Revolutionizing Collegiate Talent Acquisition: Managing Risk with Employer-Funded Financial Aid

by Jeff Nelder, Chief Purpose Officer, EFFA

Introducing EFFA!

Employer-Funded Financial Aid (EFFA) offers a groundbreaking solution to the problem of high voluntary turnover in new grad talent. By providing milestone-based scholarships to students before hiring, EFFA helps employers identify the right fit talent and reduce the risk of voluntary turnover. In this blog post, we'll explore how EFFA works and its potential benefits for employers and students alike.

The Problem: High Turnover Rates Among New Grads

According to SHRM, replacing a single voluntary turnover can cost a company between one and two times the total compensation package, including salary, benefits, and tax matching. This significant expense is exacerbated by the high turnover rates among new college graduates. Studies show that 40% of new hires leave their jobs within the first year, with three-quarters of that turnover occurring within the first six months.

EFFA: A Revolutionary Solution

EFFA addresses this issue by providing employers with a unique opportunity to invest in potential hires before Day One. Through milestone-based scholarships - which are a business expense to the employer just like recruitment costs - organizations can incentivize students to complete specific tasks or milestones, such as attending company events, participating in interviews, or completing training programs, before making the hiring decision, while the students are still in school.

By engaging with students in this way, employers can:

• Identify the right fit: Assess students' compatibility with the company culture, skills, and potential to succeed in the role.

• Reduce turnover risk: Increase the likelihood that students will accept a job offer and remain with the company long-term.

• Improve new hire productivity: Prepare students for their roles, ensuring they are ready to hit the ground running.

How EFFA Works

Milestone-based scholarships are the incentive for student talent to enter the employer funnel and participate in vetting and preparation milestones prior to employment. These scholarships are business expenses to the employer, vs. charitable donations . Once an employer awards the scholarship, the student commits to completing certain vetting and preparation milestones, set by the employer, such as assessments, projects, onboarding and mentorships - all prior to Day One on the job.

EFFA's proprietary procurement layer, EFFAPay, facilitates the financial transactions between employers and students. Employers can easily pay students for completing milestones, establishing a financial relationship that strengthens the employer-student bond.

EFFA can be integrated into your existing talent acquisition process, whether you're sourcing through platforms, like job boards, or using your own internal pipelines. We can help you manage the risk associated with hiring college graduates by providing tools and resources to vet and prepare candidates.

Protect Your Collegiate Talent Investment While Reducing US Student Debt

Investing in EFFA can significantly reduce the costs associated with voluntary turnover. Consider this: Based on an average starting salary of $70,000, and SHRM’s estimate of 1X to 2x replacement costs of, “salary + benefits + tax matching,” if your company hires 10 college graduates and four of them leave within the first year, the replacement cost could be as high as $600,000.

By using EFFA, you can invest a fraction of that amount in the form of milestone-based scholarships across all 10 candidates to reduce turnover risk. This investment can lead to:

• Increased productivity: New hires who have gone through the EFFA process are more likely to be a good fit for the company and hit the ground running.

• Improved retention: By building a stronger relationship with students before hiring, you can increase their commitment to the company and reduce the likelihood of them leaving.

• Cost savings: The savings from reduced turnover can far outweigh the initial investment in EFFA.

• Social Impact: Employers deliver profound social impact as their investments significantly reduce US student debt.

Conclusion

EFFA offers a revolutionary approach to collegiate talent acquisition. By managing risk through milestone-based scholarships, employers can attract and retain the best talent, reduce costs, and improve their overall workforce performance – all while driving down current record-breaking levels of US student debt (which is now almost 150% of US credit card debt). If you're looking to enhance your university recruiting efforts and improve your bottom line, EFFA is the solution you've been waiting for. If you’d like to learn more or discuss further, you can connect withJeff Nelder (me) here on LinkedIn or email me at the address on my profile. I’m always down to discuss EFFA.