Maximizing the Investment:

Managing Tuition Reimbursement Programs

Michael D. SmithSubmitted in Partial Fulfillment of

HRD 880 – Spring 2008

Clemson University

What is tuition reimbursement Tuition reimbursement is a common benefit

utilized in both the private and public sector

Tuition reimbursement is used as an employee retention tool

Does tuition reimbursement work? Yes & No

Evidence supports it as a retention tool while the participant is enrolled in the educational program

Evidence supports higher intent to turn over upon completion of the educational program

Losing the benefit Due to the economic down turn companies

are reviewing benefits to “trim the fat” 18% of SHRM members have already cut tuition

reimbursement programs1

42% of SHRM members state that cuts are likely1

Why save tuition reimbursement? With the downturn in economic stability and

increase in unemployment – benefits used to replace job security are very important

Tuition reimbursement involvement does increase retention over those not involved2

How do we save the program? This research project is designed to

address this very problem Completion of a degree increases turn over3

Studies show that employees who are promoted or have a sense of future with a company are less likely to turn over upon completion4

Investigate the utility of commitment requirements also known as “handcuffs”

Theory… Handcuffs do not work

Employees will avoid tuition reimbursement programs which utilize “handcuffs” if they feel there is no future at their current employer.

Employees who do not accept tuition reimbursement due to “handcuffs” are more likely to turn over upon degree completion.

Employees who offer tuition reimbursement programs without “handcuffs” have a higher participation rate than those with “handcuffs.”

Theory… Development & Opportunity

Employees taking part in tuition reimbursement programs demonstrate a lower intent to turn over if there is opportunity for promotion or further development, regardless of “handcuffs.”

Employers who offer career development programs in conjunction with tuition reimbursement experience a lower turn over rate

Method Utilize 2 separate surveys

Survey One will be administered to Graduate School Students

Address Hypothesis 1, 2, & 4 Survey Two will be administered to Company

Benefits Managers Address Hypothesis 3 & 5

Summary Tuition reimbursement is a critical employee

retention tool An increased understanding of the utility of

“handcuffs” and career programs will help employers develop affective tuition reimbursement programs

Through this research employers will be better equipped to maximize their investment in tuition reimbursement programs

References 1: Society for Human Resource Management. (2009) SHRM

Poll: Financial Challenges to the U.S. & Global Economy and Their Impact on Organizations.

2: Benson, G. S.; Finegold, D.; & Mohrman, S. A. (2004). You Paid for the Skills, Now Keep Them: Tuition Reimbursement and Voluntary Turnover. Academy of Management Journal, 47(3), 315

3: Krueger, A.; Rose, C. (1998). The Effects of Workplace Education on Earnings, Turnover, and Job Performance. Journal of Labor Economics, 16(1), 61-94.

4: Benson, G. S. (2006). Employee Development, Commitment and Intention to Turnover: A test of ‘Employability’ Policies in Action. Human Resource Management Journal, 16(2), 173.