‘Learning literacy’ and the currency of a knowledge-based economy

There is growing awareness about the importance of linking learning and work. More people are evaluating the ROI of an educational investment through an occupational lens. They look for learning experiences to translate seamlessly into earning opportunities. But what about the reverse? If students benefit when education satisfies workforce needs, can workers benefit when employment satisfies education needs? After all, in the new reality of the “60-year curriculum,” accelerating technology change is transforming learning into a lifelong necessity.

For many workers, it’s upskill, reskill or be left behind. Learners don’t just need on-ramps from education to employment. Workers need off-ramps that flow back into career-advancing learning and, ultimately, new on-ramps. Enter education benefits. If education is the great equalizer, these perks hold much promise for boosting social mobility and equity. They also have great potential for the bottom line. Like company-matched retirement funds or any meaningful benefit, education benefits can provide support for recruiting and retention. But complexity, a lack of awareness and uncertainty about their impact have historically limited their adoption.

Fortunately, some of the smartest and most successful companies are embracing education benefits and helping to spread “learning literacy” among many industries. Future of work expert Heather McGowan has aptly described learning as “the new pension.” However, pensions have largely been replaced by 401(k) plans that require smart contribution choices anticipating the future. Just as financial literacy engenders effective retirement planning, in a knowledge-based economy, employees will need smart investments in their learning, whether in time, effort, financial resources or, most likely, all of the above. And, just like saving for the future, it requires repeated and diversified deposits to achieve meaningful results.

Sustaining talent pipelines

With the half-life of skills decreasing, the one-and-done model of education no longer applies. As learners consider the growing choices along the path of lifelong learning, from microcourses, certificates and associate degrees to four-year degrees and beyond, they often do so with little or no guidance. But, to draw another comparison with retirement plans, strategic education benefits can pay healthy dividends for workers and their employers. They help sustain talent pipelines by upskilling and reskilling workers in real time. And, as we will see, they can even directly impact sales and operational performance.

Consider these statistics: Even before the pandemic, nearly two-thirds of employers said they were challenged by skills gaps. A BCG report issued just before COVID-19 swept the globe found that more than 53 million people in the U.S. were working in roles to which their competencies were not aligned. It’s not surprising that nearly 90 percent of workers believe that continual upskilling will be important or vital to maintaining a viable career. They are all too aware of the decreasing shelf life of many job skills.

Even employees hired fresh from education experiences often arrive on the job unprepared for the “real world” of work. It may be easy to blame curricula for its disconnect from workforce demands. However, learners often lack clarity when choosing education and career paths, let alone aligning them. As a result, their employers face not only the expense of recruiting difficulties but the turmoil and attrition within a workforce uncertain about its future and wondering if their current career paths are destined for a dead end.

Who can blame workers for such trepidation? An October 2020 report by the World Economic Forum revealed that by 2025, the time that humans currently spend working will be split equally among humans and machines. However, if technology and automation will displace tens of millions of today’s jobs, it will also create tens of millions of new ones. The question for workers and the companies that employ them is how to use education and training opportunities as a bridge to the future of work. This is especially critical for workers in positions most vulnerable to technology displacement. As is the case with jobs devastated by COVID-19, many of these occupations disproportionately employ low-income and minority workers.

It should be no surprise that surveys show employees feel better about employers that offer education and training linked to future opportunity. Closing skills gaps would also do a lot to help employers feel better about future business. A Korn Ferry study found that the imbalance between worker skills and job needs could cost the U.S. economy more than $1.7 trillion by 2030. Another study by the National Center for Women & Information Technology warns that a staggering 81 percent of “computing-related” jobs could go unfilled in 2028 based on the current rate of bachelor’s degree completions.

With college enrollment down sharply, particularly among traditional college students, there is a golden opportunity in serving working learners. Education benefits help diversify the pathways to acquiring work-relevant competencies, from on-the-job training and credentialing to tuition benefits and partnerships with colleges and universities. And, with heightened urgency amid the pandemic, efforts are growing to define a common language among industries and educators for describing these competencies.

Unfortunately, the traditional corporate stance on education benefits has been somewhat tepid. In the many conversations I’ve had with human resources executives, there is never any doubt that educating employees opens doors of opportunity. But there is often fear that those doors will lead out of the company. After all, the cost of replacing an employee is steep, often approaching or exceeding the position’s annual salary. I’ve also heard front-line managers grumble about “idle time” allotted to employee learning — whether on-site, in college classrooms or online. However, multiple studies confirm that an investment in employee education benefits all stakeholders.

Desired business outcomes

I’ve already shared some of the big-picture reasons why it makes sense for employers to support lifelong learning, from social mobility to our national economy. These benefits can also be measured in desired business outcomes. For example, contrary to the fears of the HR executives I mention above, research has shown that education benefits tend to increase tenure. In LinkedIn Learning’s 2019 Workplace Learning Report, 94 percent of employees said education benefits would persuade them to stay at their company longer. On the other hand, a 2015 study from Great Britain found that providing more training to employees increases their wages — but not as much as it increases their productivity. Many other studies confirm the bottom-line benefits of employee education benefits. According to calculations by Lumina Foundation and Guild Education, the ROI for educating employees is between 129 and 185 percent.

