UMB Bank, with assets greater than $7 billion, is a strong competitor in the markets it serves. Ask anyone in the company's human resources or organizational development areas, though, and they'll tell you their greatest assets are their people. Recruiting, training, and developing people allow the company to stay competitive, and those things require a commitment of both time and money from the company. Part of that commitment is helping employees obtain their college degree through the company's tuition assistance program.

Gary Estes, UMB's organizational development officer, says the company realized in recent years that the tuition aid program was not performing its job as well as it could. Costs increased dramatically, and employees using the program were frequently training for industries outside of banking. It was time to make some changes. Aligning the program with corporate goals became a mantra, and the company called experts from Educational Advisory Services, Inc. (EASI) in to help.

"We revised and relaunched the program in July of 2004," says Estes, "to make it more strategic." And strategic is exactly how Faith Ivery, president of EASI (www.e-a-s.com), describes an effective tuition aid program. "The whole concept, the reason for having tuition aid," she says, "is to keep an educated workforce. It is about succession planning, talent development, and employee retention. Unfortunately, many companies leave the policy design and strategic use of tuition aid in the hands of administrators, rather than development experts."

Tuition aid programs, says Ivery, are too often ignored. "We find that most businesses pay absolutely no attention to their program. They put the program into the hands of an administrator, who simply pays the bills but has no decision-making authority.

"That's why it often becomes what I call 'the black hole' in benefits planning. But it really is important--more important even than the 401(k) or healthcare program--not to the employee, of course, but to the company.

"When you're talking about human capital, employee performance, advancing employees, supporting diversity, and retaining employees, tuition aid is a support for all of that, but you have to use it correctly."

Begin with a Good Design

Good tuition aid programs start with good design. In UMB's case, the old program allowed employees to attend any college or university, in any program. They were reimbursed 100 percent of the cost if they received an 'A' in the class, 80 percent for a 'B,' and 70 percent for a 'C.' The new program is almost like a managed healthcare plan, says Estes. "We have a specific list of colleges and universities that we want our associates to go through, like a preferred provider list. No matter the grades, we reimburse at a higher rate for associates attending one of our preferred provider schools."

UMB built the first preferred provider list by requesting suggestions from department leaders in the company. "We went to our regional presidents and asked for their recommendations," Estes says.

"These were often based on partnerships the business leaders had set up in their communities. Then we cross checked the list against statistics from the schools." Employees and business leaders make suggestions throughout the year, and Estes reviews the list of preferred provider schools annually, adding schools that make sense for the company's goals. This approach allows some flexibility, although Estes suggests an even more flexible policy. "Reviewing new schools as they are suggested may make more sense," he says.

You'll want to include a clause in your policy that allows you to make changes, and to limit your exposure, says Ivery. "We met with an executive of a company whose policy allowed reimbursement for graduate programs. That's fine, but then somebody wanted to go to law school. That's an $80,000 program, and if they don't pay for it, the person will have a good lawsuit. You need to make sure your policy limits your risk."

More than Reimbursement

Once the design is in place, Ivery says companies can use the program much more effectively than by simply reimbursing student employees. In fact, really using the education for which you are paying is the best way to maximize your investment.

"Companies need to share data from the program throughout their management. For example, if you have a manager in California who is in finance, and he has a new project but not enough staff, he should be able to go into a database and see who in the company is in school as an accounting major. Maybe there's somebody in Indiana who is at the junior level in accounting, and the records show that she is a good employee who wants to advance in the company. The California manager may call upon that person, virtually, to help out.

"What I tell companies is, You are paying for these skills they're developing, use them! Exploit them!" Ivery says. "The employees want to be recognized for what they're doing. They want to try out new skills they're learning. In this case, you wouldn't have to hire outside or get a part-time person; you use who you have. That's stretching value."

Companies are also missing out in terms of succession planning, Ivery explains. "We just had a meeting with a large corporation that is opening 100 stores every year. They can't hire people fast enough. You've got the baby boomers retiring, and not enough qualified people to fill those jobs. That's why we're going to India and all these other places where education is valued, where people learn math and engineering.

"Companies must start thinking about the talent shortage when the baby boomers leave--how can we get our employees educated to the level that they'll be able to apply for jobs in our company when they open up? More and more jobs are requiring education, yet many companies don't give their tuition aid program the priority it requires. There's a huge dichotomy going on."

When Ivery speaks about succession planning, she doesn't mean company leadership. "The company I spoke with has about 30,000 employees," she continues. "About 1,000 are executive level, or very high management. What about the other 29,000 that really make the company happen? In business, if you don't make it or sell it, you'd better save it.

"Executives don't make it or sell it. What about the succession planning, skill building, and education of the people who are actually making whatever it is your company does? People don't earn their degree overnight. You have to look at it strategically, now, and ask, 'What are we doing now so that in 5 years we have people who have earned their degree and are ready to move into a different job?'"

Advice from Experts

If you're in charge of tuition assistance at your company, Ivery and Estes have some advice for you in the following areas:

• Data gathering. "First, you ought to be able to have some data at your fingertips," Ivery advises. "You should know how many people are using the program, and how much the company spends on it. How many are graduate students, and how many undergrads? You should know the average expense for each."
• Policy design. "Is the policy up- to-date? Is it realistic?" Ivery asks. "For example, are we including things in our program to be reimbursable that not only support the adult learner and what's going on in higher education today, but are also cost savings? One example of that is every tuition aid policy should reimburse for College Level Exam Program (CLEP) exams. These are exams that cost about $55 and often grant one or two course equivalent in the subject area. So if you have an employee who's a secretary, writing letters for bosses, and has excellent communication skills, she could probably test out of English Composition 1 and 2 at any school. Taking the class costs time and money, for the company and the employee."
• Promotion. "Promote the program consistently and on an ongoing basis," says Estes. "If you're not using it, you forget about it."
• Ease of use. "Don't make the program too cumbersome for employees," he adds. You want employees to use it, and if it's too much work just to get started, they won't.

"The whole idea with tuition aid is for employees to get their degrees and to make the company better," says Ivery. "So as the company grows, changes, moves, and merges, you should be able to change your tuition aid program to fit your needs. If you don't have a policy that's up-to-date and carefully written, it's going to cost you, not help you."