Tuition Assistance An Intermediate Course

Short of calculating ROI, other steps can and have been taken.

May 3, 2004

Although calculating return on investment for tuition-assistance programs is considered impossible and irrelevant by most workforce managers, it has been done. In 2001, Karen Calabrese, then a senior education consultant at Honeywell’s aerospace division in Phoenix, polled her fellow employees about their ambitions and set up a kind of do-it-yourself version. With the approval of management, she contracted with Capella University to enroll 15 mainly self-selected middle managers as a "cohort" in a two-year online MBA program. Capella tailored the elective courses, using proprietary Honeywell information, to make the case studies and class projects more relevant for the students. The students worked individually and in teams, both at home and while traveling on business. The cost for each came in under the $5,250 cap. "It was very, very hard," Calabrese says. "We condensed 12-week courses into eight. I got a lot of frantic phone calls."

    Still, all 15 passed the course, several received promotions, and 14 remain with the company. Many of the students’ projects were turned into department-wide or personal initiatives. Afterward, Calabrese calculated the program’s ROI using the well-respected formula codified by performance-measurement guru Jack J. Phillips, author of Return on Investment in Training and Performance Improvement Programs. "We figured the company made about $1.2 million," Calabrese says.

    Short of calculating ROI, other steps can be taken and have been. For-profit adult schools and associated consulting firms, aware that the idea of tuition reimbursement as a measurable cost-saving strategic asset will eventually occur to workforce managers, already have cost-saving and curriculum-focusing initiatives in place. They include:

● Outsourcing tuition reimbursement. Companies that want to eliminate waste without a major change in philosophy engage companies like Edcor in Pontiac, Michigan, to handle the nuts and bolts of tuition reimbursement. This includes negotiations with and payments to schools and assessment of employees’ eligibility and progress. It tracks grades and usage trends to "close the holes in the system," Edcor’s Lance Ross says. The company charges per employee transaction, handles $330 million in total reimbursement, and claims to have cut one client’s yearly bill by $4 million.

● Using educational consultants. Faith Ivery of Educational Advisory Services in Scottsdale, Arizona, is a big proponent of aligning corporate training with educational reimbursement, but confesses that she hasn’t made much headway with her clients. What she has done successfully, she says, is steer them around the potholes of the adult-education system. "For example, most people don’t realize that the University of Phoenix has a 60-credit residency requirement," Ivery says. She explains that approximately half of a student’s undergraduate-degree requirements must be earned from that school no matter how many credits he or she has piled up previously. To save time and money, she points students toward "credit-banking schools" like Empire State College in New York, which accepts credits earned elsewhere, gives its own credits for "life experience" and issues fully accredited degrees.

● Forming "corporate alliances" with for-profit schools. Most for-profits have marketing initiatives that involve tuition discounts, customized course offerings, intranet sites and even the establishment of work-site classrooms in return for a long-term agreement. "We find that our corporate partners have a higher commitment to upgrading their workforces," says Robert Silberman, CEO of Strayer University, a for-profit school in Arlington, Virginia. The downside, Faith Ivery says, is that corporate training needs may change too fast for the schools to respond, and they may bail out of the agreement if employee enrollment drops.

● Aligning internal training and development with adult education. Examples of this are few and far between, but they do exist. Allstate Insurance, for example, runs a fairly conventional tuition-reimbursement program for all except one sales and distribution business unit that has put forth an "education blueprint" for its employees. "We’re looking at future leaders and where they’re lacking in skills, and looking at what we can provide for them both internally and externally," says Sue Benbrook, a senior human resources consultant for resource education. "They’re told, ‘Here’s a suggested format for you.’ The company is just now starting this."