Providing training for employees is one way to keep them on the job and increase their value to your company. But how do you prevent employees from leaving your company for a new job after they’ve earned a new skill or certification?

You may think that the answer is a training reimbursement agreement. But many experts say employees should not be required to sign a commitment to remain with your company just because you paid for their training. TechRepublic members who weighed in on the issue believe that a reimbursement agreement, if required, should be flexible.

In this article we’ll explain the arguments for and against adopting a training reimbursement agreement.

The reasons for and against
From a manager’s perspective, it’s easy to understand why many companies try to recoup the costs of training employees by requiring an agreement that requires them to stay at the company for a specified time.

“I tend to think it is a viable option for an organization’s benefit,” said Ollie McGahee, the systems administrator for the Wayne County, GA, Clerk of Courts in a recent TechRepublic article. “Certainly, there is an investment on the behalf of the organization when an employee has the opportunity to receive additional training.”

There are two commonly cited reasons for requiring employees to work for a specified period of time in exchange for the training they receive:

  1. Recouping the cost of the training
  2. Retaining valuable employees

TechRepublic members and analysts note, however, that there are other reasons why a contract should not be required in exchange for training:

  1. Training reimbursement agreements are a detriment to recruiting.
  2. Training reimbursement agreements are ineffective because reimbursement payments are typically paid by the new employer and not the departing employee.

Members want flexible training reimbursement agreements
A lack of employee loyalty and the high costs of IT training are reasons why most TechRepublic members seem to think training reimbursement agreements are legitimate—but most also think that agreements are more a means of recouping costs rather than a retention tool.

Many members think there should be some flexibility in agreements, dependant upon the type of training provided or the costs.

One member suggested linking the time the employee promises to remain with the amount of time the company has invested in training the employee. For example, the company could require a two-year commitment with the company for every certification the employee earns at the company’s expense.

Other members suggested linking money to training duration, for example, a required month of work for every $1,000 of training.

Then there are those who think employees should be allowed to buy their way out of agreements on a prorated basis.

Dana McConnell, a systems administrator, said he recently turned down an offer from a company that would have required him to repay all training costs if he left before four years of service.

“I found this excessive,” McConnell said. “I would have accepted a more graduated approach. For example, if I left in the first year, I would pay back 100 percent. If I left in one to two years, pay back 75 percent. Four years is a long time, especially as people change jobs now.”

Is a training reimbursement agreement really worth it?
Gartner vice president and research director, Diane Tunick Morello, warns that using training reimbursement agreements to deter employee turnover may hurt your chances of attracting new workers.

“I think it does affect your ability to recruit,” Morello said. “It is a disincentive. If I go to an organization that promises to train me, to equip me to be able to do their work, then that’s the cost of doing business.”

Another analyst, H. Michael Boyd of International Data Corporation, said that all companies ultimately share the cost of training the workforce. The same companies complaining of losing workers they trained are hiring workers who were trained by their previous employer.

“You’re going to pay your share into the training market no matter what,” Boyd said.

Training reimbursement agreements also are becoming less effective as a deterrent for employees seeking new jobs because employees who break their agreements are rarely forced to repay training costs. Boyd said the companies that hire these employees often are paying off the agreement obligation or giving the employee a sign-on bonus that covers that cost.
Do you agree with the analysts that training reimbursement agreements may be more trouble than they are worth? What actually works in the field? Send us your comments or start a discussion below.