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A New Direction in Skills Training?

A new Amazon.com initiative provides employees with tuition reimbursement up-front for learning job skills outside the e-commerce industry. But will it catch on elsewhere?

Thursday, August 9, 2012
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An online retailer paying for its employees to study aircraft mechanics, nursing or another field they might like to pursue sounds like quite a stretch of the imagination. But, Amazon.com plans to do just that, and its move could lead to a new direction in developing employees' skills.

Last month, Amazon.com launched its Amazon Career Choice Program, which lets employees choose what job skills they would like to acquire or further develop. Amazon will pre-pay 95 percent of tuition, textbook costs and associated fees to accredited schools at which employees pursue vocational certifications or associates degrees. This includes online courses from accredited schools. All full-time hourly employees in the United States who have been employed for three consecutive years are eligible to participate in the program.

The caveat: Unlike traditional tuition-reimbursement programs, the company will only fund those areas that are well-paying and in high demand according to sources such as the U.S. Bureau of Labor Statistics. Besides aircraft mechanics and nursing, examples include computer-aided design, machine tool technologies, medical lab technologies and nursing.

That brings up an obvious question: Why invest money for employees to develop new careers that may lead them away from Amazon? "It's designed to be an innovative program in that way," says Amazon spokeswoman Kelly Cheeseman. "We want to help our associates have a choice in their future careers, whether at Amazon or another company."

And, by pre-paying the cost of tuition, the Seattle-based company has removed a possible barrier to success, Cheeseman says.

The program comes as a positive announcement after an investigation last year by the Allentown Morning Call revealed employee complaints to the Occupational Safety and Health Administration about extreme heat in an Amazon warehouse complex that led to employees collapsing and rapid production requirements many employees could not sustain.

Analysts also see the Career Choice Program as positive news at a time when many companies, especially in the retail sector, are scaling back. "More education can lead to opportunities and more job security," says Jonathan Smith, a management consultant with Towers Watson.

 

From an employer's perspective, it's good business sense. For starters, it's a way to attract and retain talented employees. Consider: In Towers Watson's 2012 Global Workforce Study of 32,000 employees worldwide, including 3,600 in the United States, career advancement was the No. 2 driver of employee retention, behind base pay/salary. It also is the No. 3 factor, second to base/pay salary and job security for attracting prospective employees.

"These types of benefits can be very empowering to employees and create good will toward the employer, even after the employees have left," Smith says.

And, companies with satisfied employees tend to have three times the operating margins of those in which employees are disengaged. "So generally, this is good for business and good for employees in terms of being a win-win with this type of impact," Smith adds.

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Colleen O'Neill, senior partner with Mercer, agrees. "It's just another positive message that 'the organization cares about you, but we're not handcuffing you,' " she says. "By offering it, people will feel better about staying."

O'Neill sees Amazon's move as part of a trend in which companies are trying to become more of a learning environment. "Over the last two years [companies have been] making investments in tools and resources which employees can use to enhance their skills," she says.

Will other employers follow suit? "Large employers typically benchmark their reward programs against others in the industry or others who compete for talent," Smith says. "So, if a company offers a benefit like tuition reimbursement and it's having a positive impact on retention and it isn't cost prohibitive, others will follow."

However, O'Neill, who describes Amazon's program as a "bold and exciting move," still cautions HR executives to think carefully before establishing similar programs, especially considering the cost implications. In other terms, they should consider who employee population and what specific problems they hope to solve for them.

For example, a program such as this would appeal to employees who are in their 20s, though employees at later phases in their careers may still want to enhance their job skills.

"A lot of times people start picking their strategy based on what they see as a best practice rather than what's best for them," she says.

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