A new study of Cigna’s education reimbursement program conducted in partnership with the Lumina Foundation and Accenture shows that every dollar the company contributes generates a 129% return on investment. Employees taking part in the ERP also have lower turnover, more promotions and a greater number of lateral transfers than their non-participating co-workers.
“This is the first of a series of ROI studies in different industries we are planning that we hope will generate research results we can use to encourage organizations to further ramp up employee tuition support,” says Jamie Merisotis, Lumina’s president and CEO.
Cigna is a global health service company with about 37,000 employees in 27 different countries. When the study was carried out, all full or part-time employees in good standing were eligible for the IRS non-taxable maximum repayment each year of up to $5,250 for undergraduate courses and $8,000 for graduate programs. The ERP, which could also be used gain industry certifications, had an overall annual take up rate of about 2,500 employees.
“We always thought about doing some ROI work on our ERP but this kind of research is typically expensive. So when Lumina reached out to us with this no-cost opportunity we were more than willing to come on board and contribute our time,” says Karen Kocher, Cigna’s chief learning officer.
Cigna selected promotions, transfers and turnover as criteria for measuring ROI. HR data from approximately 4,400 employees who did and did not take advantage of the ERP from 2012 to 2014 were analyzed. In addition, surveys were completed by over 200 employees and 10 interviews were conducted with leadership, ERP participants and non-participants to help put the analysis in context.
Study results reveal that the retention rate of Cigna employees participating in the ERP is over 8% higher than for other employees; participants are promoted 7% more often; and, they receive more frequent internal transfers (about 8%) than their co-workers. “In addition, we discovered that people participating in the ERP are 43% more likely to be paid more,” notes Kocher.
“That ERP participants were directly promoted is not a surprise, but the fact that many were laterally transferred I think was an interesting positive sign because it means that they got opportunities for future growth within the organization in new areas,” Merisotis says.
In addition to the compelling ROI results, the study provided Cigna with valuable information about their ERP’s strengths and weaknesses they could use to improve it. For example, they learned that many people who want to participate cannot because they are unable to afford paying thousands of dollars of tuition upfront which may not be reimbursed for six months or more.
As a result, the company approached over 40 educational institutions worldwide including the University of Hartford, the New England College of Business and American Intercontinental University. These schools agreed to provide 5% or 10% tuition discounts to Cigna employees and delay payment deadlines until employees have actually received money from the company.
“We thought they wouldn’t go for it, but only a couple even needed a few days to think about it before they agreed. Universities realize they have to be creative to maintain enrollment these days,” Kocher says.
Study results also revealed broad support for giving or the ERP a more strategic focus, rather than contributing the same amount to all employees taking undergraduate or graduate courses. “We created a list of 15 specific study areas that are currently valuable to both employees working for us or those who may leave us to seek work elsewhere,” she says. “So, for example, employees who study actuarial science, mathematics or software engineering can now be repaid up to $10,000 for undergraduate and $12,000 for graduate programs a year with the reimbursement for general degrees dropping to a maximum of $4,000 and $5,500 annually.”
Kocher says she was also surprised to learn from the study that many employees are confused about the program in spite of the company’s robust communications program. “To address this problem we added an advisory service of 14 people who spend a least part of their time counseling employees about the programs and schools that may best meet their needs. In the two or three months it has been operating about 100 people have taken advantage of the service,” she says.
Some employers require employees to stay with the company for a period of time after they get a tuition reimbursement or they have to pay it back, but Cigna abolished a similar requirement several years ago. “We wanted to accentuate the positive reasons people should participate in the ERP, not the negative ones. This study shows we made the right call because we now know that our employees who got school fees repaid stay longer than those that don’t,” she says.
Merisotis reports that Lumina has five or six similar studies in the pipeline of companies in different industries, but he is delighted with the Cigna results and subsequent actions the company took. “I don’t think we can make too many generalizations yet based on results from one company, but the Cigna ERP and the modifications the company made to the program is certainly a model for other interested companies,” he says.
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