Corporate Tuition Aid May Keep Workers Loyal

Finally, there is quantifiable support for the idea that training employees is good for retaining your employees.

Employers have often maintained that if they train their employees, the employees will just leave and go to another company. In effect, employers say that paying for employee training is a waste of money because the employee may end up working for the competition. HR professionals have often countered that what these employers end up doing is retaining an unskilled workforce which hurts company profits.

Now research suggests that paying for employees’ education makes them more likely to stay.

A recent article published by Erin White in the says, in part, the following:

“One new study, by Stanford graduate student Colleen N. Flaherty, found dramatically lower attritionamong participants in a tuition-reimbursement program at an unnamed nonprofit institution. Among employees hired the year after the program started, only about 33 percent of participants had left the employer within five years, compared with about 60 percent of employees hired the same year who didn’t use the tuition program. The study was published by the National Bureau of Economic Research (NBER) as a working paper in March.

Flaherty’s research supports results from other recent studies. Peter Cappelli, a management professor at the University of Pennsylvania’s Wharton School, found in a 2004 study that “tuition assistance appears to select better-quality employees who stay on the job longer,” in part to make use of the benefit.”

The bottom line is that employers need to ask themselves whether their human resources department is providing them with a strategic advantage in the market. This is one more example of where HR is having a positive effect on the profits of employers.