Employee Benefits: Bringing Back Education Benefits
Posted by: Chris Wing in Recruiting Software Blog, May 10, 2017
Why Employers Are Bringing Back Education Benefits
Contributed by Tiffany Rowe
Just a few decades ago, tuition reimbursement or professional development support were among the most common employee benefits. For many employees, the availability of money to help them go back to school and get more training – or even earn a degree – was a determining factor in whether they accepted a job or not.
In the wake of the financial crisis in 2007, though, many companies tightened their belts – and tuition benefits were among the first to be reduced or cut altogether. While many companies focused on cost-cutting measures like reducing travel expenses, canceling holiday parties, and doing away with annual bonuses, more than 10 percent of the companies offering tuition reimbursement cut those benefits. In the years since then, though, there has been a shift in the opposite direction, with more companies either bringing back their tuition reimbursement benefits, or offering some other type of education benefit.
Benefits Are the New Salary
In the decade since the recession began, the U.S. has seen some significant economic recovery. However, despite the reduction in the number of unemployed Americans, and steady hiring over the last few years, salary growth has remained stagnant. Since 2007, the average annual growth for hourly worker’s pay has stalled out at about 2 percent, while spending on benefits has increased by 16 percent, after being adjusted for inflation. While some of that increased spending is attributable to increases in health care costs, other factors have contributed as well. Many employers, for example, are offering benefits like extra paid time off, flexible schedules, fitness center memberships, and yes, professional development, instead of salary increases.
And while almost everyone would appreciate a bigger paycheck, corporate leaders note that in many cases, intangible benefits are often just as appreciated as a salary boost. For instance, when one company reached $1 billion in sales, instead of offering everyone a raise, the CEO opted to give everyone more time off, including the week between Christmas and New Year’s. The decision was met with great enthusiasm, and improved employee loyalty and enthusiasm for the company.
That enthusiasm is just one of the reasons that companies are bringing back or expanding educational benefits for employees. However, there are some employee benefits that can be measured where it counts – in the pocketbook.
The Benefits of Educational Reimbursement
While 60 percent of employers offer some type of educational assistance, very few actually measure the results of their programs. Recently, Cigna made headlines when it revealed the results of its study of educational benefits: For every dollar that the company spends on educating its employees, it earns back $1 and saves an additional $1.29, representing a 129 percent return on investment. That’s not even considering the tax breaks inherent in offering employee tuition assistance, as the government allows companies to deduct up to $5,200 per employee annually for tuition reimbursement.
Some of Cigna’s savings come from the career opportunity and retention that education creates. By helping employees pay for programs like an online MBA, no GMAT required, for example, the organization has seen employees become 10 percent more likely to be promoted, 7.5 percent more likely to transfer within the organization rather than leave, and 8 percent more likely to stay at the company. This represents a significant savings in recruitment and retention costs, and creates a more educated workforce in the process.
Cigna is not the only company that has found that educational benefits increase loyalty in addition to saving money. Many companies place stipulations on employee benefits, requiring employees to stay with the company for a certain amount of time after completing their courses, or repay the benefits they used. Even without such an obligation, though, many employees stay with their employers simply because they have more opportunities and a greater sense of loyalty.
Student Loan Assistance
Some companies are taking a different approach to educational benefits by offering student loan repayment assistance to those employees who already have degrees. Company policies vary, with some offering payments on an annual basis after a certain number of years of employment and others offering lump sums, but all require that employees work for a set number of years before they qualify, and cap the benefits. However, for someone drowning in student debt, a little extra help can go a long way, and encourage loyalty to their employer.
Programs for employee benefits are always in flux, and vary by industry, employer needs, and economic conditions. However, most employers have learned that when it comes to cutting costs, employee education is not the best place to start, and that the benefits far outweigh any expenses.Tags: benefits, employee benefits