Employer-paid tuition programs generally rise and fall with the economy. When there is a strong economy and low unemployment, employers do more to entice workers to choose them. When the economy weakens, employers don’t need to do as much to get or keep workers because they have fewer alternative options.
Strayer University CEO Karl McDonnell thinks he knows the key to breaking that cycle.
Employers in the United States spend hundreds of billions of dollars every year on workforce development. McDonnell says the amount rivals what the United States spends on all post-secondary education in a given year.
At Chrysler, a pioneering partner in the Strayer@Work program, retention at automotive dealerships is often very low. Some positions have an 80% turnover rate. But Strayer believes its program can cut the turnover rate in half, based on work they’ve done with Verizon.
“And then what you’ve got is a self-funding virtuous cycle,” McDonnell said. “The savings in turnover covers what it takes to send an entire workforce to get their degree for free.”
When retention rates are higher, productivity increases, and profits increase. But that’s not the entire benefit of workforce development partnerships with colleges and universities. Strayer rebuilt a college degree for Chrysler. Course developers tailored the subject matter, courses, and curricula to Chrysler’s needs, swapping out case studies from existing classes about other companies and replacing them with case studies about Chrysler.
McDonnell also thinks the programs help employees develop a growth mindset and foster curiosity, tenacity, and grit to take back to the workplace. And that piece may be what saves the funding for Strayer’s partnerships even when the economy goes bust.
“We’ve made the bet that our program is not designed just to attract and retain talent but it’s also designed to boost Chrysler’s performance,” McDonnell said. “We believe that could be the difference.”
Partnerships between colleges and employers have been around for a long time. According to Robert Kelchen, an assistant professor of higher education at Seton Hall University, they have historically been designed in two ways — local programs, where employees get trained on site, and broader programs, where employers pay their employees to go to specific colleges.
Online education has made it a lot easier for companies like Starbucks and Chrysler to partner with a single university and open access to employees all over the country. Starbucks offers its employees free college through ASU Online, and Chrysler does so with Strayer, which has 80 campuses all over the country and an online option that fills the gaps. In the past, national companies would have had to develop partnerships with different schools near all their sites.
Many colleges and universities have taken advantage of this concept. Champlain College in Burlington, VT, has forged more than 60 partnerships in the past two years of its truEd Alliances program. It serves far more students than its small physical campus could ever hold.
Institutions considering new programs, though, should think of the additional cost of serving new students. If capacity is a problem, Kelchen says the partnership may not be worthwhile, even if online education seems infinitely scalable.
“We don’t have a lot of data showing that online education is less expensive than in-person to provide,” Kelchen said. “This is a particular concern for public institutions that don’t often get as much money as private or for-profit.”
For tips about developing corporate partnerships, check out our recent feature highlighting efforts at three institutions.
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