Human Capital & Careers

Readin’, Writin’, and ROI

Why your tuition-reimbursement program may not be providing the retention value you figured it would, and a case study of a company that does it ri...
Kate PlourdApril 1, 2008

Tuition-reimbursement plans are often justified by their value in enhancing employee retention and recruitment, but few companies have put that hypothesis to the test. A recent survey of 180 companies conducted by the Corporate University Xchange (CUX) found that nearly half neither measure the impact of such programs on retention and recruitment nor follow up with employees and managers to learn how the programs affect job performance.

Verizon Wireless is an exception. Beginning in 2006, it began surveying employees who participated in tuition-reimbursement plans, as well as their supervisors. The company found that those who earned degrees with the help of such programs were more likely to have been promoted or to have made lateral moves (35 percent compared with 26 percent of overall employees), and 96 percent said they planned to stay with Verizon for at least two years beyond the completion of their degree. “Any business has an obligation to make sure the investments it makes are sound,” says Michael Flanagan, senior staff consultant for leadership development at Verizon Communications (the parent company of Verizon Wireless). “These measured outcomes prove to management that we have a strong program.” Nearly 40 percent of Verizon managers cited improved performance among employees who earned degrees with help from the company, including greater adaptability and a stronger appetite for more work and responsibility.

Beyond a handful of companies, however, tuition-reimbursement programs represent “a large pot of money that’s being spent without very much control,” says CUX senior researcher Marcia Dresner.

Class Consciousness

Why companies provide tuition reimbursement (by %)

  • Aid in employee retention: 70
  • Improve productivity: 69
  • Expand employees’ duties: 61
  • Develop promotable employees: 57
  • Improve employee morale: 50
  • Recruitment edge: 48
  • Tradition/culture of company: 42

Source: Corporate University Xchange

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