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Golden Opportunities

Some companies are strengthening their tuition-assistance programs with an eye toward building the next generation of leaders.

Monday, June 2, 2008
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It's graduation day. Do you know where your employees with newly minted M.B.A. degrees are? Are they eagerly applying their recently acquired knowledge to new and exciting projects at your organization -- or are they on the phone with headhunters?

It's generally agreed that workers who seek out opportunities to further their education often represent the best of what today's organizations value: ambition, thirst for knowledge and a strong work ethic. Yet, when it comes to helping these employees obtain college or graduate degrees and then letting them apply their new skills, many companies acknowledge that they aren't making the grade.

For example, only 6 percent of firms surveyed for Tuition Reimbursement Study 2007, conducted by the New York-based Corporate University Xchange (CorpU), report they are doing well at aligning their tuition-assistance programs with employee career paths, while 62 percent report they are dissatisfied and are planning to launch new programs or improve their existing efforts.

This apparent strong interest in the ramp-up of care-and-feeding practices for employee-students represents a sharp break with well-established corporate attitudes.

To be sure, there is a long history of company-sponsored tuition-assistance programs that have provided varying amounts of financial help, but doling out money has been about as far as most companies have gone in terms of encouragement and support for their employee-students.

Even though companies provide TAPs, the level of corporate enthusiasm for those programs typically has been underwhelming, and their efforts to encourage, support and retain employees who are enrolled in educational programs -- and especially those pursuing advanced degrees -- fell somewhere between benign neglect and grudging acceptance.

In the case of M.B.A.s, for example, there has been a very sharp contrast between companies' highly visible and energetic efforts to recruit M.B.A.s and bring them into their organizations, and the comparatively little attention businesses have focused on supporting and retaining their homegrown M.B.A.s-in-training.

"Imagine a person who has just spent time and effort in getting an M.B.A. and developing new capabilities," says Derrick Barton, CEO of the Center for Talent Retention in Denver. "If they're still doing the same thing they did before they got those capabilities, and they don't see a new opportunity ... within the organization, they're in a perfect spot to be looking outside. They are a recruiter's dream."

Two large companies are among those taking steps to avert that scenario, however. At Caterpillar Corp. and Verizon Wireless, HR is working hard to not only make it easier for employees to further their education, but to ensure that what they learn does not go wasted.

Future Leaders

At Verizon Wireless, the company is bringing college to the workplace.

"We have successfully launched on-site college-degree programs at 14 of our corporate offices, each of which offers classes for associate, bachelors' and M.B.A. degree programs," says Dorothy Martin, the national program manager for the Bedminster, N.J.-based company's LearningLINK tuition-assistance program. "We are in the process of rolling out similar programs in several additional locations in the near future."

The LearningLink program has already attained an impressive 18 percent participation rate from Verizon Wireless employees -- more than triple the average level of about 5-percent participation at companies that offer tuition-assistance programs, according to CorpU -- and the company hopes to boost that to 20 percent or more by the end of this year.

Verizon's advanced programs leading to degrees such as M.B.A.s are a key part of those new offerings, says Martin.

"It's not that M.B.A.s are necessarily a requirement for every position, but graduate degrees provide us with a fertile ground for developing the future leaders of our business," she says.

"They provide a much broader understanding of business and business results, and we want people to be thinking about M.B.A.s and other graduate programs.

"We look to that pool of individuals in terms of developing our succession planning lists and leadership developments programs. These are the strategic planners, the visionaries, the future leaders of the company."

Caterpillar also has ramped up its support for employees who are seeking M.B.A.s and other advanced degrees.

At the beginning of this decade, top management at the Peoria, Ill.-based heavy-equipment manufacturer identified leadership training and education as a key strategic priority needed to achieve the company's aggressive 10- and 20-year growth plans for its business in Asia and Eastern Europe.

The sobering bottom line was that, unless the 96,000-employee firm improved its learning environment -- particularly by upgrading the competencies of its 6,000 front-line managers -- it would not be able to achieve its long-term goals and objectives.

Spurred by these conclusions, one high-profile component of Caterpillar's response was the launch of its widely applauded Caterpillar University in 2001.

A less visible but also vital part of the company's effort has involved a major revamping and expansion of its internal leadership-development processes and increased support for Caterpillar employees who enroll in advanced-degree programs.

As a result, "the number of employees making use of C-TAP (the Caterpillar Tuition Assistance Program) has doubled in the last three years, and about one-third of them are working on M.B.A.s," says Paul T. Walliker, senior learning consultant with the College of General Studies at Caterpillar.

"Flight Risk" Worries 

Despite the value that advanced degrees can add to the workforce, TAPs and other education initiatives continue to be viewed skeptically by some executives. A large part of this lack of enthusiasm can be traced back to a widely held belief that, when a firm provides tuition reimbursement, the company is probably just subsidizing training that will largely benefit the individual's next employer.

This concern is heightened for those getting more advanced degrees -- and especially for newly minted M.B.A.s, whose skills are exceptionally portable and who are highly sought-after.

Companies have commonly recognized this "flight risk" by including explicit obligations for employees with master's degrees to stay with the firms. The CorpU study found that more than 40 percent of firms require an employee to repay at least some portion of tuition assistance if the employee does not stay with the company for a predetermined number of years.

