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Tuition Reimbursement: From Employee Benefit to Strategic Asset

Tuition Reimbursement: From Employee Benefit to Strategic Asset

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Tuition Reimbursement: From Employee Benefit to Strategic Asset

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  1. Tuition Reimbursement: From Employee Benefit to Strategic Asset Marcia Dresner, Senior Research AnalystCorporate University Xchange John Zappa, Senior Vice-President, CAEL

  2. Agenda • About Corporate University Xchange • About CAEL • Why Offer Tuition Reimbursement • The Corporate University Xchange Tuition Reimbursement Study • Plan Design & Practices • Changes

  3. Corporate University Xchange • Corporate University Xchange (CorpU) is the leading provider of corporate university research, benchmarking, and advisory services for helping organizations transform corporate learning. • Founded in 1997, the aim of CorpU research and services is to maximize corporate investments in training and development to deliver improved business results. • The Corporate University Xchange Awards for Excellence and Innovation in Corporate Learning are the oldest, most prestigious of the award programs. • Our Benchmarking Studies go beyond the numbers to determine how companies are developing people. • Membership in CorpU includes: • Unlimited analyst inquiries • Webinars presented by practitioners • Access to an extensive Research Collaboratory • Networking with other members • Benchmarking comparisons

  4. About CAEL Council for Adult and Experiential Learning A 501(c)3 non-profit organization with global reach and over 30 years of workforce experience Mission to create and manage learning strategies for working adults

  5. Tuition Assistance and CAEL • Over 20 years experience defining and managing tuition assistance programs • Broad base of established clients • CAEL served over 60,000 employees seeking tuition assistance from their employers • Over 700,000 adults are eligible for tuition assistance programs managed by CAEL • Processed $170 million in education funds

  6. CAEL Services

  7. Why Offer Tuition Assistance Source: CAEL 2004 Tuition Survey

  8. Supply of Human Capital Labor Force 25 – 44 years Source: U.S. Census Data, Creating Value with Human Capital Investment, Dr. Michael Echols, Bellevue University

  9. Poll Question #1 • A check-box employee benefit • Part of the employee value proposition for recruiting and retention • A program that can support learning and development goals • An important component to support talent management initiatives My company considers tuition assistance:

  10. The Tuition Reimbursement Study Released in August 2007 180 Organizations surveyed, ranging in size from 100 employees to over 100,000. Source: Corporate University Xchange Tuition Reimbursement Study 2007

  11. Industries Represented Source: Corporate University Xchange Tuition Reimbursement Study 2007

  12. Plan Design - Ownership Tuition Reimbursement is primarily the responsibility of Human Resources Departments. In large companies (>50,000) and in the manufacturing industries, L&D takes a much larger role. Source: Corporate University Xchange Tuition Reimbursement Study 2007

  13. Plan Design – What Source: Corporate University Xchange Tuition Reimbursement Study 2007

  14. Plan Design - Where Source: CAEL

  15. Plan Design – Where Accreditation is key, with more than 70 percent of companies requiring that a college or university be accredited before they will pay. Some companies, like Intel, go farther and specify which accrediting bodies are acceptable. On-line colleges and universities are always acceptable at more than half of companies, and sometimes acceptable at another 47 percent.

  16. Plan Design -- Accreditation Accreditation is a quality assurance process, not a license to operate Three types Regional Accreditation (evaluates entire Institution) National Accreditation (single purpose – i.e. distance education) Professional Accreditation (specific program such as engineering or business school) Most employers accept Regional Accreditation as the gold standard for undergraduate degrees. For more information check out Council for Higher Education Accreditation (www.chea.org)

  17. Qualcomm – Choosing Schools Qualcomm’s tuition assistance program supports both business requirements and an employee career development philosophy. About 180 approved classroom-based schools are approved for reimbursement, approximately 40% of which are outside of the US. Six distance-only programs approved. Schools are added to the list upon request and when Qualcomm establishes new locations. Key criteria used for approving schools include: Is the school a not-for-profit institution? Is it accredited? What is its ongoing reputation for quality education/research? Is it near a Qualcomm office? Are faculty professional educators/researchers? Is 50 percent or more of faculty employed full-time? Are Qualcomm-business relevant subjects and degree programs offered? Is original research conducted by either the school or faculty?

  18. Plan Design – Dollars Companies are generous in the limits put on tuition reimbursement. 77 percent of companies have the same limits regardless of job role (shown below). Those that don’t have the same limits for everyone generally have higher limits than those that do. Source: Corporate University Xchange Tuition Reimbursement Study 2007

  19. Plan Design – Payment Terms and Timing Over 70 percent of companies pay following course completion with a grade of C or better. Only 25 percent pay upon registration and manager approval. Source: Corporate University Xchange Tuition Reimbursement Study 2007

  20. Plan Design – Payment Terms and Timing Two Relevant Models Traditional Reimbursement Prepayment/Voucher Option Why offer Prepayment Option? Attractive Incentive for front-line staff; Eliminates out of pocket expense Strategy for engaging new employees Increase program utilization 5%12%

  21. Plan Design – Service Agreements Source: Corporate University Xchange Tuition Reimbursement Study 2007

  22. The overall average participation reported was 5.2 percent, with the largest number of companies reporting just 2.1-4 percent participation. When L&D is in charge of the program, that number goes up to 6.2 percent. About 28 percent of respondents felt that participation was too low. Practices - Participation Rates Source: Corporate University Xchange Tuition Reimbursement Study 2007

  23. Poll Question #2 We do not encourage usage Managers are encouraged to discuss tuition assistance as part of the career development process The value of the program is promoted to employees (e.g. intranet, information provided during orientation, company newsletters, etc.) Employees are recognized and rewarded for using the program (e.g. awards, success stories are promoted, stock incentives, etc.) What is the primary method you use to increase program participation?

