Investing in college tuition as an employee benefit helps companies attract and retain top talent, but a new study of Cigna Corporation (NYSE: CI) shows there's another compelling reason for employers to embrace the benefit: it improves the bottom line.
An analysis of health insurer Cigna's Education Reimbursement Program (ERP) shows every dollar the company puts into the program is returned and generates an additional $1.29 in savings—a 129 percent return on investment. Lumina Foundation, a national foundation focused on increasing postsecondary attainment partnered with Cigna to design the study, which was conducted by Accenture, a leading global professional services company.
"We've long known that when companies support their employees' pursuit of a postsecondary education, it improves employees' lives and addresses our nation's overall need to increase talent in our workforce," said Jamie Merisotis, president and CEO of Lumina Foundation. "With the release of this study, we also can further demonstrate that investing in employees' tuition isn't a benefit cost, but rather a valuable investment that positively impacts organizations' bottom line. That should entice more C-suite leaders to embrace this approach."
The study of Cigna's ERP offers a rare glimpse at the financial impact of tuition assistance programs. About 60 percent of employers offer such support—investing an average of 10 percent of their learning and development budgets on tuition assistance—but only two to five percent of organizations evaluate the return of these investments. Cigna's study examined differences in rates of promotions, transfers, and retention between employees who took advantage of ERP and employees who did not participate from 2012 to 2014, isolating factors such as employee tenure that could impact findings.
The study shows that Cigna's ERP program increases career opportunity and employee retention, which drives financial payback. Program participants are 10 percent more likely to be promoted, 7.5 percent more likely to be transferred within Cigna, and eight percent more likely to stay at the company, reducing across-the-board talent management and recruiting costs.