significant expenses typically required to fund the programs. But in truth, emerging evidence shows that not only do the programs pay for themselves, they deliver a wide array of additional strategic benefits back to the company.
For example, Lumina Foundation, a national foundation focused on increasing post-secondary attainment, partnered with health insurer Cigna to assess the specific benefits tuition reimbursement programs return to the company. The resulting study, conducted by Accenture, a leading global professional services company, analyzed Cigna’s Education Reimbursement Program (ERP) and found that every dollar the company put into the program was returned and generated an additional $1.29 in savings—a 129 percent return on investment.
The programs can also help protect companies from the significant costs associated with open positions. According to a 2014 study conducted by CareerBuilders, a company loses an average of more than $14,000 for every job that remains vacant for three months or longer, and one in six companies reports that it loses $25,000 or more because it can’t find a candidate with the right skills to fill the position. Employees who have taken advantage of the tuition reimbursement benefit can quickly fill those open positons now that they have the required credentials to qualify for the job.
In addition, there is evidence that employees who have the right credentials and can be hired within the company to fill open positions not only outperform those hired from outside but are often less expensive. According to an article in The Wall Street Journal, external hires get paid 18 – 20 percent more than internal employees do for the same job, but get lower marks in performance reviews during their first two years on the job. The article also reported that outside hires were 61 percent more likely to be laid off or fired from that positon and 21 percent more likely than internal hires in similar positions to leave their job.
Tuition assistance programs can also play an important role in solving the nation’s skills gap. While there are millions of job openings in the United States, companies cannot find workers with the right skills, training and credentials to fill them. Compounding the dilemma is the increasing importance of a college degree to fill open positions, even those not commonly thought of as needing a postsecondary degree. In fact, studies show that by 2020, 65 percent of jobs will require a college degree or postsecondary credential.
Businesses must invest in more strategic ways to help their employees get college degrees or other post-secondary credentials to fulfill the job demands of today and tomorrow, and taking a fresh look at tuition assistance programs can certainly help. As the economy continues to improve, companies must increasingly compete for talent, and tuition assistance programs can be a compelling incentive to convince the job seeker still weighing options to accept the offer.
Steps that help employees earn degrees or other credentials are good for business and good for America. Business Champions for Credential Completion, a group of approximately 35 senior business leaders at top companies across the United States, representing a wide variety of sectors from agriculture to health care to retail, are recognizing the value and are calling for a greater focus on working with employees to help them earn credentials. Working together, they share programs and best practices that encourage credential completion and demonstrate how this commitment helps their businesses grow and prosper. It’s good for workers who can advance into better paying jobs where they can use their knowledge and skills, good for companies that benefit from a highly-trained workforce, and good for keeping our nation strong and competitive.
Companies that invest in well-designed tuition assistance programs benefit from their investment not only from the satisfaction that comes from knowing that they provided their workers with the tools they need to succeed and advance in their careers, but also from a more finely tuned workforce that gives them access to workers with the right skills and credentials that they need to fill open positions and stay competitive. Tuition assistance benefits provide the opportunity to empower employees while creating a stronger, more competitive organization that has access to the talent it needs to prosper. ITM
Author Bio
As Vice President of Client Relations, Council for Adult and Experiential Learning, Lynn Schroeder leads the corporate-facing sales, account management and delivery activities of the organization where she focuses on strategic growth and customer satisfaction. Lynn first joined CAEL in 1997 and has held a number of varied positions within the organization. Lynn has more than 30 years of business leadership experience in sales and marketing, management and program delivery, client relations, communications, editing and publishing.
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