Some organisations provide school fee assistance to employees who have children attending school. Some cover from preschool up to university. Others only cover up to secondary education. At face value, employers are being considerate and helping their employees cover one of the most expensive components of a parent with children.
The school fees assistance benefit is also popular with employees. Its popularity seems to emanate from the fact that it lessens the financial burden most parents face when educating their children. Anyone offered this benefit will gladly take it.
Given the practices in the country around this benefit, I am not convinced that some employers know why they are offering it. The common reason often cited is that it attracts and retains employees. That is a fair reason. The issue is that this benefit is frequently granted solely on the employee’s personal circumstances rather than the importance of their role or expertise to the organisation. How does paying an employee based on having children help the cause of the organisation? Those who qualify for school fees under such a practice are not necessarily good performers.
Any sound remuneration policy should be based on merit. The policy should promote equity. For those organisations that offer the school fees benefit based on an employee having children, they are misallocating company resources. When remunerating employees, certain key tenets must be followed.
Let us look at an example of two employees doing the same job or in the same grade. We’ll refer to these employees as John and Sam. Both John and Sam get a monthly salary of $1000. This same grade level is eligible for school fee assistance. The school fee assistance is $2 000 per child per term. Sam has three children who qualify for this benefit. Every term, Sam gets $6 000 under this policy.
Sam earns $18 000 more annually than John because the company decided to offer a benefit that is not well thought out. On the other hand, John is married and chooses not to have children. This means that John will not benefit from this policy.
The above policy does not benefit the company in any way. So why do companies implement such unreasonable policies? The reason is that they want to cut costs while enriching a few employees. The worst part is that there won’t be a significant difference in performance between those benefiting from the school fees assistance and those not benefiting.
The other reason such unreasonable policies get implemented is that personal interest drives such decisions. If the decision-makers have children, they will implement such a policy. If they do not have children, they will not implement it.
Some downsides of offering school fees assistance to employees with children only are that often the policy requires employees to bring invoices, and the company pays directly to the school. Assume you have 400 employees who qualify for this benefit, and each has three children. That is 1200 invoices to be processed every term. You need at least 2 HR Officers or Administration offers to process invoices. There are other administrative duties related to processing these invoices. How is such a wasteful practice good for the business?
The best way to implement the school fees assistance is to offer it to all employees in qualifying grades, whether they have children or not. Give it as an allowance instead of paying as per invoice. This will be costly but will ensure there is equity in the organisation.
The school fees assistance benefit is often a competitive necessity because other organisations offer the same benefit to their employees. Research shows that offering benefits such as school fees assistance does not affect the employee’s performance. Given the above facts, it is evident that offering this benefit has nothing to do with enhancing the performance of the business but is largely self-interest. Although this benefit has little benefit to the organisation, it must be equitably given if you decide to offer it to your employees.
When an organisation comes up with multiple monetary benefits as add-ons to the salary, it could mean that its total pay packages are not competitive. The solution is to pay people well based on what you can afford instead of all sorts of allowances. What matters to the employee is not the name given to the pay component but the total package. I recommend that if you offer education assistance as an allowance or direct payment to the school, it must be equitably applied. Children can not be a good basis for allocating rewards to employees regardless of how you view it. Set a school fees allowance per grade and offer all employees in those grades.
I have noticed that some organisations ignore governance issues around remuneration. When executives propose a remuneration component interrogate by asking the following questions;
- Why should we pay this benefit?
- How will it advance the cause of the organisation?
- How equitable is the proposed benefit?
- How is it going to be funded?
- How will adding the benefit impact the overall staff costs?
- Are there potential industrial relations issues if this benefit is implemented?
- Are there any hidden self-interests in proposing this benefit?
The above questions apply to any proposal on remuneration. Management should carefully recommend benefits based on strong business principles to benefit both the company and the employees. It will assist the board in making informed decisions.
- Nguwi is an occupational psychologist, data scientist, speaker and managing consultant at Industrial Psychology Consultants (Pvt) Ltd, a management and HR consulting firm. https://www.thehumancapitalhub.com or e-mail: email@example.com.