The bottom line about employee education benefits

Daniel Banks could hardly contain his excitement. It was the fall of 2019, and Banks, Chipotle’s director of benefits, was sitting in a conference room with other execs at the company’s headquarters in Newport Beach, California, talking about a new investment in employee education. 

For years, the fast-casual Mexican grill had been experimenting with tuition reimbursement as part of a partnership with Guild. But it wasn’t working for everyone. And Chipotle needed to expand quickly and future-proof its employee pipeline. 

Banks had pored over the data from the program, analyzing it with the company’s CFO, Jack Hartung. They’d had candid conversations about the cost of expanding it, what employees wanted, and how both squared with Chipotle’s ambitious growth plans. 

Now, as Banks sat in the conference room, he listened closely, quietly elated, as Hartung and other executives agreed to expand the partnership with Guild and cover the full tuition for a broad range of certificate programs, as well as undergraduate and graduate degrees, for employees. It was a clear bet that investing in employees’ potential was worth it and would pay off. 

“It was the highlight of my career,” Banks says. 

Missed opportunities and transformative growth

At many companies, employee education benefits are something of an afterthought, one of a long list of perks in a massive HR packet. Historically, they’ve mostly consisted of tuition reimbursement, which forces workers to pay out of pocket or take on debt to front the cost of tuition. And employers aren’t necessarily eager to highlight these perks because, well, they can be costly. As a result, relatively few employees take advantage of them, and those who do often find the programs cumbersome and exclusionary. 

That’s a missed opportunity for both workers and their employers, according to CFOs, CHROs, and other experts. Indeed, these experts say that employers need to start thinking about employee education and training not as a cost, but as an investment. Retraining and upskilling your employees not only can help reduce turnover, increase productivity, boost morale, and attract talent, it can also speed up growth and transformation. And as you retrain workers for the changing needs of the company and equip them to succeed in the jobs of tomorrow, the long-term financial payoff can be significant.

To deliver on their potential, however, employee education benefits have to be measured and quantified as part of a company’s long-term strategy, business leaders say. And as the nature of work changes rapidly, employee education and skilling must be reframed from a throwaway perk into a strategic function that can help reduce the strain on HR’s hiring pipeline. “It took Kodak something like 50 years before it finally went bankrupt. That can now happen in less than a year,” says Nikhil Abraham, the CFO of SteadyMD, a telehealth company that provides clinicians to Fortune 100 companies. “The speed in which you have to move has gotten faster, and so the importance of the talent you need to compete has increased. You need to move fast, and the consequences for not doing so are more serious than they’ve ever been before.” 

Chips, guac, and higher learning

Before Chipotle started working with Guild, it had a standard tuition reimbursement program for corporate and front-line employees that offered up to $5,250 a year, the maximum permitted by law for a pre-tax benefit. Similar programs have been around since the late 1970s. But experts say they’ve had limited impact. “It’s not been really taken up in a lot of cases,” says Craig Copeland, the director of wealth benefits research at the Employee Benefit Research Institute, a Washington, D.C.-based nonprofit. “Typically, employees have to pay for it first and then wait for the reimbursement, and that sometimes can be a hurdle.” 

Chipotle says it had some success with its tuition reimbursement program. But it also saw opportunities for better ways to retain workers and expand their talent footprint. So in 2016, the California-based restaurant chain began experimenting with new forms of employee education benefits through a partnership with Guild. Chipotle offered additional discounts and opportunities for workers to pursue degrees, take college classes, earn a GED, study English as a second language, and get advice along the way. 

Tuition-free college, al-pastor

When Banks arrived at Chipotle in 2019, the company was continuing to grow rapidly. It needed to keep the workers it had, quickly train new ones, and create a clearer path for advancement. Tuition reimbursement was still an obstacle for many employees, especially those on the frontline. Many couldn’t afford the initial costs due to the $5,250 cap mandated by U.S. tax law. Others were already saddled with existing student loans.   

