Tuition Reimbursement: Understanding the Value. PA SHRM Conference September 27, 2010 Karen Sheehe, PE, PHR Sue Greene, PHR

Transcription

1 Tuition Reimbursement: Understanding the Value PA SHRM Conference September 27, 2010 Karen Sheehe, PE, PHR Sue Greene, PHR

2 Introductions Karen Sheehe, PE, PHR, Director of Continuing Education, Penn State, The Lancaster Center Sue Greene, PHR, Director of Continuing Education, Penn State Williamsport Center

3 Why are we here? Do you have a tuition reimbursement program? If you do, do you track users of your plan? What is your greatest challenge around this benefit? What does tuition reimbursement mean to you?

4 Agenda Why Offer Tuition Reimbursement? What the Research Says Tuition Assistance Plan (TAP) Design Understanding the Value ROI A Student Perspective Questions

5 Did you know that once first in the world, America now ranks 10 th in the percentage of young adults with a college degree? Education at a Glance 2009: OECD Indicators

6 Did you know that in the current recession, unemployment rates are twice as high for those with just a high school diploma (10.8%) compared to those with a bachelor's degree or higher (4.9%)? Bureau of Labor Statistics: Employment status of the civilian population 25 years and over by educational attainment

7 In Pennsylvania The percent of the persons age 25+ who have a Bachelor's degree or higher is 22.4% US Census Bureau for PA, 2000 Census

8 Complete College America Alliance of States Complete College America Alliance of States is an initiative involving 17 states, including Pennsylvania, with the goal to partner with their colleges and universities to make college completion a top priority over the next ten years.

9 Complete College America Goals Included among the end goals By 2020, to see that 60 percent of Americans aged 25 to 34 have college degrees!

10 Why Offer Tuition Assistance? Thoughts?

11 Why Offer Tuition Assistance? Reason for providing educational benefit % of Employers Employee retention 70% Improve productivity (job performance) Increase qualifications to do new work 69% 61% Source: CAEL 2004 Tuition Survey

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

13 Plan Design Who? Source: Corporate University Xchange Tuition Reimbursement Study 2007

14 Source: CAEL Plan Design What?

15 Plan Design Where? Accreditation is key, with more than 70% 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%.

16 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 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

17 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

18 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%

19 Plan Design Service Agreements Source: Corporate University Xchange Tuition Reimbursement Study 2007

20 Practices Participation Rates The overall average participation reported was 5.2 percent, with the largest number of companies reporting just 2.1 to 4.0 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. Source: Corporate University Xchange Tuition Reimbursement Study 2007

21 TAP Design Considerations Have clear objectives/outcomes of plan retention, succession planning, performance improvement, etc. Consider design components that work in your culture who can participate, payment terms, service agreement, reimbursement amounts, grade requirements, etc.

22 Design the Perfect Plan In a small group, discuss the plan features that you think would make the most successful tuition assistance plan. What barriers or challenges would you face to create this plan in your corporate culture?

23 Lifelong Learning Accounts LiLAs: Similar to a 401(k), employees save pre tax and employers may match some or all contributions. Portable as employees change jobs

24 SHRM Resources SHRM online has resources to help Track employees using tuition assistance Communicate tuition assistance programs Understand Section 127 of Internal Revenue Code that allows employers to exclude $5,250 per year in tuition assistance.

25 Measure Outcomes Recruitment Retention Career Mobility Job Performance

26 Return on Investment (ROI) Most companies justify the dollars spent for tuition reimbursement as part of an employee value proposition that attracts and retains employees.

27 ROI Calculation Example Rehire cost based on general population $44,158,850 Rehire cost based on TAP population $18,593,200 Turnover savings $25,565,650 Example based on 10,105 participants Average general population turnover rate of 19% Average TAP participant turnover rate of 8% Average FTE re-hire cost of $23,000 Program expenses for 2006 were $23.5 million

28 Recruitment Measures Survey new employees to determine if the tuition assistance program was a factor in their decision to accept employment Measure number of new employees who use the TAP

29 Retention Measures Of the employees who use tuition assistance, track their years of service, termination rates, job transfers and promotions. Compare these rates to the total company population

30 Job Performance Measures Survey managers of participants Do they notice a change in job performance and behaviors of TAP participants? Has performance improved on the job? Have behaviors improved?

31 A Student Perspective Does your plan design motivate employee participation? Tales in the field of higher education

32 Questions?