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05/26/2010

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Great post, Chuck. This question comes up often at employers, and I've never seen anyone take it on as sanely and thoroughly as you have here. Your advice makes sense to me. Thanks for sharing it here!

Interesting thoughts. I see what you are saying, but at the same time if continuous improvement is truly something the company values, then the accomplishment needs to be recognized with more than a lunch and a day off. If you want to send the message that you reward people who go the extra mile, then increasing pay, or a bonus may be a good idea.

If I have an employee who sits at his/her desk and perfectly meets expectations every day, fine. But, in today’s business environment, companies need more than that. Companies need those who will go the extra mile, who aren't content with the status quo and put in extra effort. If an employee is improving his/herself, I dare say they are also improving the company. When the sea (your employees) rises, the ship (your company) rises with it.

At some point companies need to send the message that we want you to improve, we want our company and processes/products to improve and we are willing to put our money where our mouth is when it comes to improvement. If you don’t value it (another MBA or Sr. Engineer), or think it adds value to the company, or their position, then why are you paying the employees tuition in the first place?

Asking why companies pay for tuition reimbursement is a good question. Likely the answer is a combination of "looks good" and the total expense (number of participants) is at an acceptably low level. For many companies TR can be an inexpensive benefit that they can promote the heck out of to make themselves look good as a progressive employer.

I don't think a core reason is to pay for the training of their future leaders.

Of course employees who go the extra mile should be recognized, and even rewarded. Some would suggest that's what the annual salary review is for. But if I need a journeyman engineer (what the work calls for), then I'd be overpaying to use a senior engineer for what is essentially (to them) a lower level of work. Again, good performance should be taken care of elsewhere.

In my speaking engagements I often ask folks to pretend that they're the owner of the company, trying to spend their scant resources effectively and efficiently. When there are limited funds available, business decisions tend to reward what the company needs to be successful. Paying for overqualified employees is often viewed as an emotional "nice to do" vs. a "need to do".

I love the idea of asking people to imagine they're the owner of the company!

Also I agree that you don't need to pay for a senior person to do a junior job. However, companies that don't have higher level positions for people who have taken time to become more senior will probably lose them to companies looking for senior people.

If companies are paying tuition reimbursement as a façade because it looks good and secretly hope that not very many employees will take advantage, then they are doing it for the wrong reasons. I hardly think one who thinks like an owner would do this. Employee education is an investment. If the “owners” aren’t doing this out of genuine concern for the employees and company, then they shouldn’t be doing it. End result – Employees will not see the company as a place to have a career, but a place to get some good experience and then move on to a career.

I think it's a good idea to hire people who don't have aspirations or a desire to improve themselves...that way you don't have to face this awkward situation of an employee who tried to improve their abilities and who you have to tell tough luck to, it doesn't count for anything here.

We all know that smart employees use their time more effectively---golfing and bowling with the boss to get ahead, so that we can have another dunderhead to promote to discourage people from going to school.

Name a good company that doesn't have a tuition reimbursement program. Tell Edward Lawler and other skill-based pay advocates that having "overqualified" employees is a bad idea. I guess our goal should be to have employees who meet the qualifications for their job and no more.

Bingo.

A few years ago at the hospital here,we gave any employee who earned a college degree, even if didn't apply to their jobs, eg. janitors, a $5,000 one time bonus. We also paid quite a bit toward tuition.

As you know, these tuition reimbursement plans are among the least used employee benefits, so it didn't cost us much, despite our efforts to encourage use.

Then we said: What do we really want to encourage and recognize here? People wanting to improve themselves by getting more education and knowledge? We agreed that that was not what we were about and the doctors chimed in.

Our doctors said that they were seeing more patients asking questions and acting like they knew something about their health. For example, they were concerned about drug interactions when we wrote a new prescription. The doctors referred them to a pharmacist.

They saw smarter patients as a threat that would lead to more law suits. They definitely came out on the side of discouraging employee self-improvement. Same problem---more difficult questions and people acting like they were more intelligent. Not a good thing for the organization! Our unspoken motto here at the hospital---we may be dumb, but we're not stupid.

The above described educational benefits and bonus were cancelled.

Just make sure your shiny, optimistic, ambitious employee knows in advance that a new degree only guarantees them a pat on the back before they go to class every evening/weekend for 2 years straight.

Be extremely careful! You may be hurting yourself more than helping your bottom line.

Just the mere fact that they have worked toward and attained their degree is proof that these employees are the go-getters that you should be rewarding monetarily (over those who are satisfied to simply maintain the status quo).

Don’t forget that employees who attain advanced degrees expect to see some ROI as well. If all they are offered at your company is a lunch and a day off from work, they may decide that they are trapped in a dead-end position and subsequently go looking elsewhere for career advancement. Then when they leave your company (due to this perceived career stagnation) they take that message out to the industry (both your customers and your competitors). Then you are unjustly branded as a company that doesn’t value it’s employees, and subsequently any new young talent will think twice before hiring on with you. So, to continue to attract valuable talent you will have to inflate your starting salary to compensate for an undeserved reputation. Then where is the savings?

The purpose of the study program shouldn't be the degree, it should be the body of knowledge gained from the degree. If the employee students have additional knowledge and skills from completing that degree program, they demonstrate those on the job and that leads to the promotion and pay increase. Having your company pay several thousand dollars a year for your program and accomodate your schedule while you complete the classes is a heck of a benefit. I used company benefits to get my MBA and two certifications. None resulted in a raise when I finished, but all gave me more opportunities both within and outside the company. It was the best employee benefit I could have received.

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