How the sector-based training model could be a solution for you

Traditionally, individual companies have driven the training that higher education institutions create to solve skill gap shortages, with those companies working separately to develop workforce skills and a pipeline of qualified candidates.
Sector-based training takes a different approach.

Industry players work together to create common job descriptions, skill set requirements and applicant pools. By sitting around the same table, companies within that industry cluster can achieve economies of scale and increase training efficiency.

“We have a core group of unemployed and underemployed in Cleveland who can take advantage of some of these jobs, if given the proper training. They can be the workforce that you are seeking,” says William H. Gary Sr., executive vice president of Cuyahoga Community College’s (Tri-C) Workforce, Community and Economic Development Division. “We want to begin now, to ensure the future economic vitality of this region, and that these individuals and others seeking to advance their careers can benefit.”

Smart Business spoke with Gary about sector-based training and how he hopes to see it utilized in Northeast Ohio.

What is an example of this kind of training?

With the forthcoming Republican National Convention and downtown development, Cleveland’s hospitality industry expects exponential growth — at the same time the industry is shifting to be more focused on customer service and technology. In response, Tri-C invited hotel general managers to a focus group to discuss their challenges and talent shortages.

The general managers were receptive to a sector approach for addressing both short- and long-term needs. Short-term training solutions, such as boot camps, will fill some of their immediate needs, in order to meet the expected demand. Right now, we’re developing camps designed to accelerate customer service training, which is a key aspect of meeting their employment needs.

Leaders in the restaurant industry also heard about the focus group meeting and asked if they could be included as well.

What other industries can benefit from this approach in Northeast Ohio?

The largest potential is for industries that drive the region’s economy — those that face talent shortages while projecting a lot of future growth. It also works better for industries with specialized skill set requirements and clearly-defined career pathways. Here, that could include manufacturing, information technology, health care, construction and public safety.

You mentioned this is being adopted throughout the country, what do you mean?

There are examples nationwide of sectorial approaches to addressing workforce development need in critical skill areas. In the Washington, D.C., and Northern Virginia areas, in order to address a critical shortage of skilled and credentialed nurses, the community college, in collaboration with area hospitals and health care organizations, collaborated to create a Healthcare Alliance Consortium. By pooling financial resources, engaging K-12 schools and working with an independent consultant, the consortium created a sustainable workforce development system and model for addressing the workforce needs of an entire industry sector.

How do you get organizations that compete with each other around the same table?

Competitiveness is a key obstacle, but not insurmountable, especially in Northeast Ohio. It’s important to remember, however, that a sectorial approach doesn’t have to be in lieu of individual organization recruitment strategies. It can be institutionalized in parallel with existing workforce development strategies. The value proposition is increased efficiencies, reduced training and recruitment costs, standardization, access to greater pools of resources, and the development of a sustainable workforce systems approach to addressing workforce challenges and skills shortages.

Not only is the cost lowered, because you’re training larger pools of candidates that benefit the entire industry, but it also develops common standards and skill set requirements and credentialing across the industry. Then, no matter where your potential employee receives training or works, hopefully he or she will have a set of standard credentials that are portable and acceptable throughout the state.

Insights Education is brought to you by Cuyahoga Community College

How to prepare your staff with the right skills to become supervisors

The most successful companies employ a blend of internal development and strategic external hiring. But when you promote from within, you must be sure those front-line employees are ready to take on their new roles.

It’s common for rock star individual contributors who exceed in their current job to be promoted as a result of successful performance. But when they move up the ranks to manager, they often haven’t had the opportunity to develop the skills and behaviors needed to be successful — and as a result the transition from peer to supervisor can be very difficult.

Employees should be given opportunities — preferably in advance — to learn how to coach, manage performance and hold others accountable, says Jody M. Wheaton, M.S., SPHR, executive director of Client Solutions and Programs at Corporate College, a division of Cuyahoga Community College.

“Research tells us that the No. 1 reason supervisors fail is lack of interpersonal skills,” Wheaton says. “And when you break down lack of interpersonal skills, that’s soft side leadership behaviors like how do we handle conflict, how do we communicate, how do we interact with others.”

