Bundling Education Services for Workforce Development

Last weekend, the Washington Post ran a story about a growing trend among company CEO’s to move away from the old model of trying to find the perfect external candidate for a job toward a new strategy of upskilling their existing employees.

The story provided examples of how companies are beginning to identify workers with little post-secondary education or training, but who possess a high degree of ownership, commitment, and loyalty. They are responding to this employee potential with their own packages of post-secondary education opportunities.

As Brent Orrell at AEI points out, the result of these efforts “is the kind of mobility-in-place, a once common and expected feature of American work-life, which was becoming increasingly rare.”  As one employee in the WSJ article said, “This is no longer a dead-end job.”

In fact, while higher education faces a potential future of disruption and unbundling, the short and intermediate-term solution for employers is likely the opposite — providing bundled education and services as a benefit that leads to higher employee retention rates and a better-skilled workforce.

We have already seen this with big-brand organizations — Walmart, Starbucks, and Papa Johnn’s — that are partnering with universities to offer discounted or free college degree opportunities. Such programs are creating worker loyalty and a broader talent base for future management.

The greatest impact of such education bundling in the workplace, however, will likely be seen in small and medium-sized businesses. These are companies with great employees who, unfortunately, are under-skilled with regards to industry growth opportunities. Offering their employees education and service bundles can render significant results.

First, by upskilling existing, dependable employees companies avoid the hiring guessing game and can reduce turnover expenses dramatically. In addition, educating form within allows businesses to maintain their existing culture while addressing the need for growth and innovation. Finally providing employees with education benefits will lead to improved employee loyalty and performance.

For most of these companies, offering an assortment of education pathways is a relatively low benefit investment considering the returns. For example, let’s say a company commits to providing an Associate’s degree for eligible employees. The company’s total cost per employee will be approximately $4,000. Assuming that the average employee will require 2-3 years to complete this degree, the annual benefit investment per employee is probably less than $1,500. The likely return on that meager investment — including lower turnover and training costs, a higher skilled talent foundation, improved employee motivation, and performance — is impressive.

Of course, for such programs to be truly effective, the education must be flexible enough to meet the specific needs of the employer and be convenient enough to make sense for the employees. As this happens, I believe we will see this disruptive trend expand rapidly.

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