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It was one high-performing youth apprentice that first gave Precision Plus Inc. president Mike Reader the idea seven years ago to begin offering tuition reimbursement to his employees.
The local high school senior had been working for the Elkhorn-based manufacturer through a Youth Apprenticeship program over the fall semester when he approached Reader in his office. He told Reader that his parents weren’t enthusiastic about his career aspirations. They wanted him to get an accounting degree from a four-year university, but he wanted to go into manufacturing. The student asked if Reader would have a conversation with them.
“We brought them in to show them what he had been working on,” Reader said. “They were fully convinced. (The student) had a good idea of what he wanted to do, maybe they should just let him do what he wants to do.”
The encounter not only helped change the parents’ notions of what modern manufacturing is actually like, but it also inspired Reader to begin offering an additional benefit in an effort to retain top talent and encourage their continued learning.
Precision Plus decided to institute a tuition reimbursement program for all of its employees. These days, the company is marketing the benefit more heavily in the midst of the current industry-wide battle for talent that is driving up wages and forcing employers to bulk up their portfolio of perks for employees.
“It’s an extremely competitive environment,” Reader said. “I’ve never seen wage inflation in the 25 years I’ve been at this like it is now. It is mind-blowing and not any fun. So, we’ve promoted it a lot.”
Precision Plus is among a growing number of companies offering and touting their tuition-related benefits. Even prior to the current severe labor shortage, more than half of U.S. employers surveyed in 2019 by the Society for Human Resource Management said they offer educational assistance benefits to their employees.
Recently, several of the country’s retail giants – including Amazon, Target and Walmart – have announced plans to cover 100% of the cost of their employees’ college tuition, joining Starbucks, which is credited by some with pioneering the employee benefit.
It’s more common, however, for employers to cover a portion, rather than all, of employees’ school costs. A 2019 International Foundation of Employee Benefit Plans survey of employers found the most common reimbursement amount to be between $5,000 and $5,999.
Fiddleheads Coffee Roasters began offering tuition assistance to employees three years ago. Nicolle Merkel, hiring manager for the Thiensville-based coffee company, said the benefit is particularly attractive for its employees, who are largely college students or high school students who plan to pursue higher education after they graduate.
“We bring it up with everyone who applies,” Merkel said, adding that the benefit sets Fiddleheads apart from some of its competitors.
At Fiddleheads, the reimbursement comes in the form of a check at the end of the semester, and it’s made available to students who attend any local accredited university. Employees must clock in 350 hours over the past year of employment, be in good standing with their supervisor, commit to working 25 hours weekly and take a minimum of nine credits per semester in order to receive the reimbursement. They also must maintain their employment for at least 45 days after the semester ends.
Precision Plus was intentional to structure its program with claw-back provisions in place, Reader said. Employees must stay with the company for three years in order to receive the full reimbursement. If the employee leaves before then, the company requires payback.
“I want the candidate that’s embarking on this to understand that there is some expectation of some loyalty,” Reader said.
Among the company’s roughly 100 employees, a half-dozen take advantage of it, he said. It’s generally attractive to students who join the company directly after high school and are interested in continuing their education. Most study at either Gateway Technical College or Milwaukee School of Engineering, Reader said.
Tuition reimbursement may not be the deciding factor for a candidate who’s on the fence about taking a job, but Reader sees it as a “mild differentiator” in the market.
“It fits into the culture that we’re trying to instill in everyone of lifelong learning, and that we invest in our greatest asset, which is our people,” he said.
Reader admits the ROI of tuition reimbursement is somewhat difficult to calculate.
“My response to people on the ROI question is, ‘I know the result of doing nothing, so we’re going to continue to press this as long as we can,’” he said.
As with any retention strategy, it’s not a silver bullet. The student that first inspired Precision Plus’s program ended up leaving the company less than two years later to pursue a civil engineering career.
Though labor challenges are immediate, offering tuition reimbursement is somewhat of a long-term play for employers, Reader said.
“If (employees receiving the benefit) don’t want to work with us going forward, maybe they can be an advocate in the business community for us in the future,” he said.
Setting up a tuition assistance benefit program
The Society for Human Resource Management recommends employers consider these questions when structuring a tuition assistance benefit program:
- Who will be eligible to receive the benefit? All employees? Their spouses and dependents?
- Will cash or another benefit be made available in lieu of the educational benefit to employees who don’t want or need it?
- Will student loan repayment be offered?
- Will the organization establish a strategic partnership with a specific educational institution?
- Will the organization approve of all educational institutions or only certain ones?
- Will the organization reimburse only courses related to its business?