What Starbucks Can Teach Credit Unions

The company’s tuition assistance program offers ideas for credit unions that want to do something similar.

 
 

During the 2013-2014 school year, colleges and universities awarded an estimated 943,000 associate’s degrees, 1.8 million bachelor’s degrees, 778,000 master’s degrees, and 177,000 PhDs.

But higher education is not a reality for everyone. The cost makes college unattainable for many high school graduates working to make ends meet at jobs suited for their resumes but not necessarily their skills or intelligence.

Starbucks decided to give its employees a chance to do better. On Monday the company announced a partnership with Arizona State University in which Starbucks will pay college tuition for any employee who works 20 or more hours a week. Starbucks only pays for online courses taught by the university, which offers  40 undergraduate degree programs. The tuition benefit has the potential to be a significant investment for Starbucks, as the company estimates more than 70% of its workforce are students or aspiring students.

Although the initial Starbucks release didn’t mention it as one of the program’s conditions, the New York Times reported late Monday that employees would have to take 21 credits before they would qualify for tuition assistance. That means students will pay much of the initial upfront cost themselves, valued between $10,000 and $11,400, according to the Times.

A four-year degree is typically completed after 120 credits. The company says that it will foot the entire bill for employees with more than half of these credits completed. For those with fewer credits, Starbucks will pay some costs that, combined with federal aid, should make the cost negligible.

“I strongly believe that businesses and business leaders must do more for their people and more for the businesses they serve,” said Starbucks CEO Howard Schultz about the program. “Maybe this is what we were supposed to do to begin with — to serve our people as well as our customers.”

If this last sentence sounds familiar, it’s because credit unions live by the same philosophy.

What Starbucks is doing with this program is relatively unprecedented, however, as there are few limitations on who can receive tuition, and the company is certainly aware that many employees will leave the company for better-paying opportunities once they get their degree.

High turnover is the nature of the low-wage service economy, but the same isn’t true of many credit unions, which encourage employees to stay with the institution long-term and rise through the ranks. Nevertheless, credit unions can learn from Starbucks’s lead.

One of the cooperative principles states that credit unions should provide education and training for employees so that they can contribute to the cooperative’s development. It’s unrealistic, however, for credit unions to provide that education carte blanche because the cost of some degrees is prohibitive. But certainly a partnership between a credit union and a local two- or four-year college or university is possible and mutually beneficial.

Partially subsidizing employees’ educations builds goodwill and lets them know how much the institution values their professional goals even if they lie outside the credit union. Although the potential for turnover exists, employees who recognize the value of the education provided will not forget that gift and will acknowledge it by either staying with the institution at a higher capacity or recommending it to friends and family.

Employees are the biggest and best investment an organization can make. Quality employees do better work and are more fun to be around. Higher education is not essential for every credit union employee, but few would pass up the opportunity for tuition assistance, especially from an employer with employee education written into its DNA.

 
 

June 18, 2014


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