Most companies now offer tuition assistance for employees – but are they doing it right?
Each year, U.S. companies spend billions of dollars supporting college education for their employees. By better designing the programs that direct those dollars—not necessarily spending more—employers can significantly improve the talent within their own ranks, contribute to their communities, and help meet the nation’s talent goals.
Companies such as Chipotle, Disney, and Walmart are recent additions to the 56 percent of firms that offer a tuition benefit program. That figure, from the Society for Human Resource Management, is a sharp increase from just 2018, likely driven by acute talent shortages throughout the economy.
As skilled talent becomes harder to find, more companies are looking to grow from within. Further, a new report from Bright Horizons, a major tuition assistance support organization, highlights the popularity of these programs among employees, with half of survey respondents ranking tuition support as one of the best benefits provided by their company, and three-quarters indicating the provision of such support would make them more likely to stay on the job.
Over the last several years, I’ve pulled together a Top 10 List of questions employers should ask as they’re considering providing education support to employees. These questions are relevant for employers just starting out in considering a program, or for companies considering a shift in their strategy.
1. What do you want to accomplish?
Is the company building the education assistance program to be
- competitive with other employers,
- to attract a different applicant,
- to support incumbent entry-level talent development,
- to invest in executive talent,
or for other reasons, and how would the company rank these objectives?
Each of these objectives has a programmatic implication. In our experience, many companies don’t consider the array of objectives an education program could possibly serve. A general tuition reimbursement model will likely only superficially serve objective 1.
2. How do you want to administer it?
Do you have the capacity in-house or will you need external support?
There is a growing trend among large employers in using intermediaries like Guild Education, Bright Horizons and InStride to administer tuition-support programs. Each of these organizations offers something different. In-house administration may also be an effective approach.
3. How big do you want to get?
Is the scale of the program related to the size, industry, and positioning of the company?
Having a goal in mind at the outset is helpful for planning. If a company wants to ease into a program or cap utilization at a certain spend or number of participants, that decision should lead to fundamentally different design decisions.
4. Can you measure yourself?
Does the company measure the inputs and outcomes of the program? Can you track who is participating?
One thing that surprised me most as we got into this space was how little data a typical company tracks about its education programs. Even the basics—turnover costs, promotion rates, and employee participant data—can be the foundation for a basic ROI calculation.
5. How do you want to tell people about it?
Is the program well-advertised and readily available to employees at all levels of the organization?
Even exceptional programs will suffer if they aren’t advertised! We have found over and over that programs with low utilization and little awareness among employees are absent from the day-to-day conversation, have little leadership support, and are generally mentioned only in the employee handbook.
6. Who gets to participate?
Is the program equitably administered, meaning that decisions on which individuals may participate are driven by policy rather than individual managerial judgment? Are eligibility requirements clearly described and upheld?
From my perspective, de-centralized administration of education programs results in less equitable outcomes. I hypothesize that introducing individual yes or no decisions into these programs can do several things:
- Limit the array of individuals who think the program is for them—if only middle management and above are getting approved, entry-level folks will not see themselves reflected, even if they are eligible.
- Introduce potentially risky dynamics – if an early career employee takes part in the program and struggles at work or school, that employee could be opened up to additional scrutiny. Further, a manager who had one struggling employee might close things off to others based on his experience.
- Direct resources to the top – Even if equity and fairness is a priority of the program, leaving decisions to individual managers will likely result in resources channeling to upper-level employees who are already performing very well. Our ROI analyses indicated that the best return on investment for companies comes from investments in front-line workers, rather than those who already have degrees.
7. Is the assistance program part of an upskilling agenda?
Does the company connect participation in the program to promotions, lateral job transfers, pay increases or other measurable improvements in work?
As employers provide more training on-the-job and through tuition support programs, many are finding value in creating improved career pathways for employees, and helping employees understand the value of gaining more education.
8. Which education partners are you working with?
How has the company selected colleges and universities to partner with, and has there been any discussion about outcomes and expectations for completion?
While many companies operate programs that let employees study at any institution of higher education, we are seeing more companies seeking partnerships with a limited network of institutions or a single provider. We encourage companies to ask questions of their educational partners to understand how well the college serves adult learners, whether it will recognize learning the employee has from work-based education, and whether the college will provide support to employees.
9. What kind of credentials can employees seek?
Does the company have a need for specific types of credentials or programs of study?
This question is directly related to the overall objective of the program. Companies seeking to fill in-demand jobs within the organization should consider a targeted array of credentials and programs to create a pipeline. Companies that are more concerned about improving retention and upskilling within roles may choose a broader array, leading to work outside of the company.
10. What do your employees need to succeed?
Will employees struggle to select a college or program of study? Will employees struggle to pay upfront and wait for reimbursement?
An effective program will be designed for the people intended to use it. If an existing program doesn’t seem to be working for employees, especially entry-level employees, there is a reason (and it isn’t the employees themselves!).
Companies have found that talent investments pay off for everyone. But as with so many things in business and elsewhere, the details matter. And as this trend continues to spread in response to the nation’s shortage of talent, we’re sure to see even more refinements that increase the ROI both for companies and their employees.