15th Mar, 2017
Published by admin

Should corporates invest in employee education?


Corporates investing in the continuing education of their employees is not a new phenomenon. However, the questions loom large over its viability proposition considering the cost of education, time constraints and attrition levels. On the other hand, the interplay of low employee retention rates, high costs of hiring with the benefits of attracting and engaging employees with professional development programs sets the stage for corporates to take a greater interest in investing in the education of their employees.

Problems faced by HR teams across industries:

Today, two of the major problems faced by corporates are employee attrition and recruiting. When an employee decides to quit, the organisation not only loses the employee but also the knowledge and expertise that he or she had acquired during the tenure. Hiring new people for the job and training them accordingly is a constraint on both time and money. According to business advisor William G. Bliss, the costs attached to recruiting may be very high, and the recruitment of even an eight dollar per hour employee may add up to $3,500 in both direct and indirect costs. Thus, keeping the employee engaged and attracted to the work and workplace seems to be a more profitable business policy.


Continuing Education and its Benefits


  • Pro employee organisation

When an employer invests in the education or training of an employee it is seen as a ‘pro’ employee move and considered a benefit for the employee. The company is seen as a ‘good’ employer in the job market which translates into receipt of better quality resumes and job applications.

  •  The loyalty factor

For those employees who are already a part of the organisation and benefiting from the professional development programs or policies that allow the company to pay a portion of the education costs of its workforce, a loyalty factor is created. They are not likely to leave the organisation which is in effect helping to shape a better future for them.

  •  Better engaged employees

Employees who are busy with a well chalked out professional development programme and know they are going places have less time to be bored or disgruntled with workplace or work-related issues. The promise of a brighter future allows for positive attitudes, more interest in their work, willingness to try out new ideas, ride changes easily and more accepting of what otherwise might be termed ‘hardships’.

  •  Promoting from within

Another benefit that accrues from well-educated or trained employees is that there is a ready pool of workers from which promotions may be made, rather than hiring from outside the company to fill a post. Depending on the length of time taken by a person to complete a course, the level of achievement and how well he or she can apply the new learning in the workplace, it is easier for the company to place or promote the employee.

Research shows that the corporate houses which invest in college tuitions of its employees benefit by improving the balance sheets. An analysis of Cigna’s Return on Investment (ROI) study shows that the health insurer’s Education Reimbursement Program (ERP) was a valuable business investment from the point of view of promotions, transfer, and turnover.

The benefits accrued from these three factors translated into quantifiable cost avoidance for Cigna. From 2012 to 2014 Cigna’s ERP was responsible for a 129% ROI (return on investment) for every dollar invested. The company not only got back the dollar but also avoided spending an additional $1.29 in managing talent. From interviews and a survey of 200 employee responses, it was gathered that employees felt that ERP was responsible for better career prospects, heightened confidence levels, greater motivation, more knowledge and skills, support and recognition from the management and co-workers.


It is therefore evident that when corporates invest in the educational programs of their employees, they benefit from it in ways more than one. An effective professional development policy creates a lot of positives in the workplace namely keeping the workers engaged and happy to producing a positive work atmosphere, and improving the output of the workers. However, from a purely business perspective the most important benefit is seen to be a rise in profits of the organization from more effective human resource management.

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