When running a small business, you need to have a lot of strategies in place in order to achieve higher levels of success. For example, when you create a marketing strategy, it helps you reach your consumer through the best avenues for them. And a product differentiation strategy allows you to make your goods stand out against your competitors’ in a more effective way.
But what about an employee education strategy? Do you need one of those too? Before you can answer that question, you must understand what this type of strategy is.
What Is An Employee Education Strategy?
Sometimes called a tuition reimbursement program or a tuition assistance program (TAP), an employee education strategy is essentially a plan that involves financially helping your employees attain higher levels academically. This may be via putting money toward their college classes, whether online or on campus, or it could also involve offering financial assistance that can be applied toward skills-based courses that result in your employee obtaining additional certifications.
Who is offering these types of programs? A 2013 employee benefits research study found that roughly 88 percent of the organizations studied, which included businesses based in manufacturing, health care, technical services, transportation, retail, and food services, offered their employees some type of professional development benefit. This included both on-site and off-site programs. Additionally, almost all (90 percent to be exact) also provided monies toward professional certifications and memberships.
Employee education strategies typically address three factors: 1) how much the business is willing to pay or reimburse, 2) which employees are eligible, and 3) whether or not academic performance affects pay or reimbursement.
In regard to pay or reimbursement amount, some companies choose to foot the entire bill whereas others offer a capped rate that can be applied toward each class, semester, or year. Employee eligibility could involve offering this benefit to all employees or to only employees in certain classifications or pay ranges; also potentially addressing how long an employee has to have worked for the business in order to collect the benefit.
Finally, academic performance means that your business could choose to only reimburse for programs if the employee earns a certain grade or higher. Generally speaking, this is usually defined as a “C” grade or above. So, what are the benefits of offering this type of program?
Benefits of Offering Tuition Reimbursement or Assistance
An employee education strategy that involves tuition reimbursement or assistance not only gives you better trained and more educated employees, but it has other advantages as well. For instance, one study conducted at Stanford University and published by The National Bureau of Economic Research found that tuition reimbursement reduced employee turnover rates by 20 percent.
Additionally, by offering this type of program, you tell your employees that you are willing to invest in them personally. This helps them feel more valued and often translates into them working harder and being more willing to make more sacrifices for the business.
There are also tax breaks that you get if you help your employees advance their education. As indicated within the IRS Publication 15-B: Employer’s Tax Guide to Fringe Benefits for use in 2015, as a business, you can deduct tuition, books, and other pre-determined expenses that are paid on behalf of your employee, up to $5,250. Of course, certain rules, restrictions, and exclusions apply, but a well devised employee education program could afford you some serious tax credits.
Considerations for a Solid Employee Education Strategy
If you are considering implementing an employee education strategy, the Society for Human Resource Management offers some advice to help you implement a program that is beneficial to both your small business and your employees. This includes:
- Create an easy-to-understand policy. You’re going to have a hard time getting your employees to take advantage of tuition reimbursement or assistance if they can’t make heads or tails of what they need to do to get and/or use it.
- Devise a program that extends benefits throughout the year. Because tuition costs are typically pretty high, if you cap the amount that your business provides, consider implementing the program in a way that extends the benefits throughout the year. One way to do this is to only reimburse half of the monies during the first semester and half of the monies during the second semester. This prevents the employee from using up all of the money in the first set of classes and provides benefits during the second part of the year.
- Make the educational benefits available based on hire date. Instead of operating under a calendar year or even a fiscal year, make the educational benefits available based on the employee’s anniversary date. This makes it easier to keep track of since you are already using this date for things such as vacation time and pay raises.
After reading all this, what do you think? Is development of an employee education strategy right for you? Feel free to share your comments below!
To receive email notifications when articles like this are published, helping both you and your small business thrive and grow, don’t forget to subscribe to Businessing Magazine.short url: