Running an effective bursary scheme

Education is changing very fast. With a new set of options open to promote corporate education and training – is it not time to rethink the bursary scheme?

Any HR manager will tell you about Bursary Schemes – probably while letting off some steam and telling some tales of people that never really gave back to the company. Bursary applications are typically the HR responsible’s second least favourite activity maybe just after disciplinary hearings. It is simply hard to justify investing lots of money in the career and development of a few people, while having to answer for the development of the whole company.

Unlike medical schemes it seems that bursary schemes are moving from a “defined benefit” to a “defined contribution” model more frequently. Fewer companies are trying to achieve anything out of their bursary schemes and only do full or part funding of qualifications. For many companies bursary giving got to the point where they never had one or got rid of bursaries after many failures to administer these programmes effectively.

This promotes an HR stance that states that “we will hire trained people” which typically translates into recruitment bills of more than 15% of annual staffing costs, higher staff turnover and an estimated premium in salary often as high as 50% over hiring talent and developing them over time. Surely this same 65% of annual CTC could be minimised by targeting key positions and developing staff into them. There is simply just not enough talent and although in a couple of countries in the world there is a skills mismatch in what schools are producing and what industry wants (South Africa, Nigeria, India being some of these) – there is generally a range of skills that are hard to procure in any market in the world.

So ideally bursary schemes would aid in this dilemma and promote and attract the required skills to the company that would feed into the skills needed by the company. It would certainly be much harder for a person to say no to an opportunity to further their studies while working – would it not?

A couple of things go wrong in bursary schemes

  • As soon as a bursary student is about to graduate, the person that it is given to leaves the company for greener pastures. It is as if giving them a bursary is a sure way to get rid of staff, while the theory at least says that development should be a way to retain staff.
  • People are asked to sign commitment contracts that are either poorly formed, illegal or that simply does not work.
  • Bursary programmes are long term commitments – 1-5 years and funding is annualised based on performance – this often breaks the pattern when a student fails a single subject. This leaves the company and the bursary in a challenge.
  • Bursaries are generally only available to a few.
  • Bursaries are typically for qualifications that promote a person’s career path and not necessarily the growth objectives of the companies.
  • Headhunters have developed strategies for buying out bonds or bursaries and this may both result in high legal costs and recruitment fees – depending on which side you are negotiating from.
  • Bursary schemes are increasingly challenged as promoting anti-competitive behaviour by only favouring a few providers. On the other side – you want training to fail within your business’s parameters.

Are they then even worthwhile pursuing at all? Yes – the reality is that in the war on talent, a bursary is a very attractive tool with which to recruit a person or incentivise a person to stay in a company.

So in an ideal world a bursary scheme is used to:

  • Attract high potential employees to work with the company either from as early as school or from other companies.
  • Build skills and knowledge in a particular area in the business
  • Incentivise existing staff to expand their own knowledge by full or part funding of own studies
  • Incentivise existing staff to study into areas that would benefit their existing work.

So it seems that the bursary schemes to be effective it has to be revamped and brought back into line with the objectives that it should be achieving for an organisations.

An ideal bursary scheme should achieve a range of objectives

  • A scheme should be simple, accessible and offer maximum benefit to the company or the objective that is being promoted.
  • An ideal scheme will be linked to the performance management system and development goals of individuals and offer a range of skills that can aid in a person performing more effectively in their current job or position.
  • Schemes should differentiate between what a person wants to study for their own benefit and what are skills that are ideal for the company.
  • A scheme should ideally offer the ability to study and work to maximise the impact of both.
  • An ideal scheme should be able to offer short programmes that keep people hooked into the next step, while achieving the overall objectives of the programme.
  • An ideal programme would leave the choice of where to study with the student while ensuring that the company has the best options to maximise the return on investment through e.g. replacing staff on the programme and flexible reporting options.

A bursary scheme that works on funding individual modules within a larger qualification is an ideal tool for companies to achieve the best of both worlds. By offering access to shorter programmes that contribute to degree purposes, the company can link its short-term objectives and spending to a more controllable and controlled outflow that pays for performance and success.

The additional benefit is that employees remain motivated to perform and bursaries can move from being a burden to a tool to promote success within the firm. The longer-term goal of getting a degree is a powerful motivator that drives retention if properly harnessed.

By also focusing on a more modular approach companies can typically offer access to as much as 6 times more staff and only push those that achieve beyond certain levels. This creates a culture of excellence and by many having access to knowledge within a business, creates a further opportunity for people to contribute to the bottom line more effectively with a wide knowledge base in the company.

You can utilise the programmes of different providers that have both free, cheap and premium programmes to build a strong model in which people build the competencies for the organisation without breaking the bank.

The critical success factors for an effective bursary scheme would include

  • Selecting the right staff to be trained
  • Promoting the objectives of the scheme to a wide base
  • Having clearly defined funding criteria in line with corporate objectives
  • Adequate funding of a scheme to achieve its objectives
  • Clear administration of the scheme
  • Achievement of realisation of benefits to the company
  • Timeous payments for studies and related resources
  • Working with relevant training and education providers to ensure that there is a clear understanding of available programmes.
  • Remember that there are academic objectives and company objectives. Your job as a manager is to achieve company objectives and working with a provider – you must set the tone and control the outcomes that you want from a learning intervention.

On a technical note you need to consider

  • Be able to prove that you used an objective criteria to allocate funding and that it was not just done on a first come, first served basis. A clear set of published criteria goes a long way. A committee with minutes also helps.
  • You can insist that the participant performs. Set the expectation upfront that if they fail they must pay for that themselves and then progress to the next stage.
  • Speak to the remuneration people to make sure that you are considering the tax implication of a study grant. Sometimes, depending on how a scheme is structured, you could be adding a fringe benefit to an employee that pushes them to a new tax bracket and increases the cost of training to them massively.
  • You may have to register in terms of the National Credit Act if you grant interest bearing loans to staff for studying.
  • Best practice is for people to have 1.5 times the time they studied to pay back their loans. Paying back in time is preferred over paying back in money. You must also give the person the opportunity to buy themselves out of their time commitment at a pro-rated amount.
  • Always check affordability for the person. Do not grant a cleaner a study bursary for a multi-year programme. It makes it impossible for them to pay back. Start with a course, push them up and then grow their courses.
  • Be mindful of implied job offers – sometimes companies imply that their staff will be promoted if they study and a couple of times companies have messed up on the expectation created. This is especially true for management training.
  • Government incentivises training so learn more about learnerships, tax incentives and BBBEE as ways to maximise your return on the same investment.

Conclusion:

The funding of studies is a valuable tool to ensure that the company achieves its objectives. In the past there has been poorly administered schemes that promoted the wrong objectives and simply benefited a few – while creating resentment in the many. Through the advent of a range of new education options there are new ways in which training and development can achieve exponentially more through the structuring of effective bursary schemes.