Smart Business spoke with Wheaton about formal learning and supervisory development programs that can provide your staff with the foundational skills supervisors need.

What are the advantages of promoting from within?

Not only does it benefit employees, it also helps your customers and company.

Establishing and developing internal staff helps attract, retain and engage top talent, because really bright people want to work for a company where they have clear growth opportunities through development and promotions. In addition, studies have found that younger generations today expect to advance more rapidly.

A culture of development and advancement encourages employees to not only work hard, but also be engaged because they are working toward something.

At the same time, by hiring external employees who bring something new to the table, you add new thoughts, outside experiences and diversity. And you motivate current team members to work hard and earn the advancements in the organization.

How should organizations set up a development program?

Begin with defining what the organization needs leaders to do in order to achieve business goals, and then develop a clearly defined talent strategy. Assess your talent and develop programming focused on high potential and high performing talent. Ensure your managers and leadership team are equipped to coach employees and have frequent conversations about career advancement, including a developmental action plan to address goals.

When high potential employees have frequent informal (mentoring, coaching, etc.) and formal (supervisory training) opportunities to learn the ropes, they’re better prepared when the right opportunity arises. When they aren’t fully prepared, the experience can be frustrating for both the team and new supervisor.

Also, remember that learning and development take a shared approach. The employees who want to develop their skills should be held accountable, while the company provides support.

But it doesn’t stop there — on-boarding a new supervisor is something many companies overlook. Give a new manager a mentor or network of professionals for guidance. It’s a continuous process of coaching and providing support to help him or her learn and grow in that new role.

What do you tell employers who feel they don’t have the time and resources for this?

Successful companies put their talent first, and make the investment in ongoing development because they do see the returns. Proper allocation of training budgets and resources requires understanding the needs of the business. Resources need to focus on those initiatives that are most critical and can maximize the training investment. Training providers that are agile and can customize delivery methods and content, tailored to your audience, help focus the efforts and add depth of expertise to your internal training or HR bench.

Insights Education is brought to you by Cuyahoga Community College

How to ensure your company has qualified talent over the long term

When you ask business owners what keeps them up at night, that list likely includes how to ensure their company continues to have qualified talent for the next five, 10 and 20 years.

This is a global issue that must be addressed because talent is both the most costly and most valuable need across all industry sectors. And even with the growth of automation, IT and technology, right now in the U.S. about one-third of companies have a talent need.

“It’s always one of the first things we hear from companies when they are looking to move into an area or expand their operations — they want to know about the workforce,” says Alicia Booker, vice president of operations, Workforce, Community and Economic Development, Cuyahoga Community College.

“There are no easy answers, and that’s why this is an issue,” she says. “We do need more investment and company engagement, but the reality is that this isn’t just a company problem. We all have to invest in, commit to and work together to find a solution.”

Smart Business spoke with Booker about developing a long-term organization strategy that will help keep your talent pipeline topped off.

What are you seeing with the workforce environment today?

There’s been some growth, even though it’s not at prerecession levels. Jobs are returning from overseas, but the job creation doesn’t mimic what was previously here. And wages haven’t come up to where they were. Companies are constantly trying to balance their need to grow and take on more projects against managing costs.

Right now is one of those times where we have three or four generations in the workforce. Over the next five years, about 30 percent of Northeast Ohio’s workforce is projected to decline as many who kept working during the recession retire.

The 10th annual Talent Shortage Survey, by ManpowerGroup, looked at the top reasons employers find it difficult to fill jobs: lack of available applicants (33 percent), lack of experience (19 percent) and a lack of technical competencies (17 percent). Only 10 percent of employers said the lack was because individuals wanted more money.

How can organizations better use strategy to address their talent pipeline?

Use all opportunities to combine training with work. Work with area community colleges and higher education institutions to develop curriculum, internships and apprenticeships. If this is too much to take on yourself, take an industry sector approach. Not only does this help you get candidates with the right core competencies, it gives your company more access to people to help make sure you have the right fit. The on-boarding process is smoother, which helps you avoid getting qualified people who just end up across town.

