Lumina White Paper Evaluates Value of Employee Tuition Reimbursement Program
When the Lumina Foundation studied the Cigna Corporation’s Employee Reimbursement Program, they discovered that reimbursing employees for tuition spent on higher education is a valuable business investment that “translates into quantifiable cost avoidance for Cigna.”
The Lumina Foundation, a national foundation focused on increasing post-secondary attainment, partnered with Cigna to design the study, which was conducted by Accenture.
Lumina’s analysis of Cigna’s Educational Reimbursement Program (ERP) revealed that encouraging and helping employees attain a secondary or postsecondary degree increases employee retention and career opportunities. The study proved three hypotheses:
- Promotions: ERP participants achieve more promotions than non-participants, resulting in lower cost to fill. (Results found that 10% were more likely to be promoted.)
- Transfers: ERP participants achieve more internal transfers than non-participants, resulting in lower cost to fill. (7.5% were more likely to receive a transfer.)
- Turnover: ERP participants are retained more than non-participants, resulting in reduced turnover costs. (8% were more likely to be retained.)
The white paper also examined the employees’ perspective and concluded that employees overall have positive views of ERP, and believe that it results in improved career outcomes, validates feelings of self-achievement over financial gain, and creates increased confidence, motivation, and support from managers and colleagues. The study also identified that wage gains are associated with ERP participation and that entry-level and mid-management ERP participants received, on average, a 43% incremental wage increase over a 3-year period as compared with non-ERP participants.
The study concluded that Cigna’s ERP is successful but needs some improvement in areas of communication with employees about the availability of their ERP. Cigna responded by making immediate program changes to it’s program to align it with broader talent strategies.
This study forms a foundation for further studies with other employers of various sizes across a diverse range of industries and establishes a way to quantify a program’s value, moving tuition assistance from the status of a cost-centered incentive to that of an effective talent development strategy.