In the talent race, companies are helping pay for employees’ higher education. Is it paying off?
As the job market rebounds and Millennials become the dominant generation in the workforce, companies are stepping up their efforts to attract top talent. To do so, many are turning towards a benefit that has been offered to varying degrees over the last decade – covering the cost of employees’ higher education.
Some 60 percent of companies now offer tuition assistance programs, and some, such as Starbucks and Fiat Chrysler, have committed to covering the full cost of a four-year degree through partnerships with college and university providers. But for all the momentum this approach has received, it begs the question: does tuition reimbursement further organizations’ ultimate goal of advancing and keeping top talent?
A study released today by Lumina Foundation offers compelling evidence that the answer is yes. It examined the Education Reimbursement Program, or ERP, offered by health insurer Cigna Corporation and found that participants in the program were 10 percent more likely to be promoted, 7.5 percent more likely to be transferred within Cigna, and 8 percent more likely to remain at the company than non-participants over a three-year period.
What’s more, the study showed, program participants in entry-level and mid-management positions saw a 43 percent average incremental wage increase over the three-year period compared to non-participants, and ERP participants across the board said they believe the program leads to improved career opportunities, and greater confidence, motivation, skill and recognition from managers and colleagues. That means the employees clearly win big with this program.
But what about the company—does it benefit? The study found that Cigna was able to show a 129 percent return on investment for the program – meaning the company got back every dollar it invested in ERP and saved $1.29 in talent management costs on top of that.
This study helps illuminate what chief talent officers and HR executives have intuitively known to be true: Investing in employees’ knowledge and skills growth is not only “doing good;” it also leads to doing well from a bottom-line perspective. And though a large number of companies now invest in tuition assistance, very few – only about 8 percent – actually evaluate the ROI, and almost none publicly release that information. So these findings offer rare, quantifiable insight for companies on such education investments.
The implications of these findings are potentially huge. As the business case for investing in employees’ higher education becomes stronger, chief learning and talent officers, who have long been advocates for such efforts, will have an even more powerful case to make to their C-suite peers. And as more companies make tuition benefits available and increase the strategic focus of their offerings, other firms will follow suit to remain competitive.
Cigna’s experience demonstrates the power that seeing positive financial results can have on growing such programs. In response to its positive results, the company increased its cap on tuition assistance by 50 percent to annual maximums of $8,000 for undergraduate or certificate programs and $12,000 for graduate courses for full-time employees in high-demand fields. The company anticipates additional ROI growth based on this increased investment and plans to conduct another study to test this.
The movement for more companies to embrace tuition reimbursement also has positive implications for society. There is now greater-than-ever demand for workers with education beyond high school. But while nearly two-thirds of U.S. jobs are projected to require postsecondary education by 2020, only 45 percent of Americans have degrees or certificates today. And with escalating higher education costs presenting a roadblock for too many to pursue education beyond high school, employers have an opportunity to play a critical role in filling the gap.
They should rise to the occasion. The positive results of Cigna’s study offer one more piece of motivation for companies to do so.
Contact John Assunto for all of your Education Recruiting needs! Johna@worldbridgepartners.com or 860-387-0503