Innovation with Tuition Reimbursement

Previously, I suggested that the current tuition reimbursement model was inefficient and ineffective.

What could a new tuition reimbursement model look like for companies in the United States?

  1. Companies start to identify formal learning certificates, degree-building, and degree programs from local colleges and universities that will be in line with the company’s learning needs.
  2. Classrooms move from the university to the company location.
  3. Companies would re-allocate a percentage of tuition dollars toward budgeted, learning objectives focused on company needs.
  4. Companies would negotiate with local colleges and universities for a scaled, tuition pricing for employee learning cohorts.
  5. Companies would negotiate for increased control of instructor quality and consistency in the formal learning process.
  6. Employees in these cohorts would learn with their workplace colleagues — creating new skills for a company while creating and growing a learning culture.
  7. Companies would internally market the learning programs that would provide the biggest return on invested tuition dollars.
  8. Local colleges and universities would create incremental revenue sources with limited direct costs.

Click here to see the SlideShare version of this proposed new model.

 

A New Tuition Reimbursement Model for Companies in the United States

What will the new tuition reimbursement model look like for companies in the United States in 2020?

In a previous blog, I suggested that the current tuition reimbursement model for adult learners in colleges and universities was ineffective and inefficient.  I also offered an outline of a model that companies and communities might adopt.  Posted below is a more detailed description of those ideas that will constitute the new model.

  1. Companies will identify formal learning certificates, degree-building, and degree programs from local colleges and universities that will be demonstrably in line with the company’s learning needs.  This is a focus that will be developed for groups of students from companies; not individual students.  The intent will be to use the forum for formal learning to move employees through the learning experience together.  The value of the approach will be to create both consistent learning and improved work-place relationships among participants.
  2. Classrooms move from the university to the company location.  In order to gain acceptance, companies will bring college learning to their location(s).  It will be one of the main ingredients in negotiating lower, flat-rate, per-course tuition rates.  It will also be a valuable marketing tool to get your employees involved in formal learning initiatives.
  3. Companies will re-allocate a percentage of tuition dollars toward budgeted, learning objectives focused on company needs.  Tuition reimbursement as a  tool to keep good employees is probably past its prime for that purpose.  Organizations will move to re-allocate a substantial percentage of their budgeted tuition dollars to learning that the company needs to grow.  In some cases, companies will replace tuition reimbursement dollars with budgeted dollars.  For example, budgeting $100,000 for 12 mobile application programmers or 18 graduate-level, trained project managers.  This budget approach will be particularly valuable for new technology and technology application skills that can quickly impact a company.
  4. Companies will negotiate with local colleges and universities for volume-based, flat-rate tuition pricing per course (not per employee) for employee learning cohorts.  Gone will be the days when companies paid tuition list price or ‘list-less’ discounted tuition pricing.  These organizations will negotiate tuition costs based on degrees and/or learning outcomes.
  5. Companies will negotiate for increased control of instructor quality and consistency in the formal learning process.  Today’s adjunct-heavy business model has increased the risk of students getting average or  sub-standard instructors.   Companies will increase the quality control on faculty by insisting on top-tier professors from local colleges and universities for their tuition dollars — and their employees.
  6. Employees in these cohorts will learn with their workplace colleagues — creating new skills for a company while creating and growing a learning culture.  The traditional model of individual students learning with tuition dollars from their employers will start to go away in many cases.  Companies will start to leverage groups or cohorts of students to drive content, quality, and cost.
  7. Companies will internally market the learning programs that provide the biggest return on invested tuition dollars.  Instead of offering a generic benefit like tuition reimbursement, companies will create incentives for employees to learn the skills and content needed for the company to grow.
  8. Local colleges and universities will create incremental revenue sources with limited direct costs.  The previously listed components of  a new tuition reimbursement model will be possible because local colleges and universities will see revenue opportunities that are not currently available to them.  The proposed model will offer college-credit courses at locations other than the valuable classrooms in a college.  The local colleges and universities will be able to limit their direct and incremental costs by designing agreements that allocate marketing and support costs to companies and community organizations.

I am interested in your evaluation of these 8 components of a new tuition reimbursement model for your company.

