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What is the return on investment for supporting education initiatives?

Aligning higher education to the needs of business results in a stronger workforce.

What is an employer based education initiative?

Employer based education initiatives are your company’s opportunity to use your employee benefits to facilitate the earning of a postsecondary credential or industry training. A common example would be reimbursing tuition for employee classes. A less well known example would be flextime – allowing your employees to remain on the clock while in class (onsite or offsite). Each of these is a company practice that can promote your employees’ educational attainment and provide increased value to your company. The various types of initiatives available (and discussed throughout this toolkit) make it possible for different businesses of differing size and from different sectors to tailor their policies to the unique circumstances of their company.


Educated employees mean increased productivity

Dedicating company resources to employee education can have a multitude of benefits, but one of the most compelling is that employees who receive educational support from their employers (through tuition or similar benefits) are more productive. When Bison Gear and Engineering Corporation partnered with Elgin Community College in Illinois to train and certify their employees, the company experienced a 31 percent gain in productivity1. Some companies are concerned that educated employees will only cost more in wages with no tangible return. In reality, research has shown that productivity increases twice as fast as employee wages, meaning that in a situation where an employer pays one dollar in increased wages due to education, they receive two dollars in increased productivity2. While many employers may believe the short-term cost is too high for investing in employee education, the initial investment has a direct and positive impact on long-term productivity.


Investments in employee education develops talent

 A series of roundtable discussions led by Governor Haslam in 2012 revealed that recruiting talent in Tennessee is a challenge across business sectors. Additionally, national surveys suggest southern states are especially susceptible to “brain drain”; which is when young and educated adults move elsewhere for better opportunities3. This only exacerbates the problem of fewer qualified, available workers.

In some cases, companies spend considerable resources tailoring the skills of new hires to high need positions within their organizations, only to have them poached by businesses able to pay higher wages or provide different working environments. However, existing employees who earn a degree with employer assistance exhibit higher rates of retention and loyalty4. Your company can take advantage of this reality by supporting the educational attainment of current employees. You can identify and cultivate the “right” employees for high need positions while augmenting your applicant pool for new positions with employees who are more likely to stay. Furthermore, research indicates your employees will likely display better job mobility, making them attractive for future internal opportunities5 and sparing you the time and cost of recruiting and vying for qualified talent from outside the company.


Companies supporting employee education retain employees

Employees who earn a credential with the help of your company gain a renewed sense of purpose in their careers and are likely to seek advancement opportunities internally6. By retaining and developing these employees, you can benefit from the existing workplace knowledge and specialized experience. Additionally, you can lower the cost of recruitment both in real dollars and time.


Purposeful company education initiatives improve company culture

Regardless of a company’s structure, the benefits to investing in existing employees’ education to a credential are quantifiable and tangible7. The member organization Corporate Voices for Working Families compiled a series of case studies on business led education initiatives that resulted in positive outcomes for both the employer and its employees. While varied in style of program, some of the benefits were more universal. For example, Crest Cadillac improved its customer satisfaction scores after focusing its workforce development efforts on tuition reimbursement and cooperative education programs. Outcomes for other companies included a stronger pipeline of future leaders, avoiding relocation by building a skilled workforce locally and decreasing hiring costs. You can read more on these case studies under “Case Studies” on the top navigation bar.

1. [Corporate Voices for Working Families, 2012]
2. [Richard Blundell, 1999]
3. [Carnevale, 2012]
4. [Bellevue University's Human Capital Lab, 2012]
5. [Bellevue University's Human Capital Lab, 2012]
6. [Bellevue University's Human Capital Lab, 2012]
7. [Corporate Voices for Working Families, 2012]