Don’t wait until you have need. It’s probably too late at that point. It takes time to find the right people or train them up, so you need to be intentional and strategic. Analyze your resources to see what you don’t have, and then seek help where you need it. Also, look within your organization for opportunities to upscale your existing workforce. With developmental training, you’ll have talent replacement so you can promote from within and then backfill entry-level employees.

Look for alternative ways to source people, so you can expand your recruiting tool chest. Everyone has gotten so database driven, where candidates apply online and are sorted in or out through analytics. If you’re not producing quality or quantity candidates, either look at alternative pathways to get more people in or do a better job of on-boarding and screening.

Once people come on board, you can’t leave them alone. On-boarding programs at all levels should accumulate them to your company and its culture. You also need someone in HR who keeps talent as a focus.

There’s been an increase of employees looking to other countries to find the skilled people they need, but that doesn’t mean you can’t get them here in Northeast Ohio by taking a long-term approach that develops the right core competencies. However, just like market changes, you have to stick with it through the ups and downs. Don’t give up on talent development, even if your business needs to change a bit.

Insights Education is brought to you by Cuyahoga Community College

How to get your workforce ready for the newest wave of technology

If you want to see where manufacturing technology in Northeast Ohio is heading, look to the automotive and aerospace industries. For example, mass customization has evolved so manufacturers can make SUVs a different color in the middle of a production run or outfit vehicles with customer options on cue.

These companies and their suppliers, who are increasingly near-sourced, are focused on automation and programmable logic controllers or PLCs, robotics, micro-electro-mechanical systems or MEMS, Nano technology, 3-D printing and Industry 4.0. Started by the Germans, Industry 4.0, is said by some to be the next evolution of manufacturing.

“It’s where you take everything along the production and assembly lines and connect it together through cyber or computer technology so that you can use all that power and information to chain together decisions in the most efficient manner,” says Dave Bredenbeck, program manager of precision machining at Cuyahoga Community College. “It’s a different way of looking at it. A skilled tradesman would be monitoring the decisions these machines come up with, instead of fully making the decision from the beginning.”

Smart Business spoke with Bredenbeck and Lam Wong, associate dean of engineering at Cuyahoga Community College, about how these technologies allow manufacturers to work smarter, and why you need to develop the skills to support this now.

How do you think these technologies will influence the region?

Industries like automotive have embraced connectivity, and other sectors are starting to see the advantages. Cisco systems can be described as the backbone of IT; Cisco has embraced this next level of manufacturing, so the infrastructure is already responding.

This is also coming from the top down. The big players have money to build up these systems and develop them — and over time that trickles down to their vendors, who need to embrace it to stay relevant. Just like with CNC machines and robots, eventually the technology standardizes and becomes cheaper for smaller companies.

Manufacturers — and other companies indirectly affected by the industry — must be ready to plug into this connectivity and already be re-thinking their work processes and training. Workers are still needed, just not in the same way.

How should employers stay on top of these trends?

Monitor the industry leaders, keep in touch with colleges and universities, and do a self-assessment of where your company is at with the Internet of Things.

Manufacturers often are too focused down on the immediate. You need to map out what your needs will be, in order to plan for the big picture. For example, employers ask higher education institutions for graduates to fulfill their short-term needs, but they don’t have time to serve on advisory committees that develop new curriculum and training programs.

Even if you aren’t ready to commit to these technologies, start thinking about getting your people ready, by hiring new talent, cross-training and up-scaling your current workforce or filling in other gaps.

What kind of training do you recommend?

Traditionally manufacturers have hired engineers, but in the future it’s going to be critical to have IT expertise. Health care has already gone through this with the development of health information technology and electronic records. Clinicians had to learn about IT, and IT experts had to develop clinical backgrounds.

