Back to School: Educating Your Workforce
I was in the second year of my first job after graduating from college when I decided to go to law school. Much to my surprise, I was informed by my supervisor that not only would the insurance company I worked for pay for tuition and books, they would also give me time off to study during the semester and eventually for the bar exam. I no longer remember how much that first employer contributed to my 401(k) plan but I will always remember the tuition reimbursement they provided. As we all strive to retain our most talented employees, providing continuing education benefits is a good start. Even if you have been approached by a particular employee who has decided to go back to school, it’s important—like any other benefits plan—to think through the policy and put it in writing before implementing it on a company-wide basis.
The advantages of offering continuing education are many:
- Loyalty: As in my example, providing tuition reimbursement is a benefit with staying power. Your employees will remember and appreciate it for years to come. Additionally, studies have shown that employees who are being sent to school by their employers tend to remain five years longer than those who are not.
- Educating your workers: The company will certainly benefit from employees who are actively improving their skills directly or indirectly related to their positions.
- Investment in workforce: Providing continuing education is a good investment, both in the employee and the future of the company.
There are, of course, some disadvantages to providing this type of benefit:
- Marketability of Employee: By providing the employee with additional skills, you are making them more desirable to your competitors. However, most employees who want to increase their skills will probably do so whether you are paying for it or not. In my own example above, although I appreciated the tuition reimbursement I was getting, it was ultimately not enough to keep me from relocating to another state when the opportunity arose.
- Decrease in Productivity: An employee who is essentially doubling their workload by taking classes in the evening or weekends will naturally have less time for work. You may have to sacrifice the extra hours that a good worker was putting in during this time period.
- Cost: Tuition reimbursement can be expensive and it’s a difficult benefit to retract once employees are in the middle of a degree or certificate program. Most companies will place caps on the amount of the reimbursement and the types of fees that are included.
In order to establish an effective continuing education policy, make sure you consider the following issues and factors:
- Eligibility: Just like any other employee plan, will you require a minimum amount of service before providing the benefit? Will you cover all employees or only exempt employees?
- Coverage: Will the company reimburse tuition only, or also cover books and course-related fees? Will you provide full or partial reimbursement? There is a school of thought that employees should invest some amount themselves to make sure they are committed to the program and look for the best value.
- Grades: Will you reimburse tuition regardless of performance or will you establish a minimum requirement? Most companies require at least a passing grade before providing reimbursements, while some establish higher thresholds. Other companies provide a bonus for good grades or when a professional degree or certification is earned.
- Time off: An employee going to school will likely need more time off during exams or when projects are due. A comprehensive policy should have a clear statement on whether such time is available or must be taken out of existing vacation and sick days.
- Claw Back provision: Will you require the employee to stay with you a period of time after the reimbursement has been made? Although not as common, some employers will require the employee to work for at least six months to one year in order to keep the benefit.
Having a better trained and more loyal workforce is certainly one of the main benefits of a good continuing education policy. Companies should consider the employees’ and the company’s needs, along with the long-term impact of such a policy, before putting it in place.
[Business Insights is hosted by the Law Firm of Kumar, Prabhu, Patel & Banerjee, LLC. Sonjui L. Kumar is a corporate, transactional attorney and a founding partner of KPPB Law. She primarily focuses on serving as general counsel to privately held companies assisting them with all legal matters, including corporate governance, contracts, shareholder matters, mergers, and acquisitions. Disclaimer: This article is for general information purposes only, and does not constitute legal, tax, or other professional advice.]
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