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Nabisco Tackles Tomorrow's Skills Gap

September 1, 1992
Related Topics: Basic Skills Training, Featured Article
The idea certainly isn't revolutionary. In fact, millions of parents in the past have had the same idea: that no child be denied a post-secondary education because of a lack of finances.

What is revolutionary is that a corporation is making available the means for its employees' children to achieve education and skills training beyond high school. That's what RJR Nabisco of New York City has done through its recently announced program of education initiatives, which addresses this problem and other education issues that concern its employees.

Providing financial assistance for employees who are parents of high-school-age children isn't all Nabisco is doing in the name of education. Beginning with the 1992-93 school year, several policies, which read more like a wish list for parents of children of all ages, will be available to its employees.

For example, planned are:

  • That time off be allowed for parents to accompany their children on the first day of school, or to attend parent-teacher conferences

  • That a workshop series be developed on such topics as how to become an active participant in effecting change in local school districts, and what it takes to become a school board member or president of the PTA

  • That those who achieve such leadership roles receive $2,000 grants to help them implement or fund special programs or major changes in their local school systems.

According to Louis Gerstner Jr., Nabisco's chairman, these initiatives and others are being made available to "ensure that every employee at RJR Nabisco is prepared to meet today's workplace challenges, and that future employees will have the skills necessary to succeed in a more competitive world."

As Eugene Croisant, executive vice president of administration and HR, explains, Nabisco management believed it never could convey adequately to employees the importance of education unless the company proved that it embraced that concept.

"We wanted to emphasize that education is a corporate priority," Croisant explains. "What would emphasize this more than anything else is showing that we aren't interested only in educating our current work force, but the future work force as well. By providing support for the education of our employees' children, it truly reinforces in their minds the importance of education to the corporation."

Specifically, explains Croisant, Nabisco's education initiative, which was announced in March of this year, consists of programs to achieve these four goals:

  1. Availability of financial assistance to help employees pay for their children's education beyond high school.

  2. Time off to allow employees to accompany their children on the first day of school and to attend parent-teacher conferences.

  3. Training and incentives for employees who take leadership roles in education.

  4. Expanded work-skills training for employees, so that no one is denied promotion or transfer capability because of a lack of basic skills.

Post-secondary-education financial assistance.
Clearly, the most remarkable initiative—and the one receiving the most attention in the media—is education financing. Called the Scholastic Savings Plan, it begins with a matched savings program for Nabisco employees who are parents of high-school-age children, Croisant explains. Nabisco will match contributions of as much as $1,000 per year toward each child's post-secondary education while the student is in high school.

Taken as a payroll deduction, employees can defer as much as $1,000 annually in pretax dollars, for a total of $4,000 in four years. Deferrals to the matched savings plan will be held in Nabisco's general operating fund until disbursement, explains Croisant. Interest will accrue monthly according to the Treasury Bill rate in effect on July 1 of each year. With the matching grant from Nabisco and interest, this amount could grow to nearly $10,000 by the time each student graduates from high school.

"This matching grant is provided, not only for a college education, but for any skills training beyond high school," Croisant explains. "If the employee's son or daughter is going to a computer, electronics or beauty school, we'd allow use of those dollars for formal education, as long as the school is on an approved list for governmental funding."

Contributions to this savings plan will be paid out when parents present tuition or other education-related bills, Croisant says. Parents can choose whether to withdraw the entire amount in the first year of post-secondary education, or spread disbursements out for several years.

Contributions to the Scholastic Savings Plan aren't intended to cover a total college tuition, Croisant explains. The program is designed to be a supplemental savings plan that could be combined with government loans.

The second part of Nabisco's education-financing initiative provides for loan subsidies to employees borrowing from the government's Parent Loans for Undergraduate Study (PLUS) program. These loans are made available through a special arrangement with CollegeCredit™, the education-financing program of the College Board.