For manufacturing, higher education is beginning to train students to understand software, IT and automation, as well as developing mechanical and problem-solving skills. Companies are going to need people who can connect the dots between machines and repair complex systems and sensors. New graduates must learn so much more from IT and wireless communication to data mining.

Train your people now for the next job that they’re going to have. Survey your employees to determine who would like to learn new skills, while also vetting new hires for skills in these technologies. Don’t ignore this because it’s difficult to juggle your current workflow with training for the future — it’s going to happen whether you’re ready or not.

Insights Education is brought to you by Cuyahoga Community College

How the new OTC derivative regulations could impact the market

Scott Fung, DBA, Associate professor of finance, College of Business and Economics, California State University, East Bay

Busy executives probably haven’t read Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, so they may be surprised by the broad impact of the regulatory changes to over-the-counter (OTC) derivatives trading. In addition to fundamentally changing the way the market operates, the new laws could impact your bank’s appetite for risk, your ability to borrow funds and even your company’s hedging strategy.

OTC derivatives are traded and negotiated  without going through an exchange or other intermediaries to hedge or speculate on risk. They were largely unregulated until this act.

“Any time there’s a fundamental change in the way a market operates executives need to understand the big picture,” says Scott Fung, DBA, associate professor of finance for the College of Business and Economics at California State University, East Bay. “At a minimum, the changes require increased knowledge of the interdependent relationships between the various parties, better decision making and a review of your risk management strategies.”

Smart Business spoke with Fung about the potential impact of the new derivative regulations and how executives should prepare.

Why should executives pay attention to the new derivative regulations and their market impact?

Following the financial crisis, policymakers decided that a lack of transparency and regulations in the OTC derivative market caused system-wide instability, so they created a regulated environment and increased the oversights and reporting requirements.With any legislation, there are reverberations throughout the business community and the possibility of unintended consequences, especially when the derivatives market provides the following key economic functions:

  • Price discovery. Derivatives trading provides key information on the value of the underlying assets and serves as a predictor of future prices.
  • Operational advantages. The derivatives market offers lower transaction costs and additional market liquidity.
  • Informational and allocation efficiency. Derivatives trading enhances available market information and resource allocation.
  • Business advantages. Derivatives allow companies to engage in risk management by facilitating hedging strategies and by reconfiguring risk and return trade-offs. The market allows unwilling risk holders to transfer risks for a fixed price, which frees up cash for other investments and business expansion.

What are the legislation’s key provisions and who will be impacted?

The new legislation establishes the regulatory framework for the governance of the OTC derivatives markets and vests oversight authority in the Commodity Futures Trading Commission and the Securities and Exchange Commission. The intent is to provide greater oversight and transparency for derivative transactions such as credit default swaps, commodities and equity swaps. Although the regulations primarily apply to swap dealers and major swap participants, they also impact commercial end-users, financial institutions and corporations. Key provisions include:

  • Changes in execution processes and price discovery of OTC derivatives.
  • Changes in central counterparty clearing and clearing requirements, trading activities, capital requirements and margining of OTC derivatives.
  • Changes in the reporting of transactions and record-keeping requirements.

How are these provisions likely to fundamentally alter the OTC derivatives market?

The structural changes are supposed to improve the efficiency, stability, innovation and sustainability of derivatives markets by reducing the possibility of default, system-wide risk and financial crisis. In turn, this will improve the stability and functionality of the markets and financial institutions, ultimately impacting U.S. and global businesses. But it is unclear how these regulations will impact transaction costs, margin and collateral requirements. It’s also unknown whether they will actually curtail risk or tighten the credit market by limiting financial institutions’ hedging options along with their ability to customize derivative contracts. It will be interesting to see if the regulations produce changed trading activities and characteristics, so stay tuned.

How will the regulations impact U.S. businesses?

Any regulation that impacts the market or financial institutions impacts businesses because there’s an interdependent relationship between the various parties. Ultimately, the performance of financial markets and financial institutions affect corporate decision-making, financing opportunities, risk management and so forth. Possible benefits include enhanced functionality and stability of financial institutions, better performance of derivatives contracts, and the opportunity for end-users and institutions to better manage risk. Plus, the increased transparency and availability of information along with additional oversight could increase market participation, thereby boosting market liquidity. Possible downsides of the legislation include cost increases resulting from system complexities including transaction costs, collateral and margin requirements, and diminished customization capabilities.

