Nix Degrees Of Separation

Tuition-assistance programs (TAP) are an often overlooked employee benefit — overlooked by employers, that is. Employees understand the value of such programs all too well, often using them to underwrite a degree that will lead to a new job or even a new career.

The problem, according to E. Faith Ivery, founder of Education Advisory Services, is that most companies allow their human-resources departments to administer rather than "manage" such programs. They need to understand, says Ivery, that "these programs have a very strong financial component, which CFOs should be monitoring." Given that companies spent about $20 billion on TAP last year, but 40 percent say they don't know what impact that spending had, some fresh thinking seems called for.

Ivery cites one company that had an 18 percent turnover rate among employees participating in the tuition program, compared with a 2 percent overall rate. "They were spending all this money for employees to get degrees and then watching [those employees] walk out the door," she says. Ivery says companies can cut TAP spending by 35 percent simply by limiting employees to schools and degrees that pertain to their current jobs and career paths. And companies could guard against attrition by rewarding students who complete degrees with a bonus, pay raise, or other compensation. That, she says, will motivate employees to finish degrees quickly (thus saving money) and stick around.

Diebold spent more than $650,000 last year on 284 employees who participated in its tuition-assistance program. By helping them plan an education track tailored to their career goals, the company saved nearly $12,000 per degree and cut the typical time to graduate in half. Marsha Friedman, strategic project manager at Diebold, says companies can cut costs by, among other steps, alerting employees to competency tests or lifeexperience credits that allow them to skip introductory classes, which can speed them toward graduation.

Tapping In

87%: Companies offering tuition reimbursement

47%: Set an annual dollar maximum

$5,000: Median maximum

22%: No dollar maximum

Source: Hewitt Associates survey of 795 cos., 2006