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Return on investment is the $16 billion question many organizations can’t answer
U.S. organizations invest more than $16 billion per year in employee tuition assistance programs, but it’s not clear in many cases whether the participating employees or sponsoring companies are getting any return on that investment, according to research conducted November 2011 by Apollo Research Institute.
“Despite significant financial outlay, few organizations formally measure the effectiveness or return on value of their tuition assistance programs,” according to Dr. Tracey Wilen-Daugenti, Ph.D., vice president and managing director of Apollo Research Institute, a nonpartisan research division of Apollo Group, parent company of seven providers of educational services worldwide, including the University of Phoenix.
The institute surveyed more than 6,700 current and past tuition benefit program participants from three
Fortune 1000 companies about the aspects of tuition assistance that they found most valuable. The results, published in a study titled
Bundled value: Working Learners’ Perceptions of Tuition Benefit Programs, show that working learners assign broad value to these programs and reveal the influence of educational benefits on workers’ job loyalty, engagement, marketability and personal growth.
“Some companies just offer these benefit programs because they don’t think they’ll have a competitive benefits package if they don’t,” study co-author Dr. Ruby Rouse, Ph.D., told
SHRM Online. “They say, ‘Are we going to pay for our employees’ tuition to help them get a degree and then have them get up and leave’? This is a real concern.”
Fortune 500 companies are looking more closely at the return they get on their investment in tuition reimbursement benefits and trying not just to retain employees but also to find ways to use their education benefits to further their business objectives, said Rouse, a University of Phoenix faculty member.
“They can’t just assume that they’re getting a good return [on investment]; they should be tracking this in partnership with academic organizations that have the time and money to devote to identifying the business case and positive benefits of these programs.”
Dilemma: Educational Program Marketing
Although organizations might experience many benefits from tuition assistance programs, the primary advantage is developing a capable workforce. The trouble is, many companies don’t know how they should address their employees when promoting tuition benefit programs.
Understanding the perceived value of such programs can help organizations communicate the value and maximize the advantage of employee participation. Then, measuring employees’ perceived value of the program can help identify adjustments to improve program effectiveness and ROI.
“If employers want to engage and keep people involved in tuition assistance programs so that they can achieve their strategic objectives, then they have to speak in the language that motivates the employees as it relates to what they value,” Rouse said.
For example, in the
Bundled value study, some participants described how tuition assistance influenced their education, finances, careers and lives positively.
“If employees value personal development, then human resources needs to stress personal development and the value of career marketability when promoting program participation,” said Rouse. “Stop assuming you know what your employees want. Ask them what they want and find out if you need to retool your program or retool your message.”
What Do They Want, Anyway?
Older working learners need to know that they’re appreciated. It’s great that employers are paying for tuition benefits, but it’s not enough, Rouse said, adding that organizations should encourage and support the employees emotionally and psychologically so they feel valued and want to persevere.
“Remember, these people are juggling work, family and school; they get discouraged; they’re afraid they are not smart enough. So they need to hear from supervisors who inquire about what they’re learning in school and how that might be applied in their job or the organization,” explained Rouse. “That [interest] and emotional energy from the supervisor costs nothing, but to a person who’s doing a double shift trying to go to work and school, it means everything.”
So how can companies track the return on investment of their tuition assistance program? Rouse said companies need to make data-driven decisions.
“Don’t assume anything,” she said. “Ask employees what they’re looking for in a tuition assistance program. Then determine what the organization’s strategic purposes of the benefit program are.”
Unfortunately, too few companies take the time to align these two things, she said.
“Many companies only track the last date that the employee drew funds from the program,” said Rouse. “A typical employer will waste between $3,000 and $6,000 per employee on ineffectively managed tuition assistance programs. They don’t even know if the employee graduated. But if companies proactively monitor what employees want and metrics they’ve deemed to be most important, they’ll be able to show how the program helped to achieve their strategic goals.”
For example, retention is an important metric, Rouse noted. “But are you going to track it from the time at which the employee started to participate in the program or after they complete their degree? Track promotions to show if employees can take what they learned and apply it where it’s apparent that they got better market value. What are we trying to accomplish? It’s time to get more strategic and purposeful or companies are basically wasting lots of money [on these programs].”
Theresa Minton-Eversole is an online editor/manager for SHRM.
Organizational and Employee Development Discipline
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