How should executives prepare for the new regulations and the subsequent market changes?

Executives need to understand the interdependent relationship between financial markets, financial institutions, their suppliers and clients to see how their capital supply and financial resources could be affected. They should consider how they’re managing risk, as they may benefit from the enhanced usefulness and performance of derivative contracts. They also should look out for emerging opportunities and new financing products that may spring up. Executives need to understand the regulations’s intricacies to uncover new opportunities for risk management, financial innovation and ultimately value creation.

Scott Fung, DBA, is an associate professor of finance for the Department of Accounting and Finance, which is part of the College of Business and Economics at California State University, East Bay. Reach him at (510) 885-4863 or [email protected]

Insights Executive Education is brought to you by California State University, East Bay

Helping hands

President Obama called on all Americans to further their education by pursuing at least one year of higher education or advanced training as part of a broader initiative to improve the country’s ability to compete in the global economy. A more educated work force certainly is in the best interests of both the individual and his or her employer.

Jim Hutcherson, the vice president of Strategic & Academic Alliances for University of Phoenix, creates partnerships that help achieve that goal.

“We’re seeing a lot of companies making a strong investment in education,” Hutcherson says. “They recognize the added leverage they can achieve by expanding what they’ve historically viewed as ‘training’ to a broader initiative tied to advanced education.”

Smart Business spoke with Hutcherson about how universities can help companies improve the quality of their work forces.

How can the corporate world support the education and training of its employees?

Many companies today are taking a hard look at the value of the human capital they have within the organization and how they can make investments into their work forces.

Specifically, companies are seeking ways to spend their dollars on educational programs that provide the skills their employees need. As an example, one large manufacturer we are working with recently evaluated its education spending. They realized they were spending a lot of money for education that didn’t really fit what their corporation needed. So they made a major investment to retool their program and then backed that up by making a major investment in tuition reimbursement.

Why should companies partner with higher education institutions?

In today’s environment, higher education typically has a set of programs that are fairly broad and can be applied to a wide variety of situations. What many companies are recognizing is that by partnering with a higher education institution, they can create a variety of ways to build an education experience that applies to and benefits employees of their own particular company.

For instance, companies are working with universities to improve the way their existing programs are focused, enhancing them to support learning outcomes the company can use. The university will collaborate with companies and identify specific business problems or specific learning objectives that they really want those students to have. Then the university will incorporate those into the course of study along with the core competencies that are required for that course.

The enhancements can be anything from additional types of readings that are focused on a particular industry to a specific short-term or long-term business problem the company is facing.

The game plan

For many people, going back to school can be intimidating. Quite often, when a working professional starts college, it’s the first time in years he or she has set foot in a classroom. Like everything else in today’s fast-paced, highly technological world, higher education has changed significantly during the past several years.

Getting back into life on campus and in the classroom can be a daunting task, which is why some institutions have developed support programs that are designed to smooth the transition for “non-traditional” students. At University of Phoenix, for instance, they go so far as to call them “coaching” programs to designate an even deeper level of support.

“While today’s professionals may have some management or business experience, their academic skills may be a little rusty,” says Rich Spinner, a campus college chair, full-time faculty member and student coach at University of Phoenix-Cleveland. “This is where student coaches come in.”

Smart Business spoke with Spinner about how a coaching program can help students navigate the back-to-school process.

What makes an effective coach?

Number one, coaches need to be very good at assessing student skills. They need to be able to ask probing questions to find out where a student may need help, because sometimes the problems students think they have are not the true problems. So coaches need to be good listeners, of course, and be somewhat insightful. Coaches also need a lot of patience, because some of these academic issues are pretty tough to comprehend and absorb. Last, coaches have to be encouraging. It can be tough to take on continuing education when you haven’t taken a class in years. Coaches need to reassure students that they can do it, and remind them that they don’t have to do it alone.

