Nix Degrees Of Separation

Your tuition assistance program may be just helping your employees find a job somewhere else.
Laura DeMarsApril 21, 2007

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