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Dear Workforce How Do We Judge Return on Investment From Our Education-Assistance Benefit

September 7, 2011

Dear Education Isn't Cheap:

Education assistance or tuition reimbursement programs are typically one of the most poorly managed benefits that companies offer. While nearly every company offers a variant of the benefit, few even attempt to evaluate the return on investment (or lack thereof). Such programs rarely have goals, and primarily exist just because everyone else has one. You are right to question what must be done to increase the program ROI, but I assure you that service return contracts are not the answer. Consider asking yourself:

  1. Historically what is the percentage of participants in the program who have voluntarily separated following completion or near completion of their education?

  2. How has completing the education affected the capability or capacity of the program participants to perform their jobs? In other words, does their on-the-job performance increase? Do they receive promotions more often? Does the quality of their work improve?

  3. Historically, how has the organization leveraged the education it sponsored? Was a career plan in place to make use of what the participants were learning? Did the organization re-evaluate the position of the participant or their compensation upon completion of the education (re-recruiting them)?

  4. What is the performance profile of the typical program participant? Is this a program that is primarily used by existing top performers, average employees or minimally engaged employees who continuously perform just above minimum performance standards?

The key in maximizing the ROI of this program, or any HR program for that matter, is to:

  • Develop and clearly articulate a business reason for the program to exist.
  • Cascade that reason down into clearly defined and measurable goals and objectives for the program.
  • Establish metrics relevant to each goal/objective.
  • Routinely communicate program performance and rigorously investigate/resolve non-ideal results.

Completing a degree or even adding new skills to one's portfolio increases the person's perceived market value, if not their actual value. Few organizations manage toward that perception. They do not re-recruit the program participant, placing them into a new position that utilizes their current skills. They do not adjust the compensation to levels that a competitor would now pay. And more often than not, they do not even congratulate the employees on their achievement. If such programs can have a positive ROI, achieving it will require that you manage the program for planned results, not administration.

SOURCE: Dr. John Sullivan, San Francisco State University, July 18, 2006.

LEARN MORE: Here is another article on this topic. Also, an intermediate course on calculating its ROI.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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