Using education to boost skills, keep workers

HEBRON – Tony Seymore is the first person in his family to go to college. He said it wouldn't have been possible if his employer didn't foot the tuition bill.

Seymore, set to graduate this month from Fives Cincinnati's apprenticeship program after completing his associate's degree in electrical technology, has dreams to earn his bachelor's and possibly attend graduate school. Fives, a manufacturer of high-precision machines used to produce parts for the aerospace industry, would pay for that too.

"I'm so grateful for everything I've been given here," said the 30 year-old Milford resident. "I intend to be working here for a while."

Increasingly, the Society for Human Resource Management, employers are offering college degrees and/or training programs to workers like Seymore. The goal? Addressing issues in the workplace today, including high employee turnover and an ever-growing skills gap between applicants and employers' needs.

Chrysler, for example, recently announced that it would give all of its 118,000 U.S. dealership employees the opportunity for free college tuition.

The degrees, offered at no-cost to employees, include books and other expenses, at Strayer University, a private for-profit institution whose entire bachelor degree program can be finished online.

The announcement follows Starbucks Coffee Co.'s move earlier this year to offer free four-year degrees through Arizona State University to employees working 20 hours a week or more. So far, Starbucks says nearly 2,000 workers have enrolled for the program.

The chain has more than 140,000 workers at its company-owned U.S. stores and support centers.

William Even, an economics professor at Miami University, said companies such as Chrysler, Starbucks and Fives offer educational benefits to attract a specific type of worker that isn't simply looking for higher income.

Even said companies are looking for "workers that want to improve their skills, are more productive, and value education." Those employees "tend to be better workers in general," he said.

"They are the ones that tend to want to move up in the company," said Even, the Raymond E. Glos Professor in Business at MU's Farmer College of Business.

Tuition assistance programs, "allow firms to hire better quality, more educated, more productive employees," says the National Bureau of Economic Research, a private non-profit research organization based in Cambridge, Massachusetts.

"Extra productivity makes it economically feasible to pay a large portion of employees' tuition bills," wrote Peter Cappelli in a 2002 working paper for the bureau.

Tool for when employers can't find the help they need

According to the Society for Human Resource Management, education assistance is offered by slightly more employers this year over last. Kate Kennedy, a spokesperson for the organization said, however, "over a five-year period, slightly fewer employers were offering tuition assistance for employees taking undergraduate or graduate courses."

SHRM found in an annual survey that 56 percent of U.S. organizations offered undergraduate educational assistance, and 52 percent offered graduate educational assistance.

Companies have a host of reasons to implement tuition assistance or free education programs.

Fives Cincinnati instituted its apprentice program in 2007. It acted because of the skilled worker shortage that plagues the manufacturing industry, along with an aging out of its current workforce, comprised mainly of baby boomers.

Fives spends roughly $220,000 on average for each apprentice to be trained over an 8,000 hour period, to eventually earn a bachelor's degree, according to Bob Weier, human resources director for the company.

Weier, who came up with the idea for Fives Machining apprentice program, said the program is necessary to combat the skills gap issue.

"This program alone won't fulfill our needs for workers," Weier said, but it does add a slew of employees that have an increased sense of loyalty and commitment to the Fives brand, he said. "And that's invaluable."

So far the program has graduated six apprentices, with eight currently in the program and four set to graduate this year. The program is working so well that the company went to the White House last month to attend a summit on the best methods of training and retaining workers.

Other companies offer the educational opportunity to combat the high turnover related to the job.

Chrysler developed its degree program to increase worker retention as well as attract quality workers, said John Fox, director of dealer training shared services at Chrysler Group.

Fox said Chrysler sees a 29 percent turnover for their dealership employees who work for one full year. "That needs to improve," he said.

"It's tough to recruit, train and retain employees, and because the public doesn't have the best perception of car dealers, it's hard to get the best talent."

Of course, there can be a downside to offering employees a degree or educational credits.

"If the employee has completed the program and they find a better position elsewhere, a company just lost the money they invested in that employee," he said.

How to curb 'thanks for the degree, but I'm leaving'

Companies such as Fives try to head off potential issues by requiring workers to stay on staff for an extra two years, the length of time it takes for the company to realize the benefit of training the employee.

"It is absolutely worth it to go through the program," said Andrew Bradford, a former apprentice at Fives, who moved up the ranks to be the production floor supervisor. "I don't see staying on as a bad thing."

Brian Carley, president and CEO of the Cincinnati US Regional chamber said employee turnover is a big issue in the Cincinnati region, and he's seeing more area companies offer educational benefits to retain workers.

"People don't realize how incredibly expensive it is to rehire and train employees, rather than work harder to keep the ones they have," he said. "Companies are more successful when they're creative in the ways that stimulate their employees."