Tuition Reimbursement: From Employee Benefit to Strategic Asset

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

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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

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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

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CAEL Services
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Why Offer Tuition Assistance
Source CAEL 2004 Tuition Survey
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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
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Poll Question 1
My company considers tuition assistance

• 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

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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 (gt50,000) and in the
  manufacturing industries, LD takes a much larger
  role.

Source Corporate University Xchange Tuition
Reimbursement Study 2007
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Plan Design What
Source Corporate University Xchange Tuition
Reimbursement Study 2007
14
Plan Design - Where
Source CAEL
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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.

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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)

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Qualcomm Choosing Schools

• Qualcomms 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?

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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 dont 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
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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

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Plan Design Service Agreements
Source Corporate University Xchange Tuition
Reimbursement Study 2007
22
Practices - Participation Rates

• The overall average participation reported was
  5.2 percent, with the largest number of companies
  reporting just 2.1-4 percent participation.
• When LD 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.

Source Corporate University Xchange Tuition
Reimbursement Study 2007
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Poll Question 2
What is the primary method you use to increase
program participation?

• 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.)

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Practices - Spending

• The overall averages for actual spend per year
  are 1600 for non-degree courses, 3400 for
  Bachelors level courses, and 4500 for both
  Masters and Ph.D. level courses.

Source Corporate University Xchange Tuition
Reimbursement Study 2007
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Real Market Price of Tuition
Source The Market Price of Tuition, CAEL and
Bellevue Universitys Human Capital Lab, November
2007
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Sample Case Study

• Bachelors 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

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Practices - Measurement

• 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.

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Practices - Measurement
Source Corporate University Xchange Tuition
Reimbursement Study 2007
29
Case Study Verizon Wireless

• Nations most reliable wireless network
• Over 64 million wireless customers
• 70,000 employees in 49 states
• Ranked 4 in Training Magazines Top 125
  companies for 2007

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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

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Measure Outcomes

• Recruitment
• Retention
• Career Mobility
• Job Performance

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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

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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
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Career Mobility
Job transfers include promotions, lateral and
developmental moves
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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

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Changes Noted
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Retention Value

• 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

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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 employees
  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.

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Poll Question 3

• How likely is your organization to strengthen the
  alignment between LD and the Tuition Assistance
  Program?
• Were already completely aligned
• Were planning changes in this direction in the
  coming year
• Were considering it as a long term strategy
• Not at all likely

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Practices Integration with Development
Source Corporate University Xchange Tuition
Reimbursement Study 2007
Source Corporate University Xchange Tuition
Reimbursement Study 2007
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Practices Integration with LD

• 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

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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 LD.

Source Corporate University Xchange Tuition
Reimbursement Study 2007
43
Increase the Programs 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

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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. Dont
miss that opportunity!
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Questions Comments

• Any additional questions, contact us
• mdresner_at_corpu.com
• jzappa_at_cael.org
• Or visit us on the Web at
• www.corpu.com
• www.cael.org