Companies incentivise employees’ continuing education through fee waivers and refunds. However, refunds are more effective in improving learning motivation and focusing on the course benefits. Therefore, companies should opt for refunds rather than waivers. To prevent low enrolment due to the upfront cost, they can highlight course benefits through course samples. Where waivers are unavoidable, they can introduce a virtual cost via increased time and effort during enrollment and provide learning motivation through information interventions.
Human capital development is a crucial driver in today’s knowledge-based economy.
Therefore, companies are turning to platforms that offer relevant courses or incorporate such courses in their training programmes. Firms often incur costs to incentivise these courses through fee waivers or refunds. However, they question the relative merit of these two incentives as free offers can sometimes distract consumers from the product benefits and the promotion itself. A study investigates this issue to answer the question: Are fee waivers or fee refunds better for encouraging employee learning?
The study found that fee refunds are a more effective incentive than fee waivers for
encouraging adult learning. Learners offered a fee refund are more likely to stay on with the learning activity, dedicate more time to reading the study materials, and are more likely to return to the learning activity later on. They also show greater self-motivation to engage autonomously in the learning activity. This difference in behaviour happens because when potential learners review an incentivised learning programme, waivers draw attention to the incentives and away from the learning benefits. Fee refunds, on the other hand, keep learners focused on the learning benefits.
Amount-off promotions can cause problems for product retailers too by affecting consumer behaviour. This post explores how such incentives can be used to generate positive customer responses.
The “mental accounting” concept can explain this learner behaviour, which suggests that
people are more motivated to find benefits when a cost is incurred. When they engage in a transaction, they mentally open an “account” related to it. And people are highly reluctant to close the “account” at a loss. Therefore, once they incur an expense, they are keen to track related costs and acquire as many benefits as possible to offset them. In the case of online learning, this idea translates to learners seeking out the learning benefits when an upfront cost is incurred while signing up for a course, even if the cost is later refunded.
Interestingly, the study found that the same effect of focusing learners on learning benefits
can also be achieved by including a non-monetary cost in the signup procedure of a free programme. This happens because people also apply mental accounting to time and effort. Employees look for corresponding benefits when they spend time or effort on a learning activity. Therefore, embedding such efforts in the signup process can also motivate employees to track learning benefits, reducing the impact of a fee waiver.
Mental accounting is also used to encourage consumers to choose pay-per-use tariffs. Here’s how service companies do it.
This study has significant implications for the adult learning industry and organisations that
invest in their employees’ continuing education. To encourage employees’ greater commitment towards the learning goals, they can incentivise learners by refunding them for completing the courses. However, refunds can sometimes affect enrolment due to employees’ socioeconomic status. Providing detailed information about the course, its contents, and its benefits can also improve motivation and willingness to enroll. Another option that can help in such situations is to offer a sample of the course before the actual signup.
When waivers are inevitable due to the need for greater enrolment or other reasons, firms
can use waivers but make the enrolment process use up more time and effort to generate greater learner commitment. Moreover, they can provide information interventions that strengthen learners’ belief that the course will benefit them. These reminders will help to sustain their interest in the course and reduce their tendency to quit. Firms can use encouraging text messages or emails to send such reminders.
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