Employers from Starbucks to ConAgra have begun to partner with academic institutions to create specialized programs for their employees. It’s a new spin on an older system, as benefit managers are trying to evaluate the long-term benefits of helping to pay for their workers’ education — and more cost-effective and results-oriented methods of doing so. The big question: do these programs indeed serve to attract more candidates, and does the training necessarily produce workers who are better skilled and interested in staying with their current jobs?

In the past, tuition reimbursement programs were a more unstructured offering — occasionally the classes needed to be work-related in order to qualify for employer reimbursement, depending on an employer’s needs — resulting in a pleasant but not entirely critical employee benefit, with workers paid back for their studies as long as they maintained an acceptable
grade level.

Under a new model emerging at a variety of employers, direct partnerships with the online-specific satellites of accredited post-secondary institutions are helping to create more specialized and self-directed educational offerings, catered to the skill sets employers have found lacking in their workers. The participating college offers a discounted tuition rate and in exchange, the employer works to promote that particular program. Employees have less range of choice in educational offerings as a result, but may find the classes more individually suited to their needs and ultimately more important to their professional development.

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“Corporate America is always trying to attract and retain the best talent, that’s certainly a very key HR strategy for most employers,” says Carol Sladek, partner and work-life consulting lead at Aon Hewitt. “So what we’re seeing is an increased interest on the part of employers to try to find the types of benefits and programs and policies that will help employees not only join their team, but stay on their teams and also help better employees along the way.”

Anthem Blue Cross and Blue Shield of New Hampshire partnered last year with College for America, a nonprofit college launched specifically for working adults and their employers, to create a competency-based program with no credit hours or courses. Students learn through projects targeted toward specific, employer-focused skills — communication, teamwork, ethics and others — resulting in either Associate- or Bachelor-level degrees. One of the biggest perks is the price tag: At $2,500 annually, the all-inclusive program is self-directed and online, providing an approach that allows students to progress through the program at their own pace.

Chris Dugan, director of public relations for Anthem’s New Hampshire operations, says it was one of the first companies to partner with the university last year, and since then, the insurer has had 56 employees participate in the program.

“Not only are employees going through this program stronger at their day job, but it could open up other opportunities in our company — so we promote this vigorously to our employees, and they seem to have strong interest [so far],” Dugan says. The convenience factor, plus Anthem’s arrangement to pay employees’ tuition, has also added to the new program’s success.

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To date, College for America has enrolled nearly 1,000 students since its pilot launch in January 2013, adding more than 100 new students per month in recent months. Currently, it has about 60 employer partners — including corporate, government and nonprofit groups — offering the College for America program to their employees.

“We’re currently in program development discussions with several national employers and associations who see a specific labor market need where a competency-based, workforce-applicable degree would help with their talent development pipeline,” says Colin Van Ostern, a member of the college’s leadership team. “We’re seeing significant demand.”

Another example of corporate-academic partnerships can be seen with Starbucks, which recently created a program allowing any employee working 20 hours a week or more to be eligible for a full reimbursement if they enroll in Arizona State University’s online program as juniors or seniors. Freshmen and sophomores receive a partial scholarship and needs-based financial aid toward the foundational work of completing their degree.

According to data from EdAssist, an administrator of tuition assistance programs, spending on — and utilization of — tuition  assistance varies by industry. Among health care companies in its database, for example, the average annual spending per employee on tuition assistance is $2,332, yet the industry boasts the highest utilization rate at 8%.

Anthem and Starbucks’ examples come in contrast to other employers’ internalized education programs — fast-food retailer McDonald’s and its well-known Hamburger University in Oak Brook, Ill., a corporate managerial training program that has offered skills-based training to thousands of company employees since being founded in 1961.

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Whatever the venue, Karen Hutcheson a partner in the rewards and talent management practice at Mercer, says that employees are keen in keeping up with current skills.

“I’m finding employers also want to make sure their employees have those opportunities; it’s a win-win,” she says. “On the employer side, if you can educate your workforce in an affordable and manageable fashion, you can feed into stronger engagement.”

Higher education needs to be more nimble and responsive to student needs, she adds. And people in the workforce want strong skills, but the cost of traditional higher education is so high. “This is a nice way to marry the two together,” Hutcheson says.

Limiting options

On the flip side, overly focused programs do limit some employees’ options, and might lead to lower benefit participation.

“With the lack of choice, high potential employees may discount the value of obtaining a degree or graduate degree,” Hutcheson says.  And although it’s still too early to tell, another potential downside would be the perceived value of an online degree versus the historical degree. “Not all Bachelors [degrees] are created the same,” she adds.

Bruce Elliott, manager of compensation and benefits at the Society for Human Resource Management, says the College for America model is part of a growing trend of employers working with community colleges, vocational schools and traditional universities to create structured programs.

Part of that growth, he says, seeks to offset a continued imbalance in the labor pool.

“During the height of the recession, there were employers desperate for skilled tradesmen and couldn’t find them to save their lives,” he says.

In the future, Elliott says he expects to see more corporate partnerships as a way of helping to drive down the cost of continuing education for employees — particularly in the Starbucks’ example.

“The reality is, these kids will be graduating with maybe $10,000 in debt,” compared to the much higher numbers in average student loan debt as the result of traditional, self-funded college programs. “You do the math.”

Aon Hewitt’s Sladek says that business costs and overall return on investment continue to be the biggest questions facing benefit managers as they consider the wider range of educational options.

“A lot of employers are sitting back waiting to see what will happen,” she says. “The Starbucks thing was really interesting and there was a lot of interest. I think a lot of other employers are standing on the edge watching.”

Hutcheson calls it a “wave of the future.”

“What we’re seeing in the workforce are people being more focused on building and maintaining skills,” she says. “We see employers wanting to see their employees be more prepared and in charge.”

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