On PLUS loans of as much as $4,000 a year, Nabisco will subsidize the interest rate by 3.25% and pay the loan guarantee fees. For example, on a loan of $4,000, at a prevailing interest rate of 10%, the employee will receive the loan at 6.75% interest. Nabisco will pick up the 3.25% difference and pay the required guarantee fee of 3% of the total loan, which amounts to $120 a year.

For families needing additional assistance, Nabisco also gives its employees easy access to a broad spectrum of educational loans. Through further agreement with the College Board, this includes government-sponsored parent and student loans, as well as private programs for families paying the cost of tuition at the most expensive colleges.

Nabisco expects to allocate between $5 million and $6 million this year for the education-financing initiative alone, according to Croisant. "If 90% of the persons who are eligible for the program this year take advantage of it, we'll have close to 5,000 employees and between 6,500-7,000 high school students in the matched savings program," he estimates, adding that approximately 4,000 of those children will require student loans as well.

Projecting potential costs for the next 15 years based on the utilization rate of 90% for employees who have high-school-age children, the overall expenditure for Nabisco will be in the range of $4 million to $8 million annually.

There are some restrictions to the program, says Croisant. Foremost is the ineligibility of the firm's top 150 executives. "This program isn't a perk for senior management. With the kind of salaries they make, they should have enough discretionary income to cover a college tuition," he says. "We wanted to help the employees most in need of this assistance."

Secondly, he points out, Nabisco's offer of loan subsidies and the payout of matching grants is good until an employee's child reaches age 25. If a child joins the military immediately after graduation from high school or defers the pursuit of post-secondary education for a few years, a parent can request that the Scholastic Savings Plan be left on hold and still be drawing interest. However, should an employee's child reach age 25 or decide not to pursue post-secondary education, the amount set aside by the employee plus interest (minus the company's matching contribution) must be withdrawn in a lump sum, and the employee then will pay taxes on that lump sum.

In the event a parent leaves the employment of Nabisco before the child commences his or her post-secondary education, the promise of a matching contribution also is void, and the lump sum must be withdrawn at that time.

"We don't want to continue holding these funds in perpetuity, waiting for an employee's son or daughter to go back to college at age 32," says Croisant. "However, if parents legitimately believe a child will go back to college, at their request we will extend the program, but they have to make a decision by the time the child reaches age 25," he adds.

Time off for parents to visit school.
Nabisico's second initiative focuses on the family's role in education at the primary and secondary school levels. Achieving Nabisco's goal here, says Croisant, requires a change in company policies and procedures.

"One of the best ways to reinforce our corporate priorities is to change policies and procedures," he explains. "These policies and procedures are basically the formal representation and thinking of the corporation. We would like to do a lot of things relative to this that reinforce the concept that education is important to Nabisco."

For example, he continues, Nabisco encourages employees to take their children to the first day of school. "Under the previous method of operation, if an employee said 'I would like to take the day off to take my child to the first day of school,' his or her boss would say, 'Go back to work.' Now, we are encouraging management to give time off for this and for parents to participate in various educational activities, such as the school board or parent-teacher conferences."

There might be a situation in which a single parent would opt to attend a parent-teacher conference during the day, rather than to go in the evening and hire a babysitter. This form of time off could be granted for a child's orientation to any new school situation, not just kindergarten or first grade. Depending on the policy of the individual plant, this time off could be with pay, Croisant says.

"This policy is set up to cover whatever is appropriate and agreeable to the manager," he explains. "Now our general policy is that employees don't have to take a personal day for this, but they still must have the supervisor's permission, because 70% of the plant can't take off at the same time. In the case of multiple requests, we encourage the supervisor to find alternative times that would work."

Training and incentives to take leadership roles in education.
Nabisco's third initiative focuses on helping employees become active participants in education at the community level. Through an effective combination of workshops and incentives, the company hopes to support employee efforts to assume leadership roles in education.

By the end of this year, the company plans to launch a series of Ambassadors for Education Workshops. According to company literature, these workshops are designed to "prepare concerned employees to be positive and knowledgeable agents for change in their local schools."

