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Strategic management of tuition reimbursement
January 13, 2005
Michael E. Echols, PhD
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Human resource managers face a difficult task in attempting to strategically manage the tuition reimbursement resources of their organization. In fact, most don’t manage it at all.

“What’s odd is that companies don’t know what they’re spending and furthermore, don’t seem to care,” Dr. Sullivan states in the publication Workforce Management (May 2004, p.34). Dr. Sullivan is an author and Professor at San Francisco Sate University. Dr. Sullivan was also recently a key-note speaker for Honeycomb Connect’s C.H.R.O.M.E Hive, having spoken on Maximizing Employee Productivity – How Leading Corporations Build and Maintain a Performance Culture.

 

“In an era when benefits like health care, profit sharing and pensions are examined microscopically, haggled over and periodically put through the wringer to reduce costs, tuition reimbursement remains a placid vestige of unexamined corporate benevolence,” says Dr. Sullivan.

Eduventures, a Boston based consulting firm, conducted research on the topic by surveying 500 U.S. corporations in 2003. While conducting the research, Eduventures came across a high-tech company that reported spending $25 million per year on tuition reimbursement. A follow up audit of that company discovered that the actual figure was more than $50 million. The fact that the HR department of this company missed an expenditure miscalculation of 100 percent is eye opening.

The challenge for HR is to strategically manage this corporate resource. The following are examples for HR managers to consider when attempting to implement a control structure for tuition reimbursement programs:

Degree needed: According to a Merrill Lynch publication, the difference in pay between someone who had a high school education versus a bachelor degree was 50 percent in 1980. Now that difference is 100 percent and growing. The research further states that a 30 year-old male with only a high school degree makes less than two thirds of what he made in the 1970’s and that only 21 percent of the U.S. adult population has a bachelor degree or better. Employers need a feasible option to help employees secure their degrees.

Variability of cost: Employers need to be cognizant of the cost of courses from accredited universities. Per course costs can vary from $800 to $1,500 and which course the employee selects has a huge impact on the expenditure level of the resource.

Total tuition reimbursement trends: Corporations need to maintain a record of reimbursement expenditures for any given year. Equally important is maintaining a cost record of reimbursement for the past five years to help identify issues that might be arising over the course of the program, such as the impact that reimbursement has on retention and interaction with promotion.

 

While the ultimate measurement for HR on reimbursement effectiveness would be an ROI, such a measurement is not yet available. Instead, the following are some suggestions that HR professionals can do to increase the efficiency and effectiveness of tuition reimbursement.

  • Measure the total corporate expenditure of tuition reimbursement in each of the last 5 years; 
  • Get the CFO involved;
  • Analyze trends;
  • Define which expenditures are going to what institution;
  • Identify critical business objectives being serviced by tuition reimbursement; and
  • Measure the improvement in retention associated with course taking and degree awarding.  In the research by Benson et al. the reduction in turnover is 55 percent, not an insignificant impact.

For further information regarding tuition reimbursement programs for corporations, please contact Michael E. Echols PhD at Bellevue University.

mechols@bellevue.edu

 
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