Imagine a scenario in which an employee wants to upgrade her skill set, so she enrolls in an executive MBA program. Her employer sees the value in bolstering her leadership abilities, reimburses her for courses taken, and provides formal and informal support as she juggles the job and her academic program.
After earning her degree, she receives a promotion, uses the tools she learned to solve a nagging distribution problem in the business, streamlines her department, motivates increased productivity and creativity from the employees she supervises, and encourages several of her talented classmates to apply for jobs within the company.
She stays with the company several more years, feeling valued and appreciating the investment that her organization made in her.
So was it worth that investment on the company’s part? The obvious answer here is yes. But too many companies worry that if they support employees — both financially and otherwise — as they earn MBAs, they’ll be paying out dollars and won’t get a return, especially if new graduates take that degree to a competitor. But there are strategies to make it more likely such a venture will pay off. Further, the employees who want to work toward new educational challenges are exactly the employees that organizations should want on their payrolls and in their boardrooms.
Yet, many businesses do not sponsor employees in MBA programs. According to the Executive MBA Council, which polled more than 300 MBA programs designed for working professionals last year, fewer enrolled students are receiving financial support from their employers than in past years.
The council found though the average program cost of $73,401 is up from the previous year, more executive MBA students are paying their own way than ever before. Some 41 percent of students funded the entire cost of their program, a number increased from 34 percent in 2009. Only 24 percent of students received full financial sponsorship in 2013.
Employers are missing opportunities to build company loyalty, grow internal experts and retain top talent by failing to institutionalize methods to create their own high-level employees through MBA programs, according to B. Lynn Ware, president and CEO at Integral Talent Systems Inc., a talent management consulting firm.
“There’s a concern, which is misguided, that if the company pays for a degree, it means that person is going to take it and move elsewhere,” Ware said. “An organization has to support career and skill development and career growth, even over pay, to retain these workers.”
Companies aren’t more eager to invest in their employees’ growth because some fear once an employee earns that MBA, he or she will use it to negotiate a new position elsewhere. Others may worry about the cost of funding such programs in today’s economy. But those fears are short-sighted, said Craig Gill, chief learning officer at Deloitte Consulting LLP.
“For us, the value proposition of investing in our people is a direct link to our ability to be of great value to our clients,” he said. “We see great worth in supporting external ongoing education and degrees.”
Deloitte has a host of learning options, including a corporate university and programs to help employees hone their skills or seek higher education. The company will pay for employees to attend executive MBA programs, but it also has gotten creative. Deloitte is expanding a program created in the 1990s called the Graduate School Assistance Program. Promising employees apply, and those who qualify and are accepted into an MBA program leave the firm and stop working to focus full time on their studies. Deloitte pays the full cost of their education and promises a higher-level job, geared toward the new education earned, when the employee returns. Approximately 200 employees per year participate.
But these types of benefits should not be offered without thoughtful strategy behind them. Some organizations require employees to stay with the company for a set period of time before reimbursement. Others will not reimburse unless employees earn a high grade. But companies also need to recognize that employees who commit the time and energy to earn an MBA will not want to stay with a company that doesn’t reward that new knowledge and skill set. Promotions, new challenges and new projects are all ways to show employees the organization will put their MBA to good use.
At Deloitte the employee pays the cost of his or her MBA program upfront. The company then reimburses the cost — 50 percent after the first year the employee returns to the company and 50 percent the second year.
It’s a retention strategy that seems to be working; approximately 75 percent of employees who participate in the Graduate School Assistance Program return to Deloitte. And two and three years out of the program, the company finds it has higher retention rates with those who participated than those who did not. Many do not leave post-graduation for other employers, even when they have the opportunity to do so.
“What is retentive is that people feel valued and valuable,” Gill said. “Part of the quid pro quo of hiring the world’s best talent is that we know other people think they’re talented too.”
Leading From Inside
Besides cultivating a company’s leaders and investing in talent, there are other reasons employers should think carefully about fostering employees’ interest in seeking an MBA.
ManTech International Corp., a firm that provides technology and services, puts a high priority on worker education and development to provide the services its clients want, said Karen Gardner, executive director of training and organizational development. The company creates its own specialty courses and offers them through ManTech University.
ManTech also provides tuition reimbursement for external educational programs like executive MBAs, Gardner said. “Our typical employee comes to us with an undergraduate or graduate degree, but then finds themselves working in an area outside the scope of their original degree. These employees may go back and get a second master’s degree to pair with the one they already have.
For example, one engineer, who had been doing systems integration for customers, was promoted to a management position where budgeting and project management is a critical skill. “That’s where an MBA comes in,” Gardner said.
But ManTech gets an added bonus from encouraging degrees like MBAs among its employees: Having employees with advanced degrees gives the company an edge when bidding for work. “We’re more likely to win the contract and then win it back,” Gardner said.
Employees pay upfront for their courses, and when an employee receives his or her grades, ManTech reimburses the cost as long as grades were a B or higher.
A Supportive Atmosphere
Employees who go back to school balance work and studies, not to mention family life and other priorities. To provide additional support, ManTech negotiated lower tuition costs with many universities. Further, this same tuition discount is extended to employees’ spouses and children to provide additional incentives for loyalty and high-quality work. ManTech also created an informal, in-house social networking community for those seeking higher education where employees can give each other emotional and technical support.
Deloitte also has found more ways to support employees seeking MBAs. As part of its graduate school assistance program, employees in full-time MBA programs are encouraged to participate in summer internship programs at other companies to add to their business acumen. “When the employee has finished the degree, they’re more ready to come back and take on new challenges here,” Gill said.
By rubbing elbows with other accomplished MBA students, Deloitte employees build relationships with classmates and refer them to the company’s summer internship program. “While they’re in business school, they’re building friendships and working with folks who were never part of Deloitte, but who we may want to attract into the company in the future,” Gill said.
Deloitte also benefits from any international experience employees get while pursuing an MBA. Many programs require project work that takes place abroad or that links with counterparts in other countries. “As we increasingly globalize and our clients are all around the world, that skill set is important to us,” Gill said.
To be successful, organizations must stack their teams with the best players possible. Often, this means acquiring additional training and skills. Approach this need for higher education as an investment and map out the benefits — both to the employee and to the company. Otherwise, companies could miss opportunities to develop, nurture and retain top performers.
Andrea Backman is dean of the Jack Welch Management Institute, which prepares executive MBA and executive certificate program graduates. She can be reached at editor@CLOmedia.com.