The Ambassadors for Education series of workshops will address such topics as:

  • What makes one school better than another

  • What you can do to help your schools improve

  • How you can get involved in school leadership.

"This will be a comprehensive training program in terms of educating our employees about what a school system is, how it's supposed to relate to the community, how to interact with the school system and how to affect change," Croisant elaborates.

To put together the most current topics and gather appropriate materials for these workshops, Nabisco first sponsored a number of focus groups in different parts of the U.S. These groups consisted of educators, school board members and PTA group leaders, and were asked to identify trends and put together what they believed to be the most-effective tools needed to assume such leadership positions. This information was coordinated by a task force at Nabisco headquarters, which then worked with an outside consultant to develop the workshop series.

A pilot project of the series is expected to begin by summer 1991, with training-the-trainer sessions to be completed by the end of the year. Croisant said workshops probably will be offered to employees who are interested. The sessions will be presented in two-day segments on a Friday and Saturday. The company and the employees will share equally in terms of time commitment.

Employees who already have taken on leadership roles in education receive from Nabisco $2,000 Leadership Grants to help them affect change in local school systems. To obtain these grants, says Croisant, employees simply submit brief proposals that state the purpose of their programs and the leadership roles they have undertaken. The funds are dispersed through the HR department.

"The process is designed to be informal, not bureaucratic. Each year, Nabisco will contribute $2,000 to those organizations in which its employees are in leadership roles, as long as the money is used to support legitimate programs," says Croisant.

Expanded work-skills training for employees.
Nabisco's fourth initiative shows the company's overriding concern for the continuing education of its employees. Nearly two years ago, the organization decided that no employee should be denied a promotion or transfer just because of a lack of basic skills—defined by Nabisco as a necessary level of math capability and reading comprehension, and the ability to express oneself verbally and in writing.

"The original concept was to upgrade the skills of our employees as we moved into a more complex environment," says Croisant, "so we embarked on this program to look at every job in our entry-level structure to see which skills are required today, versus what we can predict will be required over the next five years. That showed us the gaps, such as an employee who has a sixth-grade reading level today as opposed to needing a ninth-grade level five years from now."

In each plant, the company then put together programs for basic skills training on-site or, if the company location wasn't large enough to support such a venture, through a contract with a local junior college. Training programs emphasize reading, language, math, problem-solving and computer literacy. Job-specific skills training and management development seminars are available also, as well as tuition refunds. Today, more than half of the company's 35,000 U.S. employees have taken advantage of some type of work-skills training, clearly illustrating that the company was successful in laying the groundwork for these initiatives as early as three years ago.

Actually, these four initiatives bring full circle a corporatewide educational focus that began when Gerstner took over as chairman after a leveraged buy-out in early 1989. Having a long-standing interest in education, he established the RJR Nabisco Foundation to affect revolutionary changes in public education.

By 1990, the foundation had dedicated $30 million to its Next Century Schools program, whereby individual school districts compete for grants to make radical, sustainable changes in education that have the potential to be replicated in other school districts.

Croisant stresses that all of Nabisco's education endeavors—from the RJR Nabisco Foundation to its four-point education initiative—go beyond the scope of providing a package of benefits for its employees. Indeed, parents don't have to trade in medical or dental care benefits to take advantage of the new matched savings program or any of the other new programs. Instead, these new initiatives are viewed by company executives from a more global perspective.

Characterizing these initiatives as "a down payment on our future," Gerstner says he believes, "an educated, flexible work force is the key to our competitive strength—both as a company and a nation. RJR Nabisco has made improving education a major priority. This initiative puts our commitment to education to work for RJR Nabisco employees and their families."

Croisant adds, "We believe absolutely that all citizens in corporate America should participate in the improvement of the public school system. How they go about it I'm not presumptive enough to say, but there must be a concerted effort by individual companies to become more involved in education reform." n

Personnel Journal, September 1992, Vol. 71, No. 9, pp. 47-50.

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