1. The RSU is a particularly good tool to use here.I’m a strong believer in using equity as a retention tool for top performers. 1
The thing is, giving equity to early and mid-career professionals is (often) not a viable option as many companies don’t want to dilute their equity by spreading it widely across the organization. This isn’t an absolute rule – companies like Starbucks give stock options to all employees via a direct purchase plan.
How far down the org chart it makes sense to grant equity is really dependent 2. Some turnover is good. on company retention strategy, 2 the sort of talent an organization is looking to attract (not all employees will value equity), and finally the cost to the employer – some just can’t afford this option.
With that said, while granting equity to less senior employees in the population isn’t a good strategy for all companies, I think that for most organizations tuition assistance programs are a great retention hook – particularly if they require the employee to use the program only for learning skills useful to the company.
A program that:
1. Covers a large percentage of tuition.
2. Focuses on educational programs relevant to the company.
3. Requires tuition assistance to be paid back to the company (partially or in full) if the participating employee leaves within X years of completing the program.
…not only develops talent in ways useful to the organization, but also effectively keeps employees “hooked” into the company until they (hopefully) promote up to a high enough level to be eligible for equity.
There is an added bonus here: Even if an employee leaves after reaching the “vesting period” for the tuition assistance (i.e the point at which the company will absorb the full agreed upon cost of the tuition regardless of continued employment), said employee will have ideally trained several colleagues utilizing 3. If a company invests resources into an employee’s education, but then doesn’t have said employee use their education to benefit the company during the vesting period I question if the program is optimally designed.the skills that he/she learned in school at no additional cost to the employer. 3
Honestly, I don’t see much downside here… the biggest challenge is perhaps deciding who to open the program up to.
Does someone have to be considered “high potential” before a company will invest money into him/her? What are the years service requirements? These questions are all of course company dependent, but a lot of times the wrong choice can lower employee morale (I’d hate to be the HR person/manager that delivers a message to an employee that he/she is not eligible for the tuition assistance program because the organization doesn’t feel he/she is worth 4. Lying about the reasons here is never a good option. If an employer doesn’t feel an employee has the skill set to make an investment worthwhile, the right thing to do is to tell him/her.investing into 4).
I don’t have all the answers here. What sort of tuition assistance programs (if any) does your company offer? Do you (or your colleagues) view them as a retention hook?
As always, please share your thoughts below.
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