Running an effective bursary scheme

Published: 03 October 2013

Among many other things, Regenesys is a place where business and education come together; we understand how the two cannot be separated if success is to be achieved. This week, in line with our passion for lifelong learning, we explore the apparent demise of the bursary scheme, what went wrong, and what can be done to save this valuable developmental tool.

Running an effective bursary scheme

The sociological and technological shifts of the past few decades have been felt, perhaps, in few areas as much as in education. This impact is only intensified in the case of what we might call 'corporate education and training' - the space where business and education operate side-by-side.

For one thing, people in the working world are generally more educated now than they were only a generation ago, with Bachelor's and even Honours degrees becoming almost commonplace. Jobseekers must study ever further to distinguish themselves from their competitors.

One would think, then, that bursary schemes would be flourishing in companies all over the world. But they aren't. Far from it, in fact. Speak to almost any HR manager on her day off and she will almost certainly bemoan her fate as manager of the company bursary scheme. "Bursary schemes," she may tell you, "are my least favourite job responsibility - second only to disciplinary hearings, maybe."

She is likely to tell tales of countless bursary recipients who never really gave back to the company. And then she'll probably sink the whole concept with the clincher, probably in the form of an undoubtedly rhetorical question: "How do you justify investing hundreds of thousands, if not millions, of Rands [or Dollars etc.] in developing the careers of only a few people, while you are expected to develop the entire company?"

And so it is that, unlike medical schemes, bursary schemes increasingly seem to be moving from a 'defined benefit' to a 'defined contribution' model. Ever fewer companies are really trying to achieve anything with their bursary schemes, often only (and sometimes only partially) covering tuition fees. There are even companies that, after countless failed attempts at proper administration of these programmes, have done away with bursary schemes altogether.

So what is it that goes so terribly wrong with bursary schemes that drives organisations to completely give up on them? Well, imagine the HR, Finance and other headaches that the following could cause:

    As soon as a bursary student is about to graduate, s/he leaves the company for greener pastures. It is as if, instead of making employees want to stay and grow in the company, a bursary is a sure-fire way to get rid of staff.
    Commitment contracts are either poorly formed, illegal or simply ineffectual.
    Bursary programmes are long-term commitments of between one and five years, and their funding is annualised, based on performance. This means that, if a student fails even a single subject, both the student and the company can find themselves bound by red tape as funding automatically dries up.
    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 company.
    Head-hunters have developed strategies for buying out bonds or bursaries, resulting either in hefty legal costs or in high recruitment expenses - depending on the side from which you are negotiating.
    Bursary schemes are increasingly accused of promoting anti-competitive behaviour by favouring only a few providers. Organisations must counterbalance this with the obvious need for the bursaries they offer to cover the skills they need.

As HR becomes more and more disillusioned with the whole concept of bursaries, it seems a logical conclusion for them to take up the stance: 'We only hire trained people'. It seems logical but, in spite of all the aforementioned difficulty associated with thinking otherwise, it really isn't.

How so? Well, when 'we only hire trained people', we end up with recruitment expenses in excess of 15% of annual staffing costs, higher staff turnover and, to top it all off, an estimated premium in salary often as high as 50% over hiring talent and developing them over time. Surely this same 65% of annual cost to company could be minimised or at least better spent if key positions were targeted and staff developed into them. There is plenty of talent to go around; it's trained skills that are hard to come by. Take a look around at the next staff meeting - that's where you'll find the rough ore that bursary schemes were made to turn into gold. What's more, for anyone looking in from the outside, your company will become the place to be for anyone with raw talent to develop.

If you've been asking yourself whether bursary schemes are even a worthwhile pursuit or, more specifically, what the point is of this article, here are your answers:

First of all, yes, bursary schemes remain highly profitable investments. The reality is that, in the mad scramble for talent that is modern-day business, a bursary is a very attractive tool with which to recruit or retain valuable employees.

The fault lies not in the concept but in its application. And therein, dear reader, lies the point of this article, which is to begin to understand how to bridge this gap between theory and practice.

This begins with remembering why bursary schemes exist in the first place. In an ideal world, a bursary scheme is used to achieve the following objectives:

    Attract high-potential employees (either from other companies or from educational institutions, even schools) to work with the company.
    Build skills and knowledge in a particular area in the business.
    Incentivise existing staff to expand their own knowledge and careers.
    Incentivise existing staff to study into areas that would benefit their existing work.

So, to really be effective, bursary schemes must be revamped and brought back in line with these objectives. In order for this to happen, these schemes should possess a particular range of qualities:

    They should be simple, accessible and offer maximum benefit to the company or the objective being promoted.
    They should be linked to the performance management system and individuals' development goals, focusing on honing a variety of skills to aid employees to perform more effectively in their current positions.
    They should differentiate between that which a person wants to study for his/her own benefit and the skills that are ideal for the company.
    They should enable employees to study and work to maximise the impact of both.
    They should offer short programmes and individual modules that draw people forward gradually, while still achieving the overall objectives of the programme.

Let us dwell, for a moment, on that last point. Why are short programmes or individual modules (within larger qualifications) preferable? Essentially, a short-programme or module-by-module bursary scheme is an ideal tool for companies to enjoy the best of both worlds. It allows the company to link its short-term objectives and spending to a more controllable and controlled outflow that pays for performance and success.

Another benefit is that the longer-term goal of getting a degree is a powerful motivator that drives retention if properly harnessed. And perhaps the greatest benefit of all is that a modular approach enables companies to offer bursaries to as much as six times more staff, as only some will achieve the results needed to go on to pursue full qualifications. This creates a culture of excellence and expands the collective knowledge pool within the company, enabling everybody to contribute to the bottom line more effectively.

Regenesys' Free Business Education offering is ideal for this sort of approach because the free learning material can be made available to all staff members, with those who perform well being assisted to officially enrol for individual modules.

Whatever provider you choose, if you want your company's bursary scheme and all those involved to achieve their true potential, you must engage in the following crucial activities:

    Select the right staff to be trained.
    Promote the objectives of the scheme to a wide base.
    Have clearly defined funding criteria in line with corporate objectives.
    Ensure that the scheme has adequate funding to achieve its objectives.
    Ensure clear administrative procedures.
    Ensure that the benefits of the scheme are ultimately realised by the company.
    Make timeous payments for studies and related resources.
    Work with relevant training and education providers to ensure that there is a clear understanding of the available programmes.

Today you have read both sides of the argument over an issue that has become unnecessarily contentious in business in recent years. Hopefully, despite what you now know about bursaries' many associated challenges, you will agree that they are valuable tools to ensure that companies achieve their objectives. It is true that, in the past, poorly administered schemes promoted the wrong objectives and benefited a privileged few while engendering resentment in many others. But this need not become the fate of all bursary schemes. The advent of a range of fresh education options has opened up a whole new world in which bursary-based training and development can achieve exponentially more than ever before.
- Regenesys