What type of student would benefit from a coaching program?

Take, for example, a 40- to 50-year-old person who has little to no computer experience. Now, put that person into a continuing education program where almost all of the course work is done online. Needless to say, that person is going to need help or the class will quickly pass him or her by.

Some people may assume that anyone under the age of 60 has some familiarity with computers, but in some cases, older professionals may have worked in a role in which they didn’t use computers. Or, they may have other areas where they need help, such as remembering long-forgotten study skills. Perhaps a person is a single parent or someone else who just never found the time to become computer savvy. The first aspect of a coaching program is an assessment that determines exactly how much help a student will need and in what areas.

Linking up online

Social media is more than just another buzzword. It’s a tool that can enrich your company culture, build your company’s online presence and help you reach new customers.

“Social media is transforming how companies run their marketing and communications initiatives,” says Mark Fiala, adjunct professor at University of Phoenix’s Cleveland Campus. “While it’s tempting for some to think it’s a passing fad, these tools have become so widespread so quickly that they’re not going to just fade away. Savvy companies that get into it right away will have a competitive advantage. If you can get out there early or even first, you’re going to be in a better position than someone who is trying to jump in later.”

Fiala incorporates new social media techniques into his curriculum, focusing on teaching students how to use social media in a way that is relevant for business.

Smart Business learned more from Fiala about how you can use social media to reach new customers and prospects that previously didn’t even know your company existed.

How can companies use social media to strengthen their cultures and stay connected to their employees?

For their internal cultures, they can use sites like Facebook and LinkedIn to build a community among their own employees. It’s also very valuable for building your candidate pool — people you’d like to attract back to the business And since hiring quality employees is so critical for any company’s long-term success, every advantage you can have in attracting high-quality employees is important.

But it is also another communications tool for your current employees. You can never over-communicate to your employees. Facebook and LinkedIn are tools your employees are using. Communication is all about being understood and reaching the people with whom you want to connect. If they are on Facebook and LinkedIn, you need to be out there as well if you’re going to connect with them, along with the other things you do through e-mail and newsletters.

Ethical decisions

Business ethics is often dismissed as a topic that requires passing reference in meetings, little more than just being sure to include a routine paragraph in your employee handbook.

However, Jim Triplett, a faculty member at University of Phoenix’s Cleveland Campus who teaches management coursework on building a culture of business ethics, says that making it a core value of your business can actually provide your company with a method for gaining an advantage over your competitors.

When everyday decisions need to be made outside the borders of the established procedure, that’s when a commitment to business ethics starts paying dividends.

“When the environment changes and gets beyond the scope of your regulations, you’re left in a Wild West environment, hoping your employees will make the right decisions,” says Triplett. “We’ve all seen how the wrong decision can not only be costly, but catastrophic to the organization’s very survival.”

Smart Business spoke with Triplett about how to create an environment that ensures your employees will make the choice that’s best for your business when that time comes.

Why is ethics important in business?

Evidence suggests that in the absence of an established and appropriate formal structure — rules, policies and procedures that exist within the organization or among legal/regulatory bodies that dictate how people should behave — it is ethics that ultimately determines how individuals will behave.

What will employees do when faced with dilemmas that don’t fit into previously established rules and guidelines? How do they make that choice, and will it be a choice you’re comfortable with? The external environment and competitive landscape changes much faster than our ability to create new internal rules and guidelines. So you have to rely on your culture and business ethics to ensure people will behave appropriately.

How can focusing on ethics change the way businesses make decisions?

It ensures employees behave in appropriate ways that avoid legal trouble, as well as embarrassing situations that impact the products and services your company provides. Creating that additional mindset among your employees is important.

This is particularly critical for small-business owners that tend to be spread in so many directions because of the size of their businesses. With responsibility and involvement in everything from the finances, sales, and production to making sure people are behaving consistently with the employee handbook — their attention to each task is by definition much more diminished. They have to trust their employees to do the right thing.

