It's all about employee retention.
Fiat Chrysler Automobiles’ free tuition benefit for employees is now a family affair.
In May, the U.S. division of the auto giant started to offer employees at its dealerships in the Southeast free college tuition through a partnership with Strayer University, a for-profit school. On Sunday, FCA announced that it is making free tuition at Strayer available to all of its 118,000 Chrysler, Jeep, Dodge, Ram Truck, and FIAT dealership workers nationally and will also provide it to employees’ spouses and children.
Employees and their families can enroll at Strayer at no cost once the employee’s dealership opts into the program. That requires the dealership to pay a flat fee to give workers’ access to the benefit and another flat fee to extend it to spouses and children.
The expanded benefit is part of FCA’s ongoing effort to attract and retain dealership employees. “It’s a battle to put kids through college,” says John Fox, director of dealer training at FCA U.S. “This is a benefit that can surely bring top talent to our dealers.”
Depending on the position, annual retention at dealerships is in the 65% to 85% range, according to Fox. That means in some instances 35% of jobs are turning over at least once every 12 months, with some positions turning over even more frequently than that. In May, Al Gardner, head of dealer network development at FCA U.S., told Fortune that turnover in dealerships’ showrooms alone was between 45% and 60%.
FCA’s free college tuition perk is also aimed at changing the perception of what it’s like to work as a car salesman. Automobile dealerships, Fox says, “have not crafted the best reputation for [themselves].” The automotive retail business is tough, he says. It involves long hours and, in some instances, six- or seven-day work weeks.
Part-time and full-time employees at FCA who have worked at a dealership for 30 days will be eligible to enroll in an associate, bachelor’s, or master’s degree program in 40 degree categories at Strayer University, a 123-year-old for-profit college based in Virginia. They can take classes online or at one of Strayer’s 78 campuses. The same goes for their spouses and children.
Strayer declined to disclose the size of the fees that dealerships must pay to offer the benefits to their workers and workers’ families. In May, Karl McDonnell, CEO of Strayer Education, said that a bachelor’s degree at Strayer, excluding books, typically costs a total of $42,000. (The Internal Revenue Service effectively caps the tax-free tuition benefits an employee can receive per year at $5,250. Anything over that amount counts as compensation and the employee incurs taxes accordingly.)
The initial rollout of FCA’s free college tuition earlier this year included 356 dealerships in Florida, Georgia, South Carolina, North Carolina, Alabama, and Tennessee. Fox says one-third of those dealers opted into the program and 400 workers are enrolled in classes at Strayer—about 5% or 6% of all those eligible. He says the idea to extend the benefit to workers’ families came from dealers in the Southeast who are participating in the pilot.
Fox described the new benefit for workers’ families as “novel,” but earlier this month Starbucks extended its free college tuition to the spouses and children of its military veteran employees. The difference is that Starbucks’ program, which offers full- and part-time employees full tuition coverage through Arizona State University’s online degree program, requires employees to front the cost of their courses and Starbucks reimburses them at the end of each semester. FCA covers tuition upfront.
Gardner told Fortune in May that “it’s vitally important that we don’t ask these employees to put a cash outlay and then wait 90 or 180 days for reimbursement. Many of them couldn’t afford that.”