Banks, Hartung, and other executives studied the results from the 2016 program. They reached out to employees to understand their needs and pain points. And they tried to think more broadly about how expanding their education programs could lead to a return on investment. After a robust analysis in which they compared participants in the education program against everyone else, the executives found measurable upside from investment. If they grew it, offered fewer exclusions, and made tuition debt-free, they believed that upside would only grow. And so they went for it, expanding their partnership with Guild to cover the tuition for 75 different types of degrees after seeing the success of the program. “The ROI is there,” Banks says. “It reduces turnover, it drives retention, and it helps build the future leaders we need within the organization because we’re growing at such a fast clip.”

Two years later, as the COVID-19 pandemic lingered, wages rose, and companies struggled to compete for workers, Chipotle’s decision seemed prescient. So much so that it expanded the program again, adding new types of qualifying degrees and universities. “We see this as an investment in our people,” Hartung told CNBC. “And if they want to put their time and effort into learning, we want to put our investment dollars behind that learning.” 

‘It’s all about looking at the data’ 

Today, Chipotle’s top executives are firmly committed to employee education programs because of their proven value. The company is working with Guild to get the most out of them. It offers 100 types of tuition-free degrees, along with short-form certificates and other ways to acquire the types of skills needed to advance. 

Employees use their education benefits to pay for college programs, classes, or on-the-job training that help them become managers. Some like Logan Smith, a frontline worker in the greater Chicago area who is studying cybersecurity, are pursuing summer internships at the company’s headquarters. “It’s all about looking at the data,” Banks says, “and understanding what people see value in, what drives employee behavior, and what’s going to be a win-win for workers and the organization.”

That data speaks to the success of what Banks, Hartung, and the Chipotle team have accomplished. As of 2022, Chipotle crew members with less than six months of tenure are twice as likely to stick around if they’re part of the Guild-Chipotle Cultivate Education partnership, compared to those who aren’t. Meanwhile, Chipotle crew members are six times more likely to advance into manager positions after enrolling in a Guild program. 

Abraham, the SteadyMD CFO, says these types of education programs have been extremely effective, especially for frontline workers at large companies like Chipotle and Costco. “These companies have used a collection of strategies including employee education,” he says, “to reduce turnover and improve the bottom line.”

Going forward, he adds, these programs may become even more important for talent pipelines as the nature of work changes and employers need to hire more quickly. “It’s never been harder to fill some of the holes that companies are facing,” Abraham says. “What’s new is also how fast companies can rise and fall based on the skills they have.” 

Carlos Molina, the chief financial and administrative officer of United Way Miami, has seen the same thing — in both the nonprofit and for-profit sectors. “Talent has been so fluid in the last few years,” he says. “There are budgetary constraints. But you have to really maximize the benefits beyond the traditional ones.” 

He’s worked hand-in-hand with Paola Hernandez, United Way Miami’s senior vice president of people and engagement, to find creative ways to train employees and promote from within. Among them: partnering with coaching organizations, local universities, the chamber of commerce, and executives across the city to provide pathways to continuous learning.

Yet since the Great Resignation, there’s been so much turnover that data has been harder to keep track of. “We have metrics to see how we’re going to be identifying high potential employees with performance management plans,” Hernandez says. “But there was a period when people were jumping from job-to-job. We are 100 years old and we’re changing things up and having new strategies to create data.”

Some strategies, however, wind up finding you. That’s what Banks, the Chipotle benefits director, discovered a few years ago when a frontline worker in Omaha named Shikha got his phone number and left him a message. Chipotle, she explained, had helped her pay for college and graduate school. And she was excited to keep working at the company while she took her next step toward her goals.  

“She thanked me for the debt-free degree program,” Banks says, “and told me she was studying to become a doctor.”

By the time she left Chipotle, Shikha had worked there for eight years, delivering increasing value for the company as her skills multiplied. For Banks, that’s a sign that the investment was more than worth it.