  24. The overall averages for actual spend per year are $1600 for non-degree courses, $3400 for Bachelor’s level courses, and $4500 for both Master’s and Ph.D. level courses. Average spend per participating employee 70% 60% 50% 40% Non-degree courses Bachelor’s Level 30% Courses Master’s Level Courses 20% Ph.D. Level Courses 10% 0% $0-$1999 $7,000- $2,000- $3000- $3999 $4,000- $4999 $5,000- $9,000 or $8,999 $2,999 $6,999 more Practices - Spending Source: Corporate University Xchange Tuition Reimbursement Study 2007

  25. Real Market Price of Tuition Source: The Market Price of Tuition, CAEL and Bellevue University’s Human Capital Lab, November 2007

  26. Sample Case Study Bachelor’s Degree in Business • Approximately 120 -128 credits • $323 per credit hour • Employee is taking 20 credits per year • Completes in 6 years • Year 1 = $6460 plus fees and books • Six year cost = $45,060

  27. Most companies justify the dollars spent for tuition reimbursement as part of an employee value proposition that attracts and retains employees. The most recent Eduventures study concluded that 45 percent of companies do some measurement around their programs. When the CorpU study asked a question about measuring the impact of the programs, a totally different picture emerged. Practices - Measurement

  28. Practices - Measurement Source: Corporate University Xchange Tuition Reimbursement Study 2007

  29. Case Study: Verizon Wireless • Nation’s most reliable wireless network • Over 64 million wireless customers • 70,000 employees in 49 states • Ranked #4 in Training Magazine’s Top 125 companies for 2007

  30. LearningLINK Tuition Program Encourage and assist employees in achieving their educational and career development goals Build critical organizational competencies and knowledge Attract and retain the very best employees

  31. Measure Outcomes Recruitment Retention Career Mobility Job Performance

  32. Recruitment 36% of LearningLINK participants surveyed felt the tuition assistance program was a definite factor in their decision to accept employment at Verizon Wireless 19% of LearningLINK participants surveyed felt the tuition assistance program was probably a factor in their employment decision 42% of LearningLINK participants have been with the company 2 years or less 19% have been with the company less than 1 year

  33. Retention Add another graph to show termination rates 96% of LearningLINK participants surveyed said they intended to stay with Verizon Wireless for at least two years after completion of their degrees

  34. Career Mobility Job transfers include promotions, lateral and developmental moves

  35. Job Performance 4,510 managers of LL participants surveyed 52% of respondents noticed a change in job performance and behaviors while employees were engaged in LearningLINK program 71% reported improved performance on the job 73% reported improved behaviors on the job

  36. Changes Noted

  37. Retention Value Rehire cost based on VZW population $44,158,850 Rehire cost based on LL population $18,593,200 Turnover savings $25,565,650 • Based on 10,105 participants • Average VZW turnover rate of 19% • Average LearningLINK turnover rate of 8% • Average FTE re-hire cost of $23,000 • Program expenses for 2006 were $23.5 million

  38. Caterpillar – Clear Goals, Measurement, and More Executive management is clear about the goal: To develop an internal talent pipeline with people prepared for new roles. The tuition assistance program (TAP) managers report to senior management exactly who is using the program, and what courses of study they are pursuing. Courses of study are linked to the employee’s development goals, not necessarily to current positions. Articles and success stories about the program appear in the internal company newsletter. Graduates are monitored to see if they are promoted and retained and are polled about their satisfaction with TAP.

  39. Poll Question #3 How likely is your organization to strengthen the alignment between L&D and the Tuition Assistance Program? We’re already completely aligned We’re planning changes in this direction in the coming year We’re considering it as a long term strategy Not at all likely

  40. Practices – Integration with Development Source: Corporate University Xchange Tuition Reimbursement Study 2007 Source: Corporate University Xchange Tuition Reimbursement Study 2007

  41. Practices – Integration with L&D Leverage Preferred Educational Provider Networks for Tuition Discounts Leverage In-House courses Review Courses of Study and Types of Degrees Certification Prep or Continuing Education Course ACE College Credit Recommendation Services Improve the Experience for Employees Integrate the tuition assistance website with in-house education options and featured education providers Encourage employees to consider in-house education options Promote information on Prior Learning Assessment

  42. Change is Coming The table shows that many organizations are comfortable enough to keep their plans as is. But there are more companies willing to increase the money allowed, and integrate tuition reimbursement with IDPs and L&D. Source: Corporate University Xchange Tuition Reimbursement Study 2007

  43. Increase the Program’s Value • Communicate About the Skills and Credentials That The Company Needs and Values (Internal communications, IDPs, internal job postings) • Enlist the efforts of managers and corporate leaders to promote a learning culture • Walk the talk by showcasing success stories and demonstrating the value of making the effort

  44. Make the Program a Strategic Asset As the talent shortage intensifies, you have the potential to reshape and reposition your tuition program to support and grow talent. Don’t miss that opportunity!

  45. Questions & Comments Any additional questions, contact us: mdresner@corpu.com jzappa@cael.org Or visit us on the Web at www.corpu.com www.cael.org