3 Tips to Increase ROI on Education Benefits
There’s no arguing the benefit of helping employees to continue their education. It helps them, and it helps your business.
The reasons a company should seriously consider offering tuition benefits run the gamut: To attract talent, to retain it, and as last year’s Cigna study showed, to move the business forward and improve its bottom line.
When the adult-education-focused Lumina Foundation partnered with the health insurer to analyze its Education Reimbursement Program, it found that for every dollar invested, the company generated $1.29 in savings. Program participants were more likely to be promoted, retained or transferred within the company, which reduced talent management costs, Cigna’s Chief Learning Officer Karen Kocher wrote in the July 2016 article “Companies Should Invest in Employees’ Higher Education.” With a 129 percent ROI, executives raised the maximum tuition reimbursement for employees in high-demand roles.
Today, about 87 percent of Fortune 1000 companies offer tuition reimbursement, said Rachel Carlson, CEO and co-founder of Guild Education, a company that partners with nonprofit universities to help businesses with their education benefits needs. She shared three tips that can help organizations — and their employees — reap the greatest value from this investment.
- Understand the value for your company. Carlson said that historically, while tuition reimbursement may have been a line item benefit accessible to full-time staff, companies have only encouraged corporate workers to take advantage of the benefit — for a high potential leader to pursue their MBA or master’s degree, for instance.
“What you find is, while the MBA is popular, it’s actually a flat or negative ROI, and it’s a pretty uncoordinated process,” Carlson said. On the other hand, encouraging front-line employees to use the benefit, people completing a bachelor’s program or getting their GED, “there’s a highly positive ROI.”
The disparity comes down to cost and effect, Carlson said. Compared with an MBA program, which can get pretty expensive pretty fast, a bachelor’s completion program, GED or a series of classes is much more affordable. But greater than that is the retention effect, Carlson said. Her company found that employees who earn a bachelor’s degree or college credits or a GED with their employer tend to stay longer than a newly-minted MBA employee. The latter adult learner might earn the degree, get their company to pay for it and then move on.
Accordingly, Carlson recommended companies do what Guild does with its clients: some math.
Learning leaders should consider the education benefit on a per-employee basis, looking at the cost of helping an employee go back to school versus the costs associated with them leaving the company.
- Partner with senior leadership on talent objectives. Companies that work with Guild look to their workforce planning needs and business model for guidance on what education benefits to offer employees. Some employers choose to offer a plethora of options, giving employees broad choice in programs, degrees and certificates. Other companies with a more squat pyramid environment, where there are fewer ladders to ascend, might proceed in a different way. “They might be happy for an employee to work for them for two years, earn a skill as an accountant or a nurse or a teacher, and then move on to take one of those middle skill jobs,” Carlson said.
For other companies where there is demand for skills in a strategic area, learning leaders may curate specific programs and courses for employees to meet organizational needs. Carlson said getting clear on the company’s talent goals — whether it’s upskilling, retention or recruiting future employees — will drive decisions and details for a company’s tuition reimbursement benefits.
- Provide a support system and resources. Carlson said one of the features that distinguishes Guild are the coaches and advisors they deploy around the education experiences they coordinate. These supports work with employees who are reengaging in academic rigor and navigating the responsibilities that come with being a working adult, she said. Learning leaders have only to look at the completion rate for open access content available today to understand the importance of an employee support system, she said. It’s a low rate among busy people who haven’t had a strong college experience or learned how to be a strong self-directed learner. Guild’s work with adult learners through coaches and advisors has been shown to dramatically improve retention. And research supports this. Academic advising is widely seen as core to a student’s success, whether they’ve transitioned out of high school or re-entered school after time away from it.
Bravetta Hassell is a Chief Learning Officer associate editor. Comment below, or email editor@CLOmedia.com.