3 best practices when designing an equitable employer education and upskiling program
Companies have offered employer-backed education programs, including tuition reimbursement, for decades as a way to retain and train their workforce.
But these programs are typically built to serve a white-collar base (one that is also historically white and male). These old-school programs often have policies that are unintentionally discriminatory and do not serve working learners.
Employers spend $177 billion on formal training according to one 2015 estimate. More than half of that money is spent on employees with a bachelor’s degree or higher, compared to a quarter spent on workers with some college experience, and 17% on workers who attained a high school diploma or less. A recent analysis of one company’s tuition reimbursement benefit by Guild found that 88% of reimbursement costs went to full-time salaried employees — the same people that made up nearly 79% of the overall enrollment of the program itself.
Employers can — and must — do more to serve their entire workforce. By ensuring those most in need of new skills have wide access to such training, employers drive better results for all parties.
Below are three critical things employers should consider to build education programs and policies that are designed in ways that are equitable and produce successful outcomes for all employees.
Prevent and eliminate employee debt
The simplest way to make education programs more inclusive is to prevent and eliminate debt.
Traditional tuition reimbursement perpetuates inequity by making employees float costs including tuition, fees and books. A direct pay, debt-free model ensures that these same employees don’t incur the financial risk.
The restaurant chain Texas Roadhouse, for example, announced in October that it would add tuition reimbursement as a work benefit. Though workers are later reimbursed by employers, this arrangement can shut out employees who are not high-earners, are unable or unwilling to shoulder debt, or do not have sufficient savings.
Before the pandemic, the Federal Reserve reported 40% of American workers had less than $400 to pay for an unexpected expense. In the aftermath of COVID-19, the situation is exacerbated: 49% of workers who personally lost wages during the pandemic are still earning less than before, according to a March Pew Research Center survey, with 30% of American adults saying they “worry every day or almost every day about the amount of debt they have.”
Against that backdrop, nearly half of respondents in an internal Guild survey indicated low adoption of their employer education program because they could not afford to pay tuition upfront. About a third also reported they could not afford the additional cost beyond what the company covered.
By adopting a direct payment model, employers can be “de-risk” learning for employees. With the risk of debt eliminated, it is possible to achieve higher engagement and participation rates, particularly among underrepresented groups that make up the majority of entry-level roles.
Clawbacks, or repayment agreements, give employers the right to pursue tuition funds from employees who do not meet their employer-defined program criteria. This can mean hitting a certain academic standard (more on that in a bit) or staying with the company for a certain period of time after finishing a program.
Companies typically think clawbacks are needed to ensure workers put some “skin in the game” for their education benefit, but they come with a host of unintended and negative consequences. For this reason, Guild never recommends clawbacks for an employer, does not build any solutions that facilitate them, and is not involved in any way in the collection process if an employer chooses to utilize a clawback.
When these policies are included, they put learners in a financial situation that can be risky and sometimes ruinous.
Clawbacks also discourage program enrollment: Guild surveyed employees working at companies with clawback policies and found that 38% of respondents were disinclined to participate in their education programs because they worried about a commitment to stay at the company after using the benefit.
Clawbacks and other so-called skin-in-the-game measures also don’t improve outcomes — in fact, Guild’s data shows the opposite.
After a sixth-month period, students in such programs retain at a higher rate (about a little more than 10%) compared to learners who are enrolled in programs with at least one skin-in-the-game feature, such as clawbacks or copayments.
What’s clear is that injecting financial risk for students never helps — even with thoughtful employers, a clawback policy is misguided and will end up negatively impacting program persistence and participation — the very thing they’re designed to drive up.
Set policies for learners, not compliance
Two other policies commonly found in education programs are grade requirements and manager approval. Like clawbacks, both are often built in to ensure worker “buy-in,” but they can deter participation and program success.
Grade requirements require learners to maintain a certain level of academic performance to receive benefits. While a standard for academic performance is good, and baking in some grade requirements is recommended, execution is critical. These requirements must be laid out when an employee’s education term starts, and also take into account the individual’s historic academic performance.
By looking at a learner’s program grades or GPA before the start of a new term, employers can determine a payment amount for courses the employee wants to take for that new term. If the learner does not perform as expected, the company will still pay the agreed-upon amount, but can reevaluate whether to continue funding the employee’s education after that.
Some employers, however, tie grade requirements retroactively to an employee’s benefit. This means that learners will know only at the end of the course or term (when they receive their grades), whether they may have to pay their employer back for their tuition costs. This creates an anxious dynamic, with the prospect of financial risk while they’re enrolled.
Another policy that can impact performance is manager approval, which is when a manager must approve either a person’s participation in a benefit or, in some cases, specific courses or programs an individual can take.
Though it may seem harmless, this practice stokes inequity and creates discomfort. In a Guild survey of companies that required some form of manager approval, nearly a quarter of respondents indicated low company adoption of education benefits because the requirement left employees discouraged. Manager approval can also introduce biases, such as similarity bias, which occurs when managers are preferential towards employees who are similar to them.
Setting clear standards — and ones that are not tied to an individual helps to always ensure that policies are designed with all types of learners in mind.
It’s not easy to create an employer-sponsored education program. From budgeting to scalability, there’s a lot that must be considered when designing a robust, successful, and ultimately financially beneficial program. But by prioritizing employees, particularly frontline workers, and removing these sometimes subtle but nonetheless harmful barriers, companies can help ensure that every worker gets a chance to learn and succeed.