Increasingly, Businesses Offer Education Benefits to Their Employees

William Snyder, vice president for administration at Crown Central Petroleum, watched with pride as a young woman in his office used his company’s tuition-reimbursement program to attend night and weekend college classes.

Then he watched with dismay as she took her new college degree and her years of experience to another company.

The woman quit shortly after graduating because she did not see much hope of a quick promotion in his office, he said. “There were very limited opportunities in the oil industry” at the time, Snyder explained.

Although Snyder still believes continuing education is a key to the long-term success of the Baltimore-based independent oil refiner and marketer, he said that he now realizes “there is a trade-off” to investing in employees’ knowledge.

Increasingly, however, businesses are willing to take the risk of choosing the education side of the trade-off.

Though there is a danger of training employees only to benefit competitors, more and more companies are saying the dangers of not providing continuing education are far worse.

From automobile plants to high-technology research facilities, continuing education, which is the never-ending push to broaden employees’ knowledge, is becoming a central part of many companies’ strategies for success.

“There is no way to maintain your competitive edge unless you are constantly upgrading your skills,” said Charles Zimmerman, manager for education and training at Westinghouse Electric Corp.’s Howard County research facility.

Westinghouse, which pays 100% of tuition for job-related courses taken at nearby campuses and offers many specialized technical courses in-house, believes “lifelong learning” is crucial to its corporate mission, Zimmerman said.

The proponents of continuing education say the programs heighten productivity, increase corporate loyalty and attract the brightest job applicants.

But even supporters of the programs admit it is often difficult to demonstrate a direct link between the continuing education programs and improved competitiveness. And there are risks to arming employees with good educations.

“It is true you run the risk of training employees just to lose them. You are giving them knowledge they can take out the door,” conceded Cynthia Ingols, a Harvard Business School staff member who has written about corporate education.

“It is clearly a dilemma. But your alternative is an ignorant work force,” she said. “You have to take that risk.”

General Motors Corp., for example, offers extremely liberal continuing education programs to both production-line workers and managers as a part of its push to compete with Japanese automobile manufacturers.

The company will pay 100% of the tuition for college and graduate school courses, up to a maximum of $5,000 a year.

Although the program is limited to courses that are “job-related,” the company “tries to be as liberal as we can” about that restriction, said Shelman Dale, who runs the training and education programs at a GM plant here.

“Our policy is based on the concept that development of the individual is going to benefit GM,” he said.

Under a similar but separate program, unionized workers at the auto plant not only get their tuition costs paid, but can take time off with pay to attend GM-sponsored high school and literacy classes offered right in the plant.

Formerly, reading and writing were not important skills for workers at the assembly plant, who were valued primarily for their physical dexterity. But now those workers are wrestling with computers and robots, explained Rick Malloy, who runs the United Auto Workers’ education program at the Baltimore plant.

“The instruction manuals for all the new automated and sophisticated equipment assume a 12th-grade education,” he said. Besides improving the workers’ ability to produce vans, the program improves workers’ attitudes, Malloy said.

The opportunity for a free education “is a big motivator,” he said.

Setting up continuing education programs that keep both employees and employers happy can be tricky, executives in the field say.

Too often, companies offer educational benefits without finding out what kinds of new knowledge the company needs, said Frank Smith, who is vice president for compensation and development at the Black & Decker Corp.

“Prescription without diagnosis is malpractice,” he said.

The Towson, Md.-based maker of tools and appliances uses fill-in-the-dot “needs analysis” questionnaires to discover the knowledge gaps facing individual workers and entire departments, Smith said. Then, the company offers the programs that fit in with overall corporate strategy. As the corporate strategy evolves, so do the educational offerings, he said.

Once a company has decided to provide continuing education to its employees, managers are faced with what the experts call “a classic make-or-buy” decision.

As in other make-or-buy questions, managers must weigh the advantages of in-house control against the costs of developing a specialty outside the company’s traditional expertise.

For small companies, or large organizations with diverse educational needs, it is probably best to “buy,” that is, pay the employees’ tuition at nearby schools, Ingols said.

Tuition reimbursement plans can be molded to fit a variety of company objectives.

At Genex Corp., a Gaithersburg, Md., biotechnology company, employees are reimbursed for 80% of their tuition for job-related courses, and 50% of book costs and lab fees.

Genex wants employees to pay a portion of their educational costs so they will “have a vested interest” in taking their education seriously, said company spokeswoman Trisha Whelan.

Crown Central Petroleum Corp. reimburses tuition only for its managers. Crown pays 100% of the tuition for job-related courses in which the worker gets an “A.” Lower grades get lower levels of reimbursement.

The company’s sliding scale encourages excellence, Snyder said.

“Somebody has to start talking about excellence. Maybe this isn’t much, but . . . just getting by doesn’t cut it,” he said.

If there are enough employees who need the same kinds of training, a company can choose a middle path by hiring a college or consultant to provide the course in-house. However, some executives believe their educational needs are so specialized they cannot rely on outsiders.

John Hurley, who runs Chase Manhattan Bank’s education programs, said off-the-shelf and other external programs “are always several shades away” from the specific needs of the New York-based bank’s employees. “If I can do it myself, I do it,” he said.

Providing in-house training also allows employees to escape problems with the Internal Revenue Service, which has changed its position on the deductibility of educational benefits several times in the last few years.

As it stands now, employees who get tuition reimbursement for a course that does not directly improve their skills for their current job may have to pay taxes on the reimbursement.