Realizing that their best competitive advantage might be employees, executives are thinking strategically about tuition reimbursement.

Think back 20 or 30 years. What would the typical CEO say was the company's most important asset for edging out the competition? Many would say that the competitive edge would be gained through the efficient design of the physical structures of the facility or the state-of-the-art equipment. Today, those assets are still critically important, but experts believe that much of the efficiencies that can be gained from new equipment or technology have already been realized. To gain a competitive edge today, many believe that a company's biggest strategic advantage may lie with its work force. Tuition assistance programs are important tools for gaining the competitive edge, particularly in manufacturing. Once seen only as a perk for high-ranking executives, tuition programs are increasingly a strategic tool for addressing important business concerns such as retention, recruitment, morale and even productivity. To design and administer their tuition programs more strategically, companies are advised to consider several important factors.

Don't Treat as Give-Aways
It is tempting for some companies to offer tuition programs as an employee benefit and then put them on a proverbial shelf along with other benefits such as personal days off or retirement contributions - perks that are part of the full compensation package but that are not seen as critical for improving the bottom line.

But tuition benefit programs can actually be strategic tools for the company - and in fact, most companies do see them that way. Accenture, in its High Performance Workforce Study 2002-2003, notes that knowledge and information are now the foundation of a company - its new "bedrock."

Companies that work to retain their best and brightest people are the ones that have the edge.

In a 2004 survey performed by our organization,The Council for Adult and Experimental Learning, 203 manufacturers explained why they provide an educational benefit to their employees. Seventy-three percent said that they provided their tuition program for employee retention, and 68 percent said that the tuition program helps them improve productivity.

Other frequently-noted reasons for providing an educational benefit to employees included:

· Increasing qualifications to do new work
· Developing employees for promotion
· Gaining a competitive edge in recruitment efforts
· Improving employee morale

Note that none of these reasons are employee perks; they are important business goals.

As you consider your own tuition program, be fully aware of what your business goals are for it. You may want the tuition program to help you be an employer of choice, or you may want the program to help employees to become more productive.

Once you identify your specific goals, make sure that employees are aware what they are. If your goal is retention, tell employees that you are providing the tuition benefit because you want them to stay. If your goal is employee advancement to high-skill or management positions, provide information to employees about the kind of degrees or certificates, or even short-term training programs, that can lead to advancement opportunities within the company.

Offer a Range of Benefits
We have long seen the value of tuition benefits to overall business goals, and so we recommend designing tuition programs in a way that encourages participation by employees at every level of the organization. This means making programs accessible by:

· Funding online degree programs
· Expanding eligibility to all employees
· Covering the cost of prior learning assessment (which can help someone earn college credit for what they have learned on the job)
· Providing education and career advisors
· Providing pre-paid tuition for employees who do not have the money to cover the up-front costs of reimbursement programs.

It also may mean relaxing some of the typical restrictions on allowable programs of study.

This could seem counterproductive to employers who worry that their employees will earn degrees and then move on to careers in different sectors. Sure, some employees may opt to use their tuition program dollars to launch new careers as nurses or teachers. In our experience, however, most employees want to stay in their current field and with their current employer.

Providing them information on the degrees and certificates that the employer values is often all you need to do to get most of your employees to choose areas of study that benefit your company. Restricting choice may save some tuition dollars for the company, but it may count against you in areas like employee morale and becoming an employer of choice.

If you do choose to impose some restrictions, you are not alone in that practice. Most manufacturers we surveyed who provide tuition assistance typically do restrict educational benefits in terms of both access and allowable expenses. The vast majority (91 percent) of the manufacturing respondents offer reimbursement of courses only after an employee provides proof of successful completion, and only 13 percent offer pre-paid tuition programs.

In addition, the tuition benefit is most often restricted to courses or programs that are directly related to the employee's current position (84 percent) or possible future position (71 percent) within the company.

Just under half (49 percent) covered the costs of courses required by any degree or certificate program. Survey respondents also reported that among employers who cover non-business-related coursework, a pre-approval process is generally required.

Nearly two-thirds (64 percent) of employers require a minimum length of service before employees become eligible for the tuition program, with more than half (55 percent) requiring between four months to one year of service. Few employers offer tuition benefits to part-time employees (12 percent or less, depending on the level of the job and whether it is unionized).

Employers varied greatly on the dollar amount of the annual benefit, with the largest segment (23 percent) covering $2,500 or less. Most employer respondents reported that reimbursement is dependent on the grade received in the completed course, with 27 percent requiring a passing grade, 41 percent requiring a grade equivalent to "C" and 25 percent requiring a grade equivalent to "B."

Align Policies with Goals
After you have clearly defined what the business goals of a tuition program are, consider whether the program's policies help to support those goals.

One example discussed earlier: If you want the tuition benefit program to help advance your employees into higher-skilled positions, be sure that your program's outreach efforts include information about what kinds of skills, credentials and/or degrees are needed for the higher-skilled positions within the company.

Or, you may choose to provide your employees with the services of a professional career and educational advisor who can also relay this information in a one-on-one advising session.

Is It Working?
Designing a program to meet your business needs is only the first step in a successful tuition program. It is important as you begin to offer the benefit to also measure whether it is having the desired effect.

Is the tuition benefit a reason that some employees choose to stay at a company? Is the tuition program helping to improve the company's productivity? Is the benefit helping to improve morale, advance employees to higher positions, or attract high-quality job candidates? You do not have to answer all of those questions, but if you do have some strong reasons for offering the program, put in place mechanisms to measure whether the program is giving you what you need. This will allow you to make changes in the program as needed, based on the actual results.

Measuring impact is a challenge for many companies. In our survey of more than 200 companies, of the respondents who cited productivity improvement as a reason for providing the tuition benefit, 36 percent did not know whether it made a difference in the job performance of participants.

But for those that did track outcomes, favorable outcomes for participant - better retention, promotions and job performance - were reported two to three times as often than otherwise.  E+P

Rebecca Klein-Collins is a work force development consultant for the Council for Adult and Experiential Learning. For more information, vist www.cael.org.