CEOs Are Leading A Movement To Educate The Workforce
This is a real movement. Companies have woken up to the fact that frontline workers (retail, store employees, operations staff, drivers) are the most important and difficult workers to attract, so they’re investing in them like never before. And why are they doing this? Because it’s good for recruiting, good for retention, and good for the business in general. (Read “Why Service Workers Are Now More Important Than Software Engineers.”)
In the case of Amazon, the program includes full pay for college tuition, high school diploma, ESL programs, and all sorts of technical skilling programs. Wal-Mart goes even further: the company not only pays for education but also includes payments for all books, job transition services, and a dynamic internal marketplace for jobs to help people change careers. And Target, which has been a leader in this domain for years, offers programs for employees at all life stages including bootcamps, master’s programs, and other certificate programs.
Under the covers of all this, vendors like Guild Education (one of the fastest growing providers in the HR domain, now valued at $3.75 Billion) end EdAssist are making this easy: connecting employers and education institutions at scale.
The business community really gets this approach. While many predicted that employee benefits would be cut during the Pandemic, the opposite has taken place. More than 31% of all payroll in the United States is spent on various health, education, and other benefits and that number is ticking up this year. Not only is education a tremendous way to attract workers during the tight labor market, it also makes the company more dynamic at its core.
Just this week we helped Wal-Mart roll out their massive internal career development program. The benefits to Wal-Mart are enormous: new Career Pathways help individuals move from “low demand jobs” to “high demand positions” and simultaneously let individuals raise their earnings potential. It’s a powerful solution for frontline workers, and that’s why so many companies are jumping in.
Allstate now lets employees apply to any new job internally at any time, and their ten-year-old internal career marketplace is filled with education and tools to help. Disney has invested in education and career pathways for its employees for years, making it one of the best-branded workplaces in the world. And hard-hit employers like Verizon created entire “job sharing” communities last year to help furloughed workers reskill and find new jobs during the toughest time of the pandemic.
This market has had skeptics for years, but now it’s all paying off. The Federal Government lets employees exclude up to $5250 in benefits from their taxes, making it one of the most powerful rewards companies can provide. Today, according to SHRM, 56% of employers offer these programs and investment went up over 4% last year. Next year I bet the increase will double.
Education benefits, by the way, are much more than tuition reimbursement. Tuition Reimbursement programs, which we studied years ago, are often frill programs offered to white-collar workers to help with an MBA or other advanced degree. Today’s education benefits are full-fledged, complete, highly tailored education and career programs, designed to give people confidence and skills for the jobs of the future.
And let me tell you more about why this pays off. We’ve studied the cost of attrition and recruiting in great detail, and in many cases, the cost of replacing an employee can be 50% to 200% of their salary. (This includes lost internal knowledge, lost customer relationships, survivor syndrome effects, and the high cost of advertising and recruiting new people.) Education is a fraction of this cost, and the result is an employee who is even more committed, excited, and engaged. (Read our report “Build vs. Buy” to see the financial impact.)
And there’s an even bigger trend as well. CEOs are bending over backward to make sure their company is well respected as an Employer of Choice and a contributor to the future of the US economy. What better way to do this than to become well known as an educator and builder of family wealth. Jeff Bezos has been thinking this way when he became Chairman, and I know that Wal-Mart, Target, Disney, and other execs do as well.
We can’t “fix” the education system in the United States overnight, but we can sure make debt-free education available to more if we pitch in. This is a trend we all like to see, and better and better solutions are coming every day.