As awareness of these benefits has grown, we’re seeing more and more businesses promote the benefits of subsidized employee education and training. Checkers and Rally’s announced that more than half of its employees who received a high school diploma through its education benefits earned a promotion within six months of completing their program. It also found that employee retention doubled among participating companies.

Taco Bell reported a 34 percent increase in retention within the initial six months of offering its education benefits program. Verizon, Amazon, Bank of American and JPMorgan Chase are among the major corporations that have recently announced big investments in employee education benefits (from tens of millions to one billion dollars).

But despite the proliferation of these benefits and growing evidence of their inclusive advantages, employee uptake has been low. Companies may be able to automatically enroll and contribute to 401(k) accounts, but there isn’t a way for employees to “auto-learn.”

The employee uptake dilemma

In our experience at the Council for Adult and Experiential Learning, only about two to five percent of our clients’ employees have taken advantage of employee-offered education benefits. A Bright Horizons survey reflected a similar trend: It found that only two percent of American workers were using them. However, it’s not because they question their value. In that same survey, three-quarters of respondents felt that a lack of education benefits created a disadvantage, and 65 percent said such benefits support workplace equality.

In a 2019 survey of U.S. companies, the International Foundation of Employee Benefit Plans found that more than 90 percent offered some type of education benefit. While the quality, generosity and marketing effectiveness of such plans clearly varies across companies, in my experience, this isn’t enough to account for the disparity between how many organizations offer these benefits and how many employees use them. What we find is that workers are cautious about pursuing education, and they are confused about career navigation and what skills they need to learn for the future.

We also know that working adults have a lot to manage, even in good economic times. With pandemic shutdowns abruptly adding homeschooling and other caregiving responsibilities, time becomes even more scarce. This only underscores the impact left by combining employment and education opportunities. The question is how to encourage uptake.

For example, consider work schedules. Most low-income workers are not experiencing the sudden flexibility of working from home that has proliferated during pandemic shutdowns. On the contrary, these workers have largely remained on the front lines, often not knowing what shifts they will be working from week to week. You can’t enroll in traditional college courses in those circumstances. Companies could encourage uptake and support their incumbent workers by finding ways they can coordinate their time off from work with course scheduling.

McDonald’s success story

One success story that CAEL was fortunate enough to be a part of is the McDonald’s Archways to Opportunity program. Archways to Opportunity, which launched in 2015, offers eligible employees at participating restaurants an array of education benefits. They include ESL classes, high school completion, college tuition assistance and free education advising services.

In the program’s first year, nearly 5,000 employees took advantage of an Archways to Opportunity education benefit. By year two, participation had more than doubled. By 2020, more than 60,000 McDonald’s employees had participated, and the program had awarded more than $125 million in tuition assistance. But McDonald’s wanted to drive participation even more.

Along with our fellow Strada Education affiliate InsideTrack, CAEL partnered with McDonald’s to develop Archways to Careers, a career-exploration app. The app includes interest assessments, skill gap analysis and career pathway information and interfaces with InsideTrack’s credentialed career advisers. Its mission is to help McDonald’s restaurant employees around the country get the most out of their education benefits and support their professional development. To its credit, McDonald’s candidly acknowledges that these benefits will advance careers both within McDonald’s and beyond. I think this level of transparency only increases the credibility and effectiveness of promoting education benefits. And I think this level of holistic, turnkey support is needed to transform passive awareness of a benefit to active engagement in it.

McDonald’s recently worked with Accenture to conduct a study on the ROI of the tuition assistance portion of the Archways program, and the results are highly encouraging. Gathered from the responses and participation data of participating owner-operators, they exemplify the attrition-lowering effect of education benefits that I mentioned earlier. Restaurant employees who make use of the Archways program are staying with the company more than twice as long as their nonparticipant colleagues. They also are more than twice as likely to be promoted. In addition to the significant cost savings inherent with reduced turnover, the program is making a positive difference in revenue generation. Overall, there is a 1.2 percent sales lift that statistically correlates with the Archways Program.

Lisa Schumacher, director of education strategies at McDonald’s Corp. and architect of the program, says, “McDonald’s has a strong commitment to providing meaningful and relevant education options for our workforce. This research effort demonstrates how these programs are a win-win for our entire organization.”

What works for one company may not be ideal for another. There is no one-size-fits-all solution. But there is ample evidence of the universal benefits employee education programs confer. When employers invest not just the currency of our knowledge-based economy but in helping employers cultivate that investment, they are investing in a brighter future for themselves, their employees, and the communities that depend on their mutual success.