Should You Be Offering Education Benefits?
Editor’s note: Figures or statistics in this guest post may only apply if you’re based in the United States. However, the core message of this article applies no matter where in the world you are.
It makes sense that employers have a stake in their workers’ health: Unhealthy employees aren’t terribly good at getting things done. It also makes sense for you to offer retirement savings plans because those tend to keep talent around longer, reducing your attrition and boosting your workforce’s morale. Undoubtedly, you pride yourself in providing your employees with the best benefits, keeping them productive and happy.
However, there is one significant benefit you probably don’t offer your workers. This benefit not only encourages your employees to stay with you for longer, but it also steadily improves their abilities and knowledge, preparing them for higher positions in the future. This benefit motivates your employees to be the best they can be – transforming your workplace into a powerhouse of positivity and potential. This benefit is education, and here’s why you should strongly consider encouraging your employees to participate.
The Benefits of Education Benefits
There are three primary reasons most employers choose not to offer employee education benefits: cost, concerns about productivity, and greater chances of attrition. Indeed, with college tuition rates rising around the country, it seems unlikely that you’ll be able to pay for employees’ educations without financial penalty. Then, while your workers are improving themselves, it seems that they will have less energy to devote to their jobs, and after they have earned their degrees, they could very well leave for better positions with your competitors.
However, companies that have instituted extensive employee benefits programs have not found those fears to be realistic. For example, Cigna discovered that for every dollar it spent on improving employees through education, it received a dollar in increased productivity and skills – and saved about $1.29 through reduced turnover.
Indeed, smartly structured education benefits programs are entirely tax-deductible, so employers need not worry about financial costs. Further, employees who take advantage of education programs – which amount to about 5 percent of the workforce at most organizations – gain vastly superior skills and knowledge, which they reinvest in their employers with renewed motivation and gratitude.
The Types of Education Benefits
It’s important to note that these benefits don’t necessarily extend to employers who give their workers total freedom in pursuing higher education. It is possible for a workforce to abuse education benefits, which is why many employers limit who can utilize the programs and for what purpose. For example, you might determine that only salaried workers who have at least three years with the company are eligible for participation, or you might decide that only notable degree programs pertinent to your business will be funded, like AACSB-accredited online MBA programs. You might also promise payment only for workers who perform well in courses, setting minimum GPA requirements or credit hours.
Perhaps the most important consideration you should have for your employee education benefits program is how you will pay. While you can craft nearly any payment or reimbursement program you can imagine, most employers choose one of two methods for their favorable tax treatment. These options are a payment/reimbursement arrangement and an education assistance program.
In an education payment or reimbursement arrangement, you allow your employees to improve their knowledge and skills while deducting those costs as business expenses. Plus, this gift can be tax-free for employees, too, if the education obtained adheres to federal regulations. The main rule is that workers’ educations must be mandatory to continue in their current position, but there are other important guidelines to follow if you want to optimize your education benefits program.
Conversely, in an education assistance program, your workers can seek any type of advanced education, regardless of whether it pertains to their current employment. However, you can only offer individual employees a maximum of $5,250 per year, which usually only covers a portion of their tuition and fees. Additionally, your employees cannot use the money to cover meals, lodging, transport, sports, hobbies, or tools kept after the program concludes – like devices and software. Still, it is an incredibly flexible, tax-free program you can take advantage of if you want to help your workers feel academically fulfilled.
Study after study proves that happy, fulfilled employees are more productive than their unenthusiastic, unengaged peers. After Google began building employee support programs, including an education benefits program, its employee satisfaction rose 37 percent and its productivity spiked more than 12 percent. It is important for your business that your workers are healthy and productive – but it is equally important that the people around you are satisfied. If nothing else, that’s why you should offer employee education benefits.
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