Comment below.

Let’s Have Companies and Communities Drive the Change in Higher Education for Adult Learners

If you have read much about higher education for adults, you will have seen many authors lamenting the fact that colleges and universities (CaU’s) are slow (very slow) to change.

So, let’s have companies and communities drive the change in higher education for the adult learner.

There are 3 reasons why companies and communities should drive learning for their employees (adult learners).

  1.  Companies and communities know what they need – and they typically have a large pool of potential students. 
    I am quite certain that the traditional undergraduate and graduate college degrees will have volume and value in the coming years.  However, companies and communities are better positioned to work with CaU’s to suggest formal learning content.  The higher education literature regularly suggests certificate programs will offer more value to companies and communities in the coming years.I encourage companies and communities to create 3-6 course clusters and offer internal certificates for employees to use for better job performance and to prepare for new career opportunities.Properly constructed, certificate programs can build toward a degree.  For adult learners, progress can be measured in months not years.  Who ever said that 120 college credits is a magic number that demonstrates a new level of learning.It can take 8 or more years for adults to earn that many credits.  In my experience, without strong support from their employer, the attrition rates are very high for adult learners who have to wait that long.  Let’s look at ‘serial certificates’ that provide both job-relevant learning to adults and moves them toward a degree.As employees move through the certificates (groups of college courses), make sure there is some form of recognition.  Then — all of a sudden, we are looking at measurable progress in months – not 80% of a decade.
  2. An increasing number of colleges and universities are willing to innovate to get new sources of tuition income.Both public and private CaU’s are looking for supplemental income.  Degree and certificate programs that come from new sources are highly valued.  Even those CaU’s that are still too traditional for the 21st century higher education market, are slowly recognizing and adapting to the changing adult-learner market.When developing these learning programs, make sure to be innovative on the pricing structure.  I was successful in negotiating flat-rate tuition costs per class.  The agreements also specified minimum and maximum enrollments.  If structured properly, companies and communities are able to have lower tuition costs per student, while CaU’s are guaranteed a flat revenue amount.
  3. Companies and community organizations can come together to let multiple colleges and universities bid on their business.  We can call it the ‘Reverse-Priceline Model’Do you really think you can differentiate a quality education?  Why not operate under the premise that all formal college learning is a commodity.  If one college or university vendor wants to charge a higher rate, ask them to demonstrate their thought process.  If it is based on quality, ask them to demonstrate the incremental difference in quality from one vendor to the next.One consideration to add to your negotiating strategy:  ask for faculty used to teach your employees or community members be in the top 25% of that institutions faculty – adjunct or full-time.

The alternative to what I have suggested above is to let your employees and members of your community choose a college or university on their own.  That option effectively limits your organization’s ability to negotiate both price and quality.

Next:  Dynamic Tuition Pricing Models for Adult College Students

The Current Tuition Reimbursement System in Companies is Ineffective and Inefficient

It is time to look at the traditional employee benefit of tuition reimbursement (tuition assistance).  The current model is ineffective and inefficient.

Tuition reimbursement programs came into use in the middle part of the 20th century and were based on the success of the post WWII GI Bill. In the decades that followed, it became viewed as a standard employee benefit, much like healthcare.  Historically, tuition reimbursement has been used as a competitive benefit.

I would argue that those days are gone and the time has come to move this scattershot approach to formal learning for the employees of companies to the same secondary status that printed textbooks are becoming.

Tuition reimbursement is indeed analogous to the scattered approach of a shotgun shell.  In its current format, it does not provide companies with the directed learning focus that can most effectively move organizations forward.  The collective mind set seems to be that if we throw enough tuition reimbursement dollars out there – our employees will stay and the business will grow because of it.

There are 4 main reasons why the current model of tuition reimbursement is ineffective and inefficient.

