Employee tuition benefit perks are more than simple altruism

Dive Brief:

At first blush, employers helping employees pay for an education seems to be an altruistic, talent attracting perk. But once you clear away the media hype employers received upon making such an announcement, employers had a strong ulterior motive: lowering rising turnover rates.
Money also points out that employer deals with online, for-profit universities (and some nonprofits too) may be driven by those for-profit schools hoping to "reverse dramatic enrollment declines." In other cases, employers require employee-students to apply for government grants, so tax dollars are in the mix.
The biggest concern, according to Money, is that students may not be getting a quality education. Nicole Hochsprung, senior associate for higher education at the American Federation of Teachers, told Money that her organization is "concerned both with the value of these benefits that lock employees into one provider of dubious quality education or one mode in which to get that education—usually an online portal—and the lack of voice workers have in negotiating these partnerships."

Dive Insight:

Money explores several scenarios involving employers and tuition payment benefit plans, some good for employees and some less so. For example, it cites new research that Cigna saved $1.29 for every $1 it spent on tuition reimbursement thanks to lower turnover and recruiting costs. Participants in its successful program were 10% more likely to be promoted and earned 43% more on average (over three years), than co-workers who didn't participate, according to Money.

Bottom line, no matter which plan it featured, Money says the new benefits are still in their infancy, so effectiveness and participation are still to be determined. McDonald’s new program saw 5,037 of 440,000 U.S. employees participate. Cigna’s plan has 5.8% of its 31,000 workers, and after two years, Starbucks partnership with Arizona State saw 5,200 of the company’s 135,000 U.S. employees participating, a university spokesman told Money.

For HR observers, it's little surprise that employers look to benefit from these programs by keeping talent in the fold, especially as recruitment toughens in the tight job market. Such programs are often used to improve "employer branding" and stand out, too.