Lending a hand

A company’s people and its culture are the only things that cannot be replicated or duplicated by competition. If a company cannot retain its most valuable employees, it loses its competitive edge.

What keeps a work force motivated? What helps keep them sharp and able to offer the most innovative ideas and skills? Continuing education certainly is at the forefront of a highly skilled and energized work force. Companies have long recognized this through tuition reimbursement programs, one of the most popular employee benefits available today. Depending on the source, some 80-90 percent of companies today offer some type of tuition reimbursement support.

“It’s always incredibly important to the growth of any company to invest in training and education,” says Gina Cuffari, vice president and director of University of Phoenix’s Ohio Campuses. “It’s not only a key driver of employee retention, but it’s vital for maintaining a competitive advantage in the market.”

Smart Business spoke with Cuffari about how tuition reimbursement programs help retain your “A” players — and are smart financial moves, even during a slow economy.

Why should tuition reimbursement be a cornerstone of an employee benefit policy?

There are typically three key business objectives that an organization is trying to impact through their benefit programs: improve retention of staff, attract high-performing new employees into the organization and boost productivity and profitability.

Tuition reimbursement has been proven to achieve those three objectives. At times executives questioning the value of tuition reimbursement often wonder whether they’re educating an employee who will merely leave for greener pastures after earning a degree. Yet a variety of independent studies shows that exactly the opposite occurs.

How do tuition reimbursement programs benefit employers and employees?

I hear firsthand from employers who use tuition assistance that employees who are engaged in the program are more committed and more likely to be considered for an internal promotion. Continuing education helps with the development of critical thinking skills. These skills are especially important today because companies across the board are faced with figuring out how to do more with less, or how to create an innovation that will leapfrog other companies. Those are key messages in business today, so the development of critical thinking skills has an immediate return on investment for an employer.

How prevalent is the risk of employees using their new training to find another job?

That is the major myth employers believe about tuition reimbursement programs. However, there are several studies that show turnover is lower among employees who participate in tuition reimbursement programs.

An Academy of Management Journal study, aptly titled ‘You Paid for the Skills — Now Keep Them,’ showed that taking courses and receiving a bachelor’s degree reduced turnover by nearly 50 percent. Career Systems International cited professional ‘growth, learning and development’ as the No. 2 reason employees remain with their companies. The staffing services firm Spherion reported that 62 percent of surveyed employees who had received training or mentoring were likely to stay in their current positions.

The real question is ‘What is loyalty worth to you as an employer?’ It costs at least 1.5 times an employee’s salary to replace that person, even up to 200 percent if they are in a key leadership position. It could be three to six months before you’ve recruited and trained to replace that person. It’s vital to keep your key staff rather than spend unnecessary dollars recruiting and retraining to replace good people you’ve lost.

Should companies try to save money by reducing tuition assistance programs?

The key aspect to think about is that the economy moves in cycles. What we do in a down economy really helps determine which companies recover more quickly than others. Education is a key to driving the economy out of its current state. So, this is the time when education is more important than ever.

The real question for employers is: Are you keeping your best people now because the economy is preventing them from leaving, or are you keeping them because they’re loyal, invested in your organization and they see the opportunity for skill advancement? If they are only staying because they have nowhere else to go, what’s going to happen when the economy recovers?

It’s a legitimate issue facing people who have to make cuts right now, but consider what you are doing to build for tomorrow’s success by investing in your leaders today. A company is going to turn around faster with smarter people, with a better-educated work force. Whether the economy is in a down cycle or an up cycle, you’ll always beat the competition with a better-educated work force.

Are there best practices to consider when building a tuition reimbursement program?

There are no rigid requirements when designing tuition assistance programs, so employers have flexibility in determining how their programs can function. Some firms offer the same support to all; others target only certain levels within the company.

Also, the level of benefit varies. Some employers cover the entire tuition amount, while others cover a portion. Some tie the level of tuition reimbursement to a student’s performance in the classroom. There is also a tax benefit for the employer. They can provide employees up to $5,250 in education assistance tax-free every year.