A Guide to Professional Development Stipends: 6 Reasons to Offer L&D Benefits
Professional development stipends are a great investment in your people. Here's why and how to offer them to your employees.
Our 2023 Benepass Benefits Benchmarking Guide reveals insights on top pre-tax and perks programs, average stipend contributions, and benefits design so you can design more competitive benefits.Get the guide
Imagine if no one in your company had updated their skills in the past decade. Your workers would still be using Windows 8, your company website’s homepage would launch with a super annoying Flash intro, and your marketing team would still prioritize print ads over social. As for AI? There’s no chance anyone would know how to handle that.
But times have moved on, and thankfully, so have most companies. The concept of lifelong learning is essential for employee growth, and that’s where professional development stipends come in. This guide unravels what professional development stipends are, why you need them, and how to set them up so your employees can embark on a path of continuous growth.
Professional development stipends are tax-deductible benefits paid by employers to support their employees’ growth and development. These stipends empower employees to take charge of their professional journey by providing affordable access to essential learning tools and resources. The frequency and amount you offer are flexible, with options to allocate it:
Learning stipends aren’t the only way to cover professional development expenses. Tuition reimbursement is another popular model, although their mechanisms differ significantly.
The beauty of professional development stipends lies in their adaptability. Stipends are designed to be flexible to meet each individual’s growth journey, allowing for tailored learning experiences. Here are some popular ways that organizations support employees with their development:
Whether it’s an undergraduate course in business management or an advanced degree like an MBA or a Ph.D. in Data Science, an education stipend can significantly reduce financial barriers to higher education. For employees with existing degrees, this stipend can be an invaluable opportunity to upgrade their skills in the field or branch out into new areas of study to enhance their skill set and marketability.
Digital courses allow everyone to find a course that aligns with their career aspirations. Online learning platforms host a wide range of courses across various industries, with some options including:
An employee learning and development stipend further increases accessibility for your employees, enabling every learner to continuously grow at their own pace, meet their career goals, and contribute to your company’s success.
Conferences and networking events allow employees to immerse themselves in the latest industry trends, engage with thought leaders, and forge meaningful connections. Beyond conferences, there are several other avenues, including:
Employees can use their professional development stipends to cover the cost of these events and grow their expertise.
Though mentoring often emerges from organic relationships and usually doesn’t involve monetary transactions, career coaching is a more structured, professional approach to career development and often commands a fee.
A career coach can use their expertise and experience to offer personalized guidance that helps employees:
Employees can use their development stipends to invest in sessions with seasoned career coaches.
Being part of a professional organization or association can elevate an employee’s career trajectory. For example, an HR professional might consider joining the Society for Human Resource Management (SHRM). The Professional membership tier starts at $244/per year and offers research papers, webinars, and more aimed at enhancing HR practices.
By using their learning and development stipends for such memberships, employees gain access to industry-specific knowledge and opportunities to network, collaborate, and lead within these organizations.
Whether you prefer digital or traditional learning, most employee development models require access to materials, such as:
These materials support an employee’s self-study program, allowing them to stay updated and continuously refine their skills.
Professional development stipends are more than just a financial investment; they’re a forward-thinking, employee-centric perk that represents your commitment to your employees’ growth and future. Here are six gains your company will enjoy by offering these tangible benefits:
Professional development stipends are designed to offer ultimate flexibility, allowing employees to create their own learning paths. Instead of being confined to a predetermined set of courses or programs, they can choose what aligns best with their career goals and personal interests. This flexibility keeps the learning relevant and increases engagement, as employees are more likely to be invested in courses they’ve personally chosen.
Consider these real-world examples of how employees use their Benepass professional development account flexibly:
Today’s young professionals look beyond paychecks to seek opportunities for growth, personal development, and continuous learning. According to LinkedIn, 76% of Gen Z workers express a desire for more opportunities to learn or practice new skills. Similarly, Gallup finds that 87% of Millennials say that development opportunities are important to them in a job. Offering professional development stipends can set your company apart in the modern competitive talent market and attract these individuals.
Attracting young talent is only half the battle. The next step is retaining your employees, especially if you want to keep recruitment costs low. The SHRM estimates the average cost to replace an employee at $4,750 per employee. However, industry experts suggest that the costs could be even higher. For example, Edie Goldberg, founder of talent management and development company E.L. Goldberg & Associates, believes the real cost of recruitment could be as high as 3 to 4x the employee’s salary.
These figures don’t just represent monetary losses. They also represent the invaluable time, effort, and institutional knowledge that walks out the door with every departing employee. Professional development stipends can play a key role in increasing employee retention. You send a clear message of commitment and trust when you invest in your employees’ growth. In turn, they feel valued and recognized, making them more likely to stay loyal to your organization.
A skills gap between the skills employees possess and the skills required for optimal organizational performance can have dire consequences. According to McKinsey & Company, 87% of companies either already know they have a skills gap or expect to within the next few years. Such a gap can affect their bottom line by leading to:
Learning stipends are a proactive solution to this challenge. By providing employees with the resources to continuously upgrade skills, you can bridge skills deficits and keep your workforce agile, competent, and aligned with industry demands. You also future-proof your organization against upcoming industry shifts.
The digital revolution has ushered in a wave of transformative technologies that are reshaping industries and redefining job roles. Generative AI is one such technology. With its ability to create content, design products, and even simulate human-like interactions, many both celebrate it for its potential and view it with apprehension.
One telling statistic reveals that 46% of employees are worried about AI making all or some of their job duties obsolete. This fear is understandable, but equipping employees with the knowledge and skills to work alongside these advanced technologies can mitigate it.
Employees can use learning stipends to explore, understand, and master these emerging technologies. Instead of the fear of elimination, they can harness the power of AI to enhance their roles, streamline processes, and drive innovation.
A professional development program is a powerful way to boost employee engagement. It creates a sense of belonging and motivates employees to invest their best efforts, knowing that your organization supports and values their professional journey.
The ripple effects of increased engagement are profound. According to LinkedIn’s 2023 Workplace Learning report, “Compared to disengaged learners, engaged learners are more likely to say:
Employees who actively utilize professional development benefits are also more likely to engage with other organizational offerings, such as wellness programs, company events, or HR initiatives. This comprehensive engagement ensures employees are productive and aligned with your company’s values, cultures, and objectives. For employers, this means a cohesive workforce that’s efficient and emotionally invested in your company’s vision and success.
Diversity, equity, and inclusion are foundational elements of company culture that should be present throughout your entire organization, including your learning initiatives. By ensuring stipends are accessible and relevant to all—irrespective of their background, gender, ethnicity, or any other defining factor—you demonstrate that every employee’s growth matters. This inclusivity cultivates a sense of belonging and lets your organization benefit from a diverse range of perspectives and skills.
With the right platform, setting up a learning stipend allows you and your employees to reap the rewards. Benepass offers two options to distribute funds and support continuous learning in your organization.
Curious how much companies offer in professional development stipends? The 2023 Benepass Benefits Benchmarking Guide found that companies offer an average of $998 in annual professional enrichment benefits. Download the complete guide to explore more benefits trends by company size and industry.
In both cases, set up your Benepass account in four simple steps: