By BLR Founder and CEO Bob Brady

Nothing is sacred these days. Not motherhood. Not apple pie. Not even tuition reimbursement.

Reimbursing employees for education expenses might seem like the most uncontroversial subject possible, but Dave Ulrich, the well known, well respected University of Michigan management professor recently launched a broadside against these programs.

In an article in Workforce Management, Ulrich questioned the value of tuition reimbursement and challenged employers to prove its utility and to manage it for maximum benefit, as they would any other training expense.

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According to Ulrich, employers rarely come out ahead on what can be a substantial expense. Many beneficiaries of these programs get their degrees and then move on to other employers. Worse, those who don’t leave are often resentful when employers do not recognize their shiny new degrees with promotions and salary increases.

Part of Ulrich’s remedy is to manage tuition reimbursement within cost center budgets, so managers are held accountable and it “costs” someone something. In most organizations, these benefits are bundled in with other administrative costs. As a result, no one is really responsible for them. Ulrich also suggested that employees who don’t stay with the company should be required to pay back some or all of the money spent on their behalf.

IBM recently announced a new twist to these programs. The computer services giant is creating 401(k)-like accounts that employees can use for training. (This is in addition to other company-provided education.) IBM will match employee contributions at 50 cents on the dollar. Employees can use the money for any training programs of their choice and can take the money with them if they leave. To say the least, this is new and innovative, if not revolutionary.

What We Do, What We Get From It

At BLR, we’ve had a modest form of tuition reimbursement almost since our founding 30 years ago. During that time, many employees have benefited, mostly through attendance at local community colleges, and a few have earned degrees. The expense has been significant, though not huge, and it has really benefited the workers involved.

I sometimes wonder, though, what it has accomplished for us, as a company. (And we have had situations when people have been disappointed that their degrees didn’t’ get them immediate raises. Our feeling was that they are still doing the same job and the payoff for them will come in the long term.)

On the other hand, we can point to several long-term employees who have worked for years on their associate’s and bachelor’s degrees. They are loyal, dedicated staff members who have helped us move the company forward. Their learning has helped them succeed, and the fact that we’ve helped them gain that learning has presumably bought us something in terms of loyalty. While true, anecdotally, we certainly have no data to document claims either way.

Not that we haven’t had contrary advice about this.

Several years ago, one of my peers, Terry Jukes, then president of a competing company, said almost the same thing as Ulrich. “I don’t believe in tuition reimbursement,” I recall him telling me. “It can be lot of money and it goes to just a few people. We’re better off spending that money on broader-based or more goal-oriented benefits.” Other consultants have similarly suggested that we could save money by eliminating tuition reimbursement.

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In an age in which all of us feel obligated to reduce everything to its dollars-and-cents value, no benefit is sacrosanct, but—at least so far—we haven’t considered eliminating tuition reimbursement. Inertia is part of the reason, but there is also the feeling that even if the economic benefit to the company doesn’t justify the expense, the social benefit of helping employees does.

If we “donated” the money to a charity, which then gave it out to the same people as scholarships, we’d be seen as benefactors. Maybe that’s the way it should be looked at.

I would be interested in other points of view. Does your firm offer tuition reimbursement? Do you think the benefit to the employer equals the cost? And while we are on the subject, are there other time-honored benefits that ought to be reexamined?

That’s my e-pinion (and a request for yours.) Use the Share Your Comments button or e-mail me at rbrady@blr.com and let us know what you think.