DEVELOPING TALENT is a top concern of any smart business. That’s why some companies see paying for employee education as a worthwhile investment.
Besides the obvious advantage of gaining a better-trained worker, tuition reimbursement provides other benefits for companies, such as helping them attract top talent.
“It sets you apart from other employers,” says Tina Weber, president-elect of the Portland
Human Resource Management Association. “And it can increase employee morale because they know you’re interested in their development.”
Tuition reimbursement can also promote retention. Employers sometimes ask employees receiving educational aid to sign a contract saying they’ll stick around for a certain period of time. If they don’t, they may have to repay the employer’s contribution. Others tie it to a
retention bonus or simply offer it as a gesture of
loyalty they hope will be returned.
“The thinking is that if the organization invests in the employee, the employee will reciprocate,” says Debra Ringold, dean of Willamette University’s Atkinson Graduate School of Management. “It signals commitment and asks for commitment back.”
Though tuition reimbursement can be offered for any classes related to an employee’s job,
it’s especially popular for employers to chip in for a Master of Business Administration degree.
“Most organizations are concerned about succession planning,” Ringold says. “One way to make certain you’ll have the talent needed to lead your organization as the current management retires out is to prepare people for management with an MBA.”
Other classes employers might consider paying for include those required to obtain or maintain a professional certification or any others that might help an employee improve at their job.
Weber says tuition can range from $1,500 for a national conference to $2,000 and up for a quarter of undergraduate- or graduate-level courses at a college or university. Employers can offer to contribute all or part of the cost, though employees must pay taxes on anything above $5,250 for undergrad or graduate courses. There are different ways of setting up a program, from offering a flat amount per employee per year to setting a budget for the entire company.
Despite the benefits it can offer, tuition reimbursement is often one of the first programs to go when budget cuts have to be made. Even if you can’t afford to pay for every employee to get an advanced degree, there are other ways to help out. Ringold suggests being flexible with an employee’s schedule while they are in school, while Weber says you could just offer to pay for books.
“It’s up to the organization to decide what is their resource capability and how much they can offer,” Weber says.