Tuition Reimbursement

Providing employees with opportunities for on the job training, tuition reimbursement, and professional development will increase the human capital of individual employees. Human capital is gained through education, which is divided into two different categories: general and firm-specific education. The difference between these two types is not based on the type of education that an employee receives, but whether the skills that an employee gains are transferable to another firm. The theory of human capital suggests that a firm will only provide firm-specific education to its employees, as this type will be the most beneficial for the firm (Kessler & Lülfesmann, 2006). Contrary to the theory of human capital, would investment in general education

The most common type of general education is company funded tuition reimbursement programs. Tuition reimbursement programs involve a company paying for a portion or all of the expenses that come from attending seminars, taking courses, and pursuing degrees. This is categorized as general education because the coursework or training is not based upon the specifics of any firm, but instead is composed of material that can be applied to many different firms and situations. According to Manchester, it is estimated that as high as 85% of firms offer tuition reimbursement programs

Tuition reimbursement increases an employee’s general skills and therefore his or her voluntary turnover (Becker, 1962). Instead, this theory would support firm specific training because increasing these skills would lead to greater firm productivity, and the skills would be less transferable between companies. Firm specific education would not increase employee turnover because the acquired skills would be too specific for other firms to capitalize on (Campbell, 2012). Firm-specific education also creates a stronger relationship between employee and employer. Griffith and Lusch (2007), state that the employee and employer want to continue their relationship because the specialized capital benefits both of them. The firm wants to retain the unique skills that the employee has and these unique skills create a limit to how easily and convincingly the skills can be transferred to another