Are Education Benefits the New Stock Options?
To attract talent and fill skill gaps, employers are making workers’ education and professional development a strategic priority
From the evolution of hybrid work policies to the “Great Resignation,” it’s clear that our labor market is undergoing a transformation, with the balance of power shifting from employers to employees. Despite projections of a cooling economy and a rise in unemployment, many employers continue to struggle to meet skills gaps in their workforce. Reports show employees across many industries—including retail, health care, education and construction—maintain the upper hand.
The pressure to attract and retain much-needed talent is hardly new. In the past, tight labor markets inspired employers to be creative with employee benefits. These ranged from lavish office amenities like gyms and on-site dry cleaning to stock option plans that let employees buy company shares at a fixed price (with the hope of large gains, especially after an IPO).
Shifts in workers’ lives and priorities have shifted the incentives. The rise of remote work means free food and cappuccino makers at the office are no longer a draw. The dot-com bust rendered stock option plans less appealing as well. Today, employees want good leadership and advancement opportunities. Notably, a poll from fall 2022 shows education benefits are an important driver as to whether employees stay at or leave a company.
As continuous skills development and lifelong learning have become a labor market reality, one has to ask: “Are employer education benefits today’s stock option plans?”
Since 2021, reports by Deloitte and in Forbes show employer-paid education improves retention. An education benefit that is well-funded, easy-to-use, widely adopted, and universally available, is sticky. A fall 2022 poll of workers shows that 58% of those who did not indicate that their current employer offers tuition benefits say they would likely remain with their current employer if offered tuition benefits. The majority of employees that take advantage of paid education benefits stick around and grow professionally within an organization—and employers are taking notice. As part of the current labor market transformation, employers are increasingly moving from education as a benefit to investing in education as a strategy.
Employees [see] education benefits as an important driver in the choice to stay or leave a company.
There are a number of ways in which this is happening:
$5K Tuition Reimbursement
Employers can offer employees $5,250 of educational assistance tax-free each year. Currently, 56% of businesses offer this benefit to employees, and the number is growing, with employers taking things a step further and improving accessibility and expanding eligibility. For example, McDonald’s dropped the minimum working requirement from 20 to 15 hours per week; that move expanded eligibility for its tuition assistance program to nearly 400K employees. Similarly, Duke University is reducing service eligibility requirements from two consecutive years to six months of full-time employment; eligible institutions can now be outside North Carolina and the Southern Association of Colleges and Schools.
Apprenticeships for both blue- and white-collar careers are common in countries like Germany and the UK. Their use in the U.S. though has been limited to trade industries. That’s changing. In the past decade apprenticeships in the U.S. have increased by more than 50%—and these include “new collar” fields like cybersecurity, financial services, health care and information technology. One employer that includes apprenticeships as part of its robust education benefits is the Indianapolis International Airport, ranked the best airport in North America for 12 consecutive years. IIA includes apprenticeships in accounting, engineering, architecture, and public safety and paid tuition for a few local colleges. As part of their efforts to attract a younger workforce, the airport also offers a bevy of other education and training benefits, including providing $5,250 tuition reduction for employees wishing to enroll in degree programs.
Career Pathing Opportunities
Many sectors are struggling with staff shortages. New education benefits are helping them compete for workers. For example, the hospitality industry has begun rolling out career development programs including cross-department training, leadership workshops, and debt-free access to high school completion, college degrees, and certifications. By introducing career development services and support, hotel brands like Hilton and Best Western are appealing to potential applicants with the prospect of greater responsibility and advancement down the road. Hospitality Ventures Management Group, which manages 55 hotels across the U.S., has rolled out new in-depth training of operations managers for general manager roles, investing $60,000 in each participant to train them in areas such as revenue, financial reporting and people and facilities management. Creating career growth opportunities for entry-level hospitality workers to take on higher-level roles and advance is helping hospitality chains fill high-turnover roles.
Coaching and Career Advising
In a move that Inc. magazine called “oddly genius,” Amazon recently launched wrap-around, employee-education services including Kaplan’s one-on-one Career Choice coaching to help Amazon’s front-line workers identify the academic programs that best fit their skills and long-term goals and provide continuous support throughout their higher education experience. The concept is forward-thinking because it embraces the reality that helping employees with career transitions may mean that some will stay and advance into new roles within the company and others may take the free education and leave the company. This thinking runs counter to organizations’ traditional focus on retention—but is one that businesses are increasingly adopting.
The majority of employees that take advantage of paid education benefits stick around and grow professionally within an organization—and employers are taking notice.
We’re at a seminal moment in workforce transformation. In the past, during tight labor markets, companies invested in compensation plans and office perks. This time employee education is at the center. Employers are making a clear shift from offering education as a benefit to investing in education as a strategy. The growth in apprenticeships, paid education and wrap-around services are among the approaches companies are adopting to promote lifelong learning for employees. For the employer seeking to attract talent and fill skill gaps, investing in the education, training and professional development of employees is becoming a strategic priority.
Connell Boyle is a national account director at Kaplan. Feel free to reach out to Connell to discuss or learn more about how your organization can use education as a strategy to attract and retain talent.