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A Lesson in Technician Loyalty

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Equipment Dealerships Battle Tech Labor Shortage with Smart Strategy

With the skilled labor shortage among the biggest ongoing challenges for many industries, businesses are sharpening their focus on key retention strategies that will keep workers engaged and loyal. And experts wholeheartedly agree – retention is core to the growth of businesses.

“For equipment dealerships in particular, we have seen some obvious negative consequences stemming from the loss of skilled workers,” says Marc Johnson, partner at K·Coe Isom. “This issue has everyone’s attention as competition for skilled technicians is becoming cutthroat, and options for finding new talent are extremely limited during times of low unemployment. Employee retention has become a critical part of business strategy for survival.”

A highly skilled technician can result in improved productivity, enhanced safety, increased efficiencies, and even extended equipment life. In the long term, this can also greatly effect customer relationships and OEM satisfaction.

“In a dealership environment, having experienced, trusted, and skilled technicians can often translate into a dealer’s biggest source of competitive advantage,” adds Johnson.

Education Benefits Influence Employee Retention

Because skilled technicians can make or break your business, creating programs to retain them is a huge priority. One way to enhance your value as an employer, advises the HR outsourced services division K·Coe People, is for dealerships to establish a tuition reimbursement program for employees.

“No matter what type of business you’re in, the ability to win business and grow profitably depends on how adept you are at finding and keeping the right people,” says Danielle McCormick, principal at K·Coe People. “The concern is not only to find skilled workers, but to make them feel continuously valued and invested in, so that they invest in your business in return – for the long term.”

Participation in tuition reimbursement programs has been effective for reducing employee turnover, as well as attracting talent. It sends a good message to your employees (and job candidates) that you are invested in them, and reinforces that they will have a job after they complete their training program.

“Tuition assistance programs have been shown to aid in retention, job satisfaction, and engagement,” adds McCormick. “Adding this benefit creates many advantages that employees will value. In addition, these programs typically result in greater employee loyalty, and provide businesses with a way to keep employee skillsets up-to-date. It’s a win-win.”

Setting Up a Qualified Educational Assistance Plan

Consider the following six requirements when implementing a tuition assistance program. To become a qualified educational assistance plan, there must be a written policy in place that satisfies all of these requirements:

1. The program needs to be in a separate written plan.

2. The plan must benefit qualified employees, and the classification for eligibility cannot be discriminatory in favor of highly-compensated employees (executives and owners).

3. Shareholders cannot receive a disproportionate benefit.

4. The plan cannot offer a cash-or-tuition benefit, or the substitution of any other benefit in lieu of tuition reimbursement.

5. The plan is not required to be funded.

6. Employees must be notified that the plan exists and of the eligibility requirements.

It’s also important to note that the first $5,250 of tuition expenses reimbursed to an employee under a qualified educational assistance plan are exempt from federal income tax and withholding, FICA, and FUTA, therefore no reporting is necessary for the first $5,250.

Any amounts reimbursed in excess of $5,250 are treated as normal cash wages and are subject to all withholdings (reported on the employee’s W-2 in boxes 1, 3, and 5). Therefore, it’s important to keep to the limit to receive the full deduction for your business, and to alleviate any discomfort from the taxes that would result for your employees.

If you have any questions regarding the tax application for TA programs, please reach out to our tax experts.

K·Coe People can develop a strategy and solutions that work for your organization. Our HR specialists provide the resources, expertise, and solutions to make your business leaner, smarter, and more profitable. For more information regarding K·Coe People’s HR outsourcing services, contact


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One thought on “A Lesson in Technician Loyalty”

  1. Lee Gray

    Thanks for the article – I believe this is a good strategy for some businesses and will ease the challenge of finding this type of talent.


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