Even before the pandemic, industries were facing a skills shortage. The McKinsey Global Institute estimated in 2017 that by 2030, 14% of the entire world’s workforce would need to either switch jobs or acquire new skills in order to keep up with changes caused by automation and artificial intelligence. Of course, that wasn’t even taking into consideration a global pandemic that would surface two years later.
The pandemic has been catastrophic, but it has given both employees and employers time to re-evaluate what they need in terms of skills. Now, everyone just needs to figure out how to address these new needs.
Almost 20 years ago, the National Bureau Economic Research (NBER) was writing about how employers were seeing the benefits of helping to pay for students’ further education. Today, there are even more reasons to start encouraging – or even paying for – your staff to upskill, whether they want to train, retrain or get a new degree.
You will get more productive employees.
Many surveys have looked at the effectiveness of tuition assistance programs on companies’ bottom lines. Within these programs, an employee will enroll and pay for a semester of university. Once the semester has been successfully completed, the company pays some or all of the tuition back to the employee.
Surveys have shown that these programs result in more educated, more productive employees. A 2016 survey from the Graduate! Network found that these programs increased customer engagement, customer satisfaction and employee productivity. A survey for the NBER found that the productivity increases actually covered the cost of the education programs.
You will retain those now-better educated employees, and see who has the potential and ambition.
There may be a small fear (or at least consideration) that upskilled employees might make a dash for the door once the skills have been obtained. There isn’t much evidence of that in the real world, however. Most research indicates that tuition assistance programs actually create more employee loyalty in the long term.
In the short term, of course, they need to remain employed in order to receive the benefit. And if they are getting a part-time course to earn a degree, that could take years to complete. During this period, they will need to stay with your company. Luckily for everyone, those employees should be more invested in your company and their work while they stay.
You can get tax breaks!
You will need to check with your legal team, but an education assistance program can be tax deductible up to $5,250 per employee every year. Many online courses cost that much or even less, so the reimbursements could actually cover most, if not all, of the costs of the course tuition.
Even better, the Coronavirus Aid, Relief, and Economic Security (CARES) Act has expanded the definition of educational assistance to include some payments that employers have made toward student loans paid after March 27, 2020. That means you don’t just get tax breaks for anything you pay going forward. You might be able to help your employees with student loans now.
You can demonstrate your values to potential employees – and clients.
The benefits a company offers tells everyone what matters to that company. When education assistance is at the top of your list, you tell potential employees that you value their education. They will know that they can improve their skills and fill their knowledge gaps with your approval and your active assistance.
When potential clients and customers see that you value employee education, you are telling them that they are getting the brightest, most well-trained staff out there. Whatever you do, you do it with people who have the newest, most advanced knowledge and training available. Whatever they come to you for, they will find the most cutting-edge expertise in your employees.
Your employees are looking to you to make upskilling a priority.
Showing potential clients and potential employees that you value education is fantastic, but your current employees will also benefit from knowing that you value their ability to upskill. Prudential’s most recent Pulse of the American Worker survey asked workers who, besides themselves, was most responsible for helping them develop their skills. One-third said employers were most responsible and 24% said their managers were, which were the top two answers.
In other words, employees are looking to their managers and employers to help them discover which new skills they need and how to gain those skills.
Offering to help employees get more education and more skills is ideal for any business. Costs can be offset by higher employee productivity and tax breaks, and you will be telegraphing your commitment to education to employees and customers alike. Really, you should be asking yourself why you haven’t started upskilling your employees already.