Rethinking Workplace Education

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Rethinking Workplace Education

Guild offers a data-driven approach to education benefits that has attracted the Fortune 500.
Rachel Romer Carlson, MBA ’15. | Jimena Peck

Corporate America has offered tuition-assistance benefits since World War II, but Rachel Romer Carlson says those benefits were mostly reserved for men in white-collar jobs. The Stanford MBA graduate, along with fellow alum Brittany Stich, launched a company out of school to change that.

Rachel Romer Carlson, MBA ’15

Hometown: Denver, Colorado

Industry: Education Technology

Professional Experience:

  • CEO and co-founder, Guild Education
  • CEO, Student Blueprint
  • Barack Obama 2008 campaign

Education:

  • MBA, Stanford University, ’15
  • M.Ed, Stanford University, ’15
  • BA, Stanford University, ’10

Guild Education brings education benefits to frontline employees of giants such as Walmart, Walt Disney Co., Lowe’s, Chipotle, Discover Financial, and Taco Bell. Employees can earn everything from high school completion to traditional associate’s, bachelor’s, and master’s degrees, as well as trade skills and competency-based degrees. By partnering with both large employers and nonprofit colleges and universities, they’ve helped transform traditional tuition-assistance programs from a corporate cost center into a recruitment and retention tool they say can pay back the company’s investment within a year.

Since launching in June 2015, the Denver-based B Corp has raised about $228.5 million in venture capital and is now valued at $1 billion — making it one of the few female-led unicorns. Guild says tens of thousands of students are starting new classes each month.

We asked the data-loving Carlson to tell us about Guild’s journey.

What’s new about Guild’s approach to workforce training?

We brought tuition reimbursement into the modern era by building a software platform and payments integration with the employers on one side and the universities on the other so that employees no longer have to front the money. That’s so important because the average American has about $400 in liquid assets. To ask that person to spend $1,000, $3,000, $5,000 on tuition — you’re asking those people to spend their entire emergency savings account just to go back to college for a course or two.

The second core innovation came when we realized that tuition reimbursement has no quality assurance, no monitoring for outcomes, no understanding for the corporation of the return on investment.

How did you solve that piece of the puzzle?

On the back end, we evaluate to see if it’s driving the employer’s recruitment rates, their retention rates, their promotion and upskilling rates, and their brand. That last one is probably the most fun.

How so?

We get to spend a lot of time helping companies like Walmart share the good parts of what they’re doing within local communities. Walmart doesn’t always get a fair shake on what they’re actually doing for their workers. A program like this has helped them earn the accolades they deserve for the investment they’re making in their workforce. When Walmart announced our program, it lifted its stock price and lifted the perception that customers had of them, and it dramatically impacted the impression that their employees or prospective employees had of the business. And when it was named to Fortune’s Change the World list last year, it cited this program as a contributor.

You also turned the old business model on its head, asking the universities to pay a share of the cost for the student, right?

We realized the real value we’re creating is for the university. We’re in an era where the largest for-profit universities in the country have nine-figure marketing budgets. You see their commercials, and they’re tearjerkers. But the thing we should be crying about is that their outcomes are horrific. We shouldn’t be encouraging working adults to spend at places that have very low records for graduating and for helping create economic opportunity for their students. The more than 100 schools we regularly work with — including Southern New Hampshire University, University of Denver, University of Florida, Purdue University, Brandman University, and Bellevue University — don’t have marketing budgets that large.

How do those schools and the employers benefit?

Community college students weren’t struggling because they’re not capable, but because they didn’t have the right academic support or a feasible schedule.
Rachel Romer Carlson

At a simplified level, the employers are paying universities for tuition. They’re getting tuition rates at bulk discounts, of course, and the tuition discount the schools are offering is coming from money they typically would spend on marketing to attract students. The universities are spending another part of what they’re saving in student acquisition costs to pay Guild for the technology and support services we provide students. Guild is paid by universities on a term-over-term basis, only as the students successfully progress through their programs.

The presumption is that employees who further their education will be promoted at work. Is that actually happening?

Compared to an employee who has the same title at the same company, the data show us that an employee in a Guild program is 2.7 times more likely to be promoted.

What’s the typical return on investment for a company that participates in the Guild program?

For every dollar they spend, they see a $1.30 to $2.10 return on that investment. You can see that hard return in the reduction in turnover and recruitment costs, and the reduction in training and promotion costs when you can promote from within.

Does the appeal of this program go away if the job market is not as competitive as now?

Some companies will be less interested in launching this benefit during a recession. But the flip side is that in a recession, employees are more likely to want this benefit. For example, 2009 was higher ed’s best enrollment year in history. In a time of economic uncertainty, the frontline workforce heads back to school at unprecedented rates. We’re confident we will continue to grow in a recession.

200 of your company’s 470 staffers are academic coaches. Why is that such a central part of the business?

Brittany and I both realized that community college students weren’t struggling because they’re not capable, but because they didn’t have the right academic support or a feasible schedule. Most of the classes were in the middle of the day while they also were trying to hold down jobs, so our nation had effectively built dropout factories where the structures were simply not designed for working adults. The average graduation rate was between 5% and 20%. And whenever anyone would bring up that statistic, everyone would shrug and say, “Well, not everyone’s cut out for college.” I found that so disparaging. Coaching helps increase the odds that someone will be successful.

Do your corporate clients worry their newly educated workers will leave for better jobs?

We have to know that helping employees get into this program pays for itself in that first year, such that if somebody goes back to school with you for two, three, or four years, and then moves on, that you have recouped the money. So we work with state and nonprofit schools that have been able to bring down bachelor’s degree costs to between $6,000 and $7,000 a year. The company can invest $5,250 to their employees’ education in nontaxable benefits. A couple thousand dollars a year is very doable when the average turnover cost of a frontline job is between $5,000 and $7,000.

What’s the hardest decision you’ve made?

The decision to move the business to Denver. We’re now in an era when everyone says you should move your business outside of the Bay Area, but in 2015, that was not well-received. People thought, “Hey, this is the Renaissance; how dare you leave Venice or Rome?” I knew it would be unsustainable to hire droves of coaches and ask them to live and commute in San Francisco, and I believed it made sense to have our coaches, as well as our product leaders and our engineers, in the same place. I also knew my husband and I wanted to have children and that many of the people I wanted to hire were going to be parents. In hindsight I think it’s one of the two or three best decisions we’ve made. We’ve built the working-parent culture that we aspired to build. And it’s great to be within one flight of everyone we partner with.

Is there one particular challenge that keeps you up at night?

Literally, my children. I have two little girls, Magnolia and Lily Grace, 20-month-old twins. They keep me up more than anybody. From a business perspective, the challenges change. In the early days your challenges are existential. Will the market appreciate what we’re producing? Will employers work with us? Will universities work with us? Now we’re focused on how to move from the hundreds of thousands of students we’ve been involved with to those we want to reach. We know millions of Americans need what we do.

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