  1. Companies usually pay list price for their employee’s tuition costs; thus, a company cannot leverage its buying power to control tuition costs.
  2. Employees are in open enrollment classes in a variety of colleges and universities, making a culture of learning much more difficult to develop with the a la cart consumption of  courses and degrees from a pot pouri of colleges and universities.
  3. The challenges of managing the tuition reimbursement program are cumbersome.  This includes the application process, tuition cost allocating, and collections from non-compliant employees.
  4. Companies cannot reasonably expect to control the quality of their employees’ courses and degrees.  The quality of the content and the quality of the instructor are inconsistent. Today’s adjunct-heavy faculty staffing model by many colleges and universities can increase the risk of lower quality instruction on a company’s tuition reimbursement dollar.

While most companies have general guidelines for the types of classes and degrees covered, programs are generally administered from a transactional, not a strategic, perspective. “We were startled to find that such huge sums of money are allocated to corporate benefits with little or no measurement of impact or effectiveness,” said Josh Bersin, president, Bersin & Associates. “While the intangible, personal value of higher education is clearly very high, we see a tremendous opportunity for companies to more effectively align and manage these dollars toward strategic talent needs.”

“Most tuition assistance programs are institutional and considered to be a standard employee benefit,” said Chris Howard, principal analyst at Bersin & Associates. “Consequently, most companies do not capitalize on the potential to use these dollars to support specific talent management objectives. In fact, 27% of the companies we surveyed do not measure program effectiveness in any way.”

Here is a summary of the 2009 Bersin report on tuition assistance programs.

While many of the respondents to a 2008 SHRM study had access to tuition reimbursement benefits, they were uncertain about how their corporate culture viewed continued learning.  Tuition reimbursement, in its traditional form, has created an inconsistent organizational culture of learning.  Companies would be better off determining their learning needs and engaging their employees directly – not through the buckshot approach of tuition reimbursement.

In most organizations, a small set of employees use their tuition reimbursement benefit to either subsidize or completely pay for their education.  SHRM confirms that surprisingly few employees are taking advantage of tuition reimbursement programs offered by their employers.  They go on to suggest that the fast-paced, over-stressed culture of modern work might contribute to that.

Maybe.  I would suggest that tuition reimbursement – in many organizations – is so scattered that many employees don’t think about it.  After the initial, new employee orientation, tuition reimbursement is rarely marketed.  In my experience, the initiative of single employees is the only marketing of formal learning in organizations.  The benefit is used neither strategically nor tactically.

You will find few academic studies have looked at tuition reimbursement programs. Anecdotally, the primary reasons given by firms as to why they offer tuition reimbursement programs are recruitment and retention.  However, if most organizations offer tuition reimbursement benefits, it is unlikely that there is any sustainable competitive advantage.

From an individual employee’s perspective, there is a tax-advantage value for tuition reimbursement programs.   Up to a cash value of about $5,250, there are usually no taxes against an employee’s income.  Effectively, $5,000-plus dollars of untaxed income.

Finally, it would be wrong to suggest that the current tuition reimbursement model is wrong for everyone.  That is clearly not the case.  Many have used the current model to improve their career opportunities.  However, I offer readers that the exclusive use of the historical model inhibits companies from maximizing the benefit of tuition dollars.

What Could Supplement or Replace Tuition Reimbursement?

Groups of employees in an organization studying the same content would allow both for more controlled learning and better tuition cost control.

What could a new tuition reimbursement model look like for companies in the United States?

  1. Companies start to identify formal learning certificates, degree-building, and degree programs from local colleges and universities that will be in line with the company’s learning needs.
  2. Classrooms move from the university to the company location.
  3. Companies would re-allocate a percentage of tuition dollars toward budgeted, learning objectives focused on company needs.
  4. Companies would negotiate with local colleges and universities for scalable, tuition pricing for employee learning cohorts.
  5. Companies would negotiate for increased control of instructor quality and consistency in the formal learning process.
  6. Employees in these cohorts would learn with their workplace colleagues — creating new skills for a company while creating and growing a learning culture.
  7. Companies would internally market the learning programs that would provide the biggest return on invested tuition dollars.
  8. Local colleges and universities would create incremental revenue sources with limited direct costs.

I will expand on the new model in future blogs.

Here is a list of companies that provide tuition reimbursement to their employees.

Check out my professional profile and connect with me on LinkedIn. 

 Details on implementing a new tuition reimbursement model at collegecohorts.com