Why Education Reimbursement Supports Talent Development
One of the main reasons that many people don't go to college is because of the cost associated with attendance. Right now, in 2023, most people can't afford to attend college because of the steep cost of university education. The annual average tuition rate for in-state tuition at a public 4-year university in Alaska for example, cost almost 9,000 USD. This doesn't include housing, transportation, food, etc. The fact is that most people are barely getting by with the job they have, and adding a student loan to the mix doesn't make the equation seem any better. This is a bit of a tragic situation because we have an innate desire to learn and cultivate a deeper understanding of our areas of interest.
One of the biggest problems that businesses face is attracting and retaining talented individuals that can prove a beneficial addition to the company culture. Employers need talent, and talent needs continual support to grow and develop. Supporting talent development by creating an education reimbursement program meets the needs of the company and the employee in equal measure.
1. Who benefits from education reimbursement?
There are generally two different types of education that benefit the workplace, a university education and a professional certification. Not that one has to come before the other, but generally, those already working have a degree necessary for the job. These individuals often seek continuing education in the form of professional certification. The certifications serve to expand on a niche area of knowledge, which is why they come after a degree program.
If willing to provide reimbursement, an employer can choose to pay fees on a course-by-course basis to the employee (to then be paid to the school), or to the educational institution directly, Reimbursement typically depends heavily on the structure necessary within the organization.
Both the individual and the company will reap the talent benefits that come from education reimbursement.
Talent in the Individual- First and foremost, the individual will benefit. Financial burdens are one of the top stresses of the Millennial generation and younger. No longer can a person go to work full-time, go to school full-time, maintain healthy relationships, and pay for all living expenses, tuition, books, and materials. Therefore, the peace of mind that comes from having schooling paid for allows the student a greater ability to focus on the subject material and learn to the best of their ability. In addition, some employees who may show exemplary skills in their knowledge base, like tech programming, may benefit from these opportunities to focus on more underdeveloped oral and written communication skills required for job performance.
Talent in the Company-
Let's talk about the "others," such as the company offering education reimbursement programs. Why would a company offer such programs in the first place if not to benefit them in the end? Let's look at some quick statistics.
In a Bright Horizons
survey of more than 30,000 workers currently learning on the job, most respondents (82%) said the skills or degree earned through the employer's reimbursement program helped them be more effective employees, and 84% feel it helped them prepare for future work. In addition, 64% said that the program made them happier at work. This is due to the school of thought that those who feel confident in their particular area of expertise are more satisfied with the work they've done. In the end, employers are recruiting high-quality candidates that desire supplemental education to become top-performing employees.
What about companies that don't require the degree or certification to be used on the job?
In some cases, employers offer education benefits as a simple fact of employment, just like health insurance or a 401K. In these cases, employees are expected to fulfill a certain amount of work requirements to qualify for these continued education benefits.
Take Costco, for example. Costco is very well known for its excellent employee benefits, and a little-known one happens to be its education scholarships. Employees who take advantage of these benefits don't often strive toward a Costco-specific department, instead favoring a more personal route. Costco's scholarships aren't intended to cover the employee's entire program, but these scholarships, combined with the work/school structure balance, allow the employee to spend semesters in school and breaks working in the warehouse.
How does this type of action benefit Costco? Costco itself is known for having high standards for employee behavior, and adding education benefits on top of it allows their employees to both work and attend school-effectively earning a living and an education in a far more sustainable and healthy way than is standard. Providing these opportunities to employees results in employees who are willing to put in the work while they're at work, so they can put in equal effort at school. Being able to separate the two allows the employees to be fully present in each area rather than worrying about everything all at the same time. The skills employees learn in focus, task organization, and community awareness only add more benefits.
2. Leverage education reimbursement programs to attract and retain employees
It's pretty simple-most employees look for jobs that offer supreme benefits that they won't find anywhere else. They're looking for a chance to not only earn a living but also to build a knowledge base. The extensive report, State of the American Workplace
, states that 45% of Millennials report that they would change their job for tuition reimbursement benefits. In the previous Bright Horizons
report, 88% of Gen-Z workers say they are more likely to recommend their employer because of its educational benefits.
People want to learn and expand their understanding of things they're passionate about. Oftentimes, they'll jump on the chance to learn something new. Tuition assistance programs help attract talented individuals who have a knack for improving themselves by absorbing information. They're more likely to stay with companies that invest in them in equal measure.
3. Creating an effective education reimbursement program
Many companies have education reimbursement programs, but some are more effective than others. Often, reimbursement depends on what your company needs in terms of an employee talent pool. To broach the topic of education reimbursement with your employer, you should advocate for the establishment of the program with the goal to achieve specific objectives. Here are a few things you'll want to do during this process:
- Assist in setting up the programs.
- Ask experts in your field for their opinions and procedures. If they already have a similar program in place, it may benefit you to take notes.
- Decide the type of benefits you want to provide in the education department, be it certifications, full tuition coverage, partial, or any of the variations in between.
- Decide what qualifications the employee must meet to be eligible for the program, like how Costco requires that the employee works during their breaks.
- Make your employees aware of your education reimbursement program. Even though employers spend about $177 billion yearly on formal education and training, most working adults are unaware of the associated benefits.
- Monitor the effectiveness of the program itself.
In addition, according to The Society for Human Resource Management
, creating and managing an effective educational assistance program should follow the "SMART" paradigm to ensure that the goal of the program is being met:
- Specific, clear, and understandable
- Measurable, verifiable and results-oriented
- Time-bound with a schedule and milestones
4. The cost of an education reimbursement program
An education reimbursement program obviously has its benefits
, but let's talk about the inherent cost of the creation and upkeep of the program itself. There is an initial cost to the program as well as the cost of tuition and all associated expenses. If employees are given paid time off to complete coursework and attend classwork, other employees may need to take extra hours with potential overtime to compensate. The potential increase in salary necessary to keep the newly educated employee is also something to consider when providing reimbursements. For a 4-year degree, employers can end up paying anywhere from $2,000 USD to $20,000 USD in additional salary costs.
The benefits generally outweigh the cost of such programs, as the employee is now fully equipped with the necessary skills to create a better working environment and as well as more business opportunities for the company.
Creating an educational reimbursement program doesn't have to be complicated or time-consuming to be a benefit to both employer and employee. The program is there to help the individual feel satisfied with their growth opportunities, and for the company to have a profitable balance of talented individuals to benefit the group as a whole. With the right system in place and the group working together to maintain an educational standard, creating the system itself will prove extremely beneficial to all parties in the long run.