In fact, many firms have come to see their tuition-assistance programs -- and especially the support for M.B.A.s and other advanced degrees -- as little more than obligatory "check-the-box" benefits offerings.

"New recruits want to know that the company is going to support their professional growth, and they want to know that the company has a tuition reimbursement program," says Marcia Dresner, senior research analyst at CorpU. "But tuition reimbursement has often been managed as an employee benefit, not necessarily as a strategic investment that takes into account the strategic needs of the company."

This has led to a common view of tuition reimbursement as an expense, rather than an investment. It's an attitude that's resulted in many companies doing little to encourage employees to sign up for the programs -- and has caused companies to be minimally involved with, or supportive of, those employees that do, she says.

This stands in sharp contrast to the very active programs at Caterpillar and Verizon, each of which has specific features designed to strongly align and integrate the company's TAP with its leadership and career-development efforts.

Take Caterpillar, which has rolled out an extensive set of initiatives in recent years to support that alignment and integration.

"As part our annual review and performance-management process, career development is one of the topics that you are supposed to be discussing with your supervisor or your manager," says Walliker.

"One of your goals should be a personal- development goal, and what we want is for people to think about their long-term career and to have these discussions with their supervisors."

A key part of this process is an employee data sheet that serves as a standardized internal resume at the company.

The data sheet lists information about each employee's skills, education, academic degrees, languages spoken and previous positions.

In addition, supervisors are required to indicate when they think each employee will be ready for another job, whether that job is going to be a promotion or a lateral move, and what education or training the employee needs to make that move.

"Today, supervisors are instructed to set up a meeting with each employee to go over the data sheet, screen by screen, in a conference room with the door shut," says Walliker. "This includes discussions about 'Where do I want to go next, and what do I have to do to improve my skill set to position myself for those next positions?' "

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In a private section of the data sheet that's not accessible to the employee, supervisors identify "where they think the employee has the best opportunities and what kind of potential the employee has in different functional areas, and rate them on whether they are 'high potential,' 'promotable,' or 'happy where they are and do not want anyone to mess with them,' " says Walliker.

Decisions about enrollment in training and education programs arise out of these discussions.

"An employee might say, I want to be a division manager and the supervisor might ask, 'How much finance or budgeting and strategic planning experience have you had?' " says Walliker. "From that discussion, they might decide that the employee needs an M.B.A. or a post-graduate degree."

Once the need for any post-graduate work is identified, the next step is to file a post-grad study request.

"The supervisor has to initial off on the request and on the business case for why the company is going to pay this money to send this employee to this program," says Walliker, who manages the program.

Once the employee is enrolled as a student, Caterpillar managers are expected to look for ways in which newly acquired knowledge can be applied on the job -- as well as to be on the lookout for opportunities to make use of job shadowing, job rotation and other forms of experiential learning that could connect to the classroom instruction.

Because of the way these enrollment decisions are embedded in ongoing Caterpillar processes, says Walliker, "when someone is enrolled in a post-graduate project in a certain area, their supervisor will be more than happy to assign something very relevant to that education and that person. We are big on developmental assignments, and it is just one more tool when you have someone whom you are trying to position for promotion, to give them an opportunity to shine, to use their skills, or demonstrate that they have those skills."

For example, the employee might be given an opportunity to participate in a special project to develop a new product or put together a business plan on behalf of a new strategy, he says.

Linking to Success 

At Verizon Wireless, employee enrollment in academic programs also is embedded into the company's extensive set of career- and leadership-development initiatives -- which begin as soon as new hires arrive.

"We call the new-hire program 'Launch Your Success Story,' and we tell our new employees, 'Your career is up to you,' " says Martin. "From the day they're hired, we encourage people to think about their careers -- and we've been developing internal leadership-development programs throughout the enterprise to support them."

Among the tools that Verizon Wireless provides is a "Plan Your Career" course, which includes an online component designed to let employees assess their current skills and abilities so they can benchmark themselves against job openings throughout the company.

The intent is to enable employees to identify capabilities they are lacking, and provide them with concrete information about what they can do to develop those skills, whether it's more technical training, more experience in a certain area or enrollment in an academic program.

To provide employees with help and guidance while they're enrolled in an academic program, says Martin, "we teach and train our supervisors on how to coach employees . . . to help them prepare for their next career-development move."

And, when employees earn degrees through LearningLINK, "we acknowledge their achievement," says Martin. "We put photos of them in their caps and gowns on our Web site and in color brochures. We also post and promote their success stories on our intranet, and each graduate receives a book from the senior vice president of HR, along with a personalized card."

Follow-up data gathered by Verizon Wireless documents the success of these efforts. In terms of career development, employees who earned degrees through LearningLINK were almost 1.5 times as likely as the general workforce to have had a promotion or lateral move.

Also impressive is the data showing the attrition rate of LearningLINK participants is less than half of the company's general workforce and that 96 percent of the participants say they intend to stay with the company for at least two years after completing their degrees.

"These findings clearly indicate the value and the benefits of the program," says Martin. "It has given us the ability to take our show on the road and talk to the leaders in our other locations, and to expand our programs."

And, as the battle to develop and retain top talent gets even more competitive, look for programs such as those at Verizon Wireless and Caterpillar to get increasing attention at other organizations as well.

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