The media loves to talk about how big name companies like Target, Chipotle and Starbucks offer education benefits to their employees. In May, Walmart announced a $1 a day college tuition plan that set off a wave of media speculation. An astute observer will realize that these businesses have a bigger motivation than just looking good in the press.
It's safe to say that these major players don't do anything without fully investigating how it will impact their business. So why are they doing it, and is it something your business should be doing too?
The fact is, providing education benefits helps you build better employees. Businesses that offer education benefits have found that their employees are more loyal, more competent, and more productive. That equates to real savings in the form of decreased recruitment demands, increased profitability, and a more skilled workforce.
Education benefits close skills gaps
While educational benefits impact your business in some surprising ways, one way is obvious. They help employees build skills. When your employees are more skilled, they are better prepared to do their jobs. They feel confident in the work that they do. The effects ripple across the organization, positively impacting retention, productivity, and more.
Without education benefits, some employees could not afford to pursue a degree or other training programs. According to the Institute for Higher Education Policy, many people can't afford to go to school even with the help of student loans. By helping employees enroll in tailored educational programs you help them learn both the hard and soft skills essential to their jobs.
This is becoming increasingly more important in today's tight job market.Unemployment rates have plummeted to the lowest seen since 1969. While that's good news for the economy as a whole, it presents challenges for employers. Instead of selecting from a pool of highly credentialed employees, many businesses are choosing motivated and growth-oriented employees with less education and fewer skills. They close the gap by helping these employees access educational opportunities in the form of degrees, apprenticeship programs, certificate programs, and other training.
Education benefits make employees more loyal
Surprisingly, few studies have been done on how providing tuition assistance or other educational benefits improves the bottom line for companies. This may be because tracking ROI is difficult with so many factors at play. Either way, the shining example of how education benefits provide positive ROI is Cigna. The health insurers Education Reimbursement Program returned $1.29 in savings for every dollar spent according to a study by the Lumina Foundation.
Participants in the program were 8% more likely to stay with the company, 10% more likely to be promoted, and 7.5% to be transferred within the company. In short, they're keeping qualified talent within the company. That means Cigna is saving significantly on recruiting and hiring costs.
The question is: Why? Why are employees more likely to stay with your company if you pay for tuition assistance. It's the exact opposite of what some employers fear will happen. These employers wonder if paying an employee to better themselves is the same as paying that employee to get a better job somewhere else. Yet it doesn't work that way. Why?
Because offering tuition assistance or other education benefits shows employees that you value them and their development. The desire to be valued is a driving force for all people. By writing that check, you're telling employees that you value their contribution and believe in their ability to do even more.
In addition to helping you keep the employees you already have, a strong education benefits package can also help you attract more quality employees. According to a survey by Fractl, 44% of workers say that tuition assistance would make them more likely to take a job. It's safe to assume that someone who wants to go to school is eager to learn new things and improve themselves. That's exactly the kind of person you want as an employee.
The best part is, thanks to tax breaks, $5,000 in tuition reimbursement may cost your business as little as $250 per employee. You'll spend more to provide free snacks in the lounge or an on-site gym, which are both less desirable than tuition assistance according to the employees surveyed.
Education benefits drive productivity
Business owners have known for decades that education increases productivity. A New York Times article from 1995 shared the results of a study conducted by the Census Bureau for the Federal Department of Education. The survey found that increasing worker education resulted in two times higher gain in efficiency compared to updating tools or machinery. When employees have access to customized training programs they become more productive.
In the past, businesses had a greater abundance of educated workers to choose from. Unemployment rates were higher and more students were pursuing degrees. Now with dropping enrollments driving up education costs, employers likely don't have a large pool of educated applicants to choose from. This doesn't mean they have to give up the productivity benefits that an educated workforce brings, it just means that employers may need to help by offering education benefits to employees.
Although education doesn't necessarily give the employee the hyper-tailored skills that training delivers, it does improve overall competence and soft skills like communication, collaboration, and time management. These directly impact the productivity of both the employee and everyone he or she works with on a daily basis.
Finding an education partner
One of the best ways to ensure that your business builds better employees through education benefits is to partner with an institution that understands the needs of the working learner. Penn Foster helps businesses to build a better workforce through a broad range of education & training programs. From individualized skill-based courses, to industry-specific career pathways and apprenticeship programs, Penn Foster can help meet your organization's unique training needs.