Free degrees, loyal employees

Lee Dailey, director of executive and management education, says that "one of the reasons was that [the programs] varied in the amount of money they would reimburse people. Some reimbursed fully at 100 percent, some were at 80, and some had a sliding-scale arrangement."

Employees had to pay their tuition upfront and be reimbursed later. They also had to find on their own a program that fit into an inflexible work schedule.

UTC's answer to these problems took shape as the Employee Scholar Program, which allows any worker, salaried or hourly, to study any subject at any accredited school.

The most generous and innovative aspects of the program, however, are the awards: When a UTC worker completes an associate's or bachelor's degree, he or she receives $5,000 in company stock. For a master's, it's $10,000.

Padgett received her first stock award after completing her associate's degree in business administration and accounting. Then, in 2001, she received a second stock award for finishing her bachelor's in business management. If she gets her MBA as she hopes, her total award, in addition to a free education, will be $20,000.

Currently, about 11,500 of UTC's US-based employees are active scholars. That's 17 percent of the workforce, well above the national average but still below UTC's goal of 20 percent participation.

The workers now participating are almost evenly distributed across the various degree levels. Since 1996, when the program first started, nearly 9,000 employees have earned degrees, and the company has paid almost $275 million in school costs and stock awards.

Michael May, a manager of Advanced Cell Stack Engineering at UTC Fuel Cells, is one of the many employees who might have left UTC were it not for the flexibility of the Employee Scholar Program.

He enrolled in an MBA program the day after Mr. David announced the education cash benefit. The company had already paid for his master's degree, but as an engineer, under the previous policy he could only get a degree in engineering management.

"I actually looked at leaving the company in '91," says Mr. May. "I realized that an EM degree was not the same as an MBA.... I kind of knew that going along. But at the end of the program, I actually still wanted my MBA, because I had a lot of interest in going into senior management, going into business, going into other areas."

UTC's employee-turnover rate averages 8 to 10 percent a year, but this drops to about 4 percent for employees who've participated in the scholar program.

"There are no strings attached, no contractual bonds to the company," Mr. Dailey says. "There were some concerns initially that this might become a revolving door, where people come into UTC, take advantage of the program, get their degree, and then move on. But ... it has in fact worked the opposite."

As long as a program is accredited, UTC employees can sign up for it. A few engineers went for degrees in culinary arts, in effect earning stock awards for learning to cook. "We even paid for the knives," May says with a chuckle.

In order to fit both work and school into their lives, most participants choose universities that have cooperative arrangements with UTC. Gray-Kemp, for instance, takes most of her law classes in her office building, through a live video-conference feed. Others still go to school the way full-time employees typically have: at night and on the weekends.

"I've been recruited on many occasions," Gray-Kemp says. "But the fact that they paid to send me to school without knowing my abilities – that is very meaningful to me, and so it is very easy for me to tell the headhunters, thank you but no thank you.... For no amount of money have I been persuaded to leave this company."

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