Starbucks: How Tuition Reimbursement Benefits Both Employee and Employer

That's not a valid work email account. Please enter your work email (e.g.
Please enter your work email

businessman showing thumbs upOne of the top 100 companies to work for  is collaborating with one of the top 100 Universities in the world to provide tuition assistance to its employees.

“I love that we can receive benefits and stock rewards at 20 hours/week…there is potential for anyone to move up the ladder,” explained a Starbucks employee, in response to its ranking by Fortune. Not only does Starbucks treat its employees like partners of the company, offering them an array of benefits, they treat them as an investment too. Starbucks has just announced that it will be providing eligible employees with tuition assistance. The program, Starbucks College Achievement Plan, is for employees that are in their junior and senior years, and it will assist employees in  finishing their degrees by reimbursing college tuition.

This program is available to U.S. based employees at Starbucks working an average of 20 hours per week or more, and after the employees graduate they aren’t required to remain at the company. Starbucks CEO Howard Shultz said:

In the last few years, we have seen the fracturing of the American Dream. There’s no doubt, the inequality within the country has created a situation where many Americans are being left behind. The question for all of us is, should we accept that, or should we try and do something about it.

Starbucks is doing something about it.

However, they aren’t the first. Other companies like Deloitte, UPS and Home Depot offer tuition reimbursement as well.  More and more companies are fighting to find a way to differentiate themselves from their competitors and improve their company culture by offering incentives like these. This type of assistance is a major attraction to potential candidates. Therefore, let’s take a quick look at three ways employers benefit from offering tuition reimbursement!

1. Attracts Higher Quality Candidates

What’s wrong with attracting candidates who have larger goals than working as a barista for the rest of their lives? Don’t get me wrong; working as a barista until you’re 65 is okay if that’s your cup of joe. However, this type of benefit is going to be attracting candidates who have ambition, drive and motivation to push themselves further by earning a college degree.

Supporting our partners’ ambitions is the very best investment Starbucks can make. Everyone who works as hard as our partners do should have the opportunity to complete college, while balancing work, school and their personal lives.- Howard Schultz.

In addition, even though Starbucks doesn’t require the employees in this program to stay working at Starbucks, chances are this incentive will foster some sense of loyalty to the company. For employers who are thinking about offering this benefit, it’s important to educate the employees about the opportunities that are available through your company upon completion of a degree. This can be talked about in the initial hiring stage so that the employer isn’t forcing loyalty to the company, but is encouraging it by showing a possible pathway to where this program can lead.

2. Encourages Internal Hiring

Candidates who dream of moving up the ladder through Starbucks are overall going to be stronger employees. Employees in this tuition reimbursement program may aspire to manage their own Starbucks location, become a franchise owner, head a regional department or more! So not only does this program attract higher quality candidates, it also promotes those candidates to build their careers through Starbucks. Studies, like this one, have concluded that hiring internally is the way to go. The study found that external hires cost 18 percent more than internal hires in the same position. Also, internal hires outperform external hires on performance reviews, and external hires are 61 percent more likely to be fired from their new job than an internal hire who was just promoted.

3.  Improves Employer Brand

Part of improving the employer brand can be related to how a company is seen socially. Providing a benefit like college tuition reimbursement can be seen as a socially responsible action. Paul Tough states in the New York Times that “more than 40 percent of American students who start at four-year colleges haven’t earned a degree after six years.” Tough additionally attributes this to the social issue of economic inequality.

About a quarter of college freshmen born into the bottom half of the income distribution will manage to collect a bachelor’s degree by age 24, while almost 90 percent of freshmen born into families in the top income quartile will go on to finish their degree.

So at a time where it is becoming more and more difficult for the average American to finish their degree, companies like Starbucks are fighting to make it possible.

Not everyone agrees with my take on the subject of Starbucks approach to tuition reimbursement. This article has an interesting take:

What are your thoughts?

By Shaley McKeever