January is a time for new resolutions—for some of your employees, going back to school may be on their list of goals for 2021. And with many colleges and universities offering primarily remote instruction for the time being, what better time to get back to the "classroom." If you’re among the roughly 50% of organizations that offer undergraduate or graduate tuition assistance to your workers, good for you; you already understand the value of the investment you’re making in the future not only of your employees, but also your company.
But if you’re in the other half of organizations that don’t yet offer tuition assistance, listen up—it could help close skills gaps, boost succession planning efforts, and improve employee retention. Of course, whether or not tuition assistance delivers a good return on investment (ROI) depends on several factors.
Here are some questions to answer if you’re considering introducing tuition assistance.
Do You Promote From Within?
There are clear advantages to developing internal employees and setting them up for growth, including promotions. It’s less risky than making an outside hire and bringing a new individual into the organization, and it tends to be more affordable, too. But developing employees means ensuring they’re gaining the skills they need for any advancement or new opportunities. While tuition reimbursement shouldn’t take the place of an internal learning and development strategy (since the latter enables your business to have more ownership over how and what your employees learn), it’s one way to provide essential training that closes skills gaps.
For example, grocery store chain Wegmans (full disclosure: I worked there over 20 years ago) offers a scholarship to their full and part-time employees. For the 2020-2021 school year, they plan on paying out $5 million in scholarship money to workers. Why make this massive investment?
Today, the supermarket has over 100 stores across the U.S., all of which need management employees. By paying for entry-level workers to receive training or degrees and gain the essential management skills they’re missing (i.e. earn MBAs from business schools), Wegmans isn’t just closing skills gaps. The company is also making an investment in succession planning and increasing its pool of management candidates.
Five million dollars may seem like a lot of money, but with $9.7 billion in income, it’s a drop in the bucket that delivers good ROI by allowing the company to promote from within, rather than invest in external recruiting.
Do You Need to Increase Retention?
Glassdoor found that 18% of employees would prefer tuition reimbursement benefits over a pay increase—for an employee looking for opportunities outside of your company, offering tuition reimbursement could be an incentive to stay.
Plus, in some cases, a tuition reimbursement agreement is contingent on employees agreeing (read: signing a contract) to stay with a company for a certain period of time after completing their education, which guarantees retention.
When Tuition Reimbursement Isn’t For Your Business
It may sound like tuition reimbursement is a no-brainer, but it’s really not for every company. In reality, there are lots of jobs where a college degree just isn’t required. If most roles at your business fall into this category, it may not be worth it for you to offer tuition reimbursement.
Alternatively, if most of your employees already have undergraduate or even advanced degrees, offering tuition reimbursement may not be a useful benefit. If you’d still like to offer a similar perk, consider paying down your employees’ student loans—or just offer better health insurance instead. After the year we’ve had, no one’s turning that down!