3 Reasons to Invest in Education Benefits
Major employers from Target to Chipotle to Starbucks make headlines for offering education benefits to their employees. Last year, Walmart announced a $1-a-day college tuition plan that set off a wave of media speculation. Earlier this year, Disney’s Aspire program announced its first graduate.
Education benefits are nothing new, as those familiar with McDonald’s Hamburger U or GE’s famed management campus know. But what has driven the recent rise of education-as-a-benefit? Of course, large employers don’t make any major investment decisions without understanding how those decisions will impact their business. Here are three of the reasons the Fortune 500 has been inspired to invest in talent.
1. Education Benefits Are Good Business
A growing body of research backs up the return on investment of reskilling efforts. An analysis by the Lumina Foundation in partnership with Discover Financial found $1.44 in savings for every dollar spent on education reimbursement, including a whopping $2.73 in savings for call center employees. A similar study at Cigna found that every dollar the company spent on education reimbursement generated a 129 percent ROI.
As the research makes clear, providing education benefits doesn’t just help with recruitment and retention efforts—it’s also worth the investment from a productivity standpoint.
2. Education Benefits Close Skill Gaps
As the pace of change in the labor market accelerates, the shelf-life of skills is shrinking—with some estimates suggesting that skills become half as valuable in just five years. Many employees don’t have the time or resources to leave work to learn new skills, making education benefits a critically important part of employers’ response to an increasingly dynamic economy. In addition to being better prepared to do their jobs, more skilled employees are more confident—which can have positive ripple effects across the enterprise.
Addressing these skill gaps is becoming increasingly more important in today’s tight job market. Unemployment rates have plummeted to the lowest seen since 1969. While that’s good news for the economy as a whole, it presents challenges for employers. Instead of selecting from a pool of highly credentialed employees, many businesses are choosing motivated and growth-oriented employees with less education and fewer skills. They close the gap by helping these employees access educational opportunities in the form of degrees, apprenticeship programs, certificate programs, and other training.
3. Education Benefits Drive Recruitment and Retention
The Lumina Foundation’s research with Cigna didn’t just focus on ROI. According to the study, participants in Cigna’s program were 8 percent more likely to stay with the company, 10 percent more likely to be promoted, and 7.5 percent more likely to be transferred within the company. In short, education benefits enabled Cigna to retain skilled talent—and save significantly on recruiting and hiring costs. Guild Education has seen similar success, boasting a 98 percent retention rate for students enrolled in its education benefits—compared with the baseline rate of 71 percent for workers who are not enrolled in an educational program.
Some employers fear that education benefits like tuition assistance will work too well—and employees will take their new skills to a new job. Why doesn’t this appear to be the case?
Savvy employers know that offering tuition assistance or other education benefits shows employees you value them and their development—and helps chart career pathways for their continued growth and success within the organization.
In addition to helping you keep the employees you already have, education benefits can help you attract more quality employees. According to a survey by Fractl, 44 percent of workers say tuition assistance would make them more likely to take a job.
The rapidly changing labor market is putting renewed pressure on employers to compete for skilled talent. But as a growing number of companies are realizing, the secret to improving recruitment and retention is to look for employees who don’t have the skills you need—and then provide the training to help them succeed on the job and throughout their career.
As Penn Foster’s director of National Employer Partnerships, Marie Davis is committed to cultivating and enhancing the 100-year old workforce development pioneer’s National Employer Network through strategic partnerships designed to impact recruitment, retention, and upskilling results in the workplace. Prior to joining the Penn Foster team, Davis was the executive director for the 100K Opportunities Initiative, which is the largest national employer-led coalition driving change and removing barriers in the hiring and advancing of youth nationwide. Davis earned her B.A. from the University of Rhode Island in Communications and Journalism.