Alumni relations

Why is it that when you finish college, it's called graduation, but when you leave a job, it's called termination? Why not treat your former employees as alumni, instead of castoffs, deserters, rejects and traitors?

          Why is it that when you finish college, it's called graduation, but when you leave a job, it's called termination?

          Here's a rare instance where the private sector can learn from academia: Why not treat your former employees as alumni, instead of castoffs, deserters, rejects and traitors?

          When someone leaves your company, either because he was laid off or he decided that the grass may be greener elsewhere, it's almost always your loss. (This doesn't apply to someone who is fired for incompetence, of course.) People depart with a tremendous cache of institutional knowledge, and assuming they're good at what they do, they're likely to wind up climbing the ladder at another company.

          The argument for keeping in touch goes like this: Former employees can refer job prospects to your company; they may one day decide to come back to your company, returning with more skill and experience than when they left; if they feel positive about your company, they'll speak well of it within the industry; they can help you listen objectively to what the market is saying about your company and its offerings; and some may even refer new business to you.

          Just as employees have long realised that it's not smart to burn bridges with their former employers, now employers are learning that it's prudent to remain on good terms with their ex-employees. One way to do so is by launching an alumni network an online community that helps former employees stay in touch with one another and their previous employers so they can exchange information, fill jobs and refer business back and forth.

          Starting an alumni network is almost always a project of the human resources group, with the support of the CEO or other top executives. Web-based software from companies like Bernard C Harris Publishing, Corporate Alumni and SelectMinds can be used to set up and maintain the network, allowing companies to establish a directory of alums, communicate with them and permit the alums to communicate with one another.

          Professional services companies have been among the first to create alumni networks, often using their own homegrown software.

          Management consultancies, for example, know that many of their alumni go on to work in the top ranks of companies that tend to hire management consultants, so it's wise to do what they can to keep things cordial from publishing newsletters to running sites to throwing cocktail parties. Cem Sertoglu, cofounder of New York City-based SelectMinds, says that a survey in the United Kingdom showed that when publicly held companies choose a firm to do their auditing, they're 60% more likely to choose one that has alumni working within its walls.

          New York City-based Ernst & Young International is looking for similar payoffs, using software and services from SelectMinds.

          "We're looking for three main benefits," explains Madge Nimocks, director of Americas alumni relations for Ernst & Young. "One is 'boomerangs' employees that later come back to us. Another is business development alumni referring business to us. The third is getting more information about what's going on in the world having more eyes and ears on the street."

          Nimocks reports that already, 25% of Ernst & Young's most experienced hires are boomerangs, and "we want to see that increase." Any employee with more than one year of employment at the company is eligible to join the network. "The objective is to maintain lifelong relationships with our employees," Nimocks says.

          Sertoglu believes that companies will eventually reap other benefits from their alumni networks. One SelectMinds client is already interested in ways that it might identify alumni with particular expertise and have them serve as short-term contractors or consultants, if they were available, or even answer specific questions. (Sertoglu says some kind of reward, monetary or otherwise, would likely be offered.) "

          Knowledge walks out the door with every employee who leaves," he says. "Our clients want us to dive deeper into capturing what individuals did and what they knew when they were at the company."

          Even for companies undergoing layoffs and not losing employees to other opportunities, alumni networks can make solid sense. Alumni networks can supplement more traditional outplacement activities, helping laid-off employees find new opportunities by contacting an older generation of alums. Many of the older alums will be working at other companies in the same industry, or they may have started their own company. And like people who have graduated from the same college, they make assumptions about an individual's quality and will likely be more inclined to hire them, ignoring the stigma of a lay-off situation.

          The software to start an alumni network isn't cheap but then again, it isn't priced like enterprise software, and the vendors contend it has a measurable return. The initial cost of implementing SelectMinds' system starts at roughly $US80,000, and Sertoglu says that 80% of the company's clients also ask it to serve as a "fully outsourced alumni relations office," for a price of between $US50,000 and $US200,000 a year. Planet Alumni Inc., a competitor, charges between $US7500 and $US10,000 to set up its system, then a monthly fee that starts at $US1000 and is based on the size of the network. But SelectMinds has signed up more customers so far, including Agilent Technologies, Ernst & Young and Sapient.

          The three most popular features of alumni networks, according to the vendors that help design them, are directories of former employees, job listings, career management resources and discussion boards.

          Where do the metrics come in? You might want to track how much new business comes from alumni, or how many new employees they send your way. Many companies, according to Sertoglu, keep stats on the number of boomerang employees.

          "If you have a rehire rate of 5% now and an alumni network helps you increase it to 15% meaning that 15% of everyone you hire has worked for you at some point before," Sertoglu says. "That would save a typical Fortune 500 company about $US12.5 million a year in recruiting and training costs."

          Alumni networks aren't always a breeze to implement. When they're proposed, it's not unusual for some executives to ask, "Why should we bother communicating with losers who've left the company?" They need to be sold on the potential payoffs. Once alumni networks are launched, they can encounter various snags. They can turn into havens for trash-talking about the company (something that's avoided by requiring everyone to sign in before they can post messages). They can be overwhelmed by legions of recently laid-off employees, if there's not a balance of older generations of alumni participating in the program. And if alumni aren't given a reason to participate often, the value of the network diminishes, and their contact information and profile will eventually become stale.

          Still, even if now is not the right time for your company to invest in an alumni network, it's a productive exercise to think about how you might create a win-win situation by treating employee departures as graduations rather than terminations. If you expect your alumni to speak well of your company once they leave, how might you change the way you handle resignations (and layoffs)?

          Most companies have more former employees than they do current employees. It's time to start thinking about them as potential allies, ambassadors and alumni. Establishing an online community for them can be a smart first step.

          Scott Kirsner is an alumnus of Boston University, a small management consultancy and Boston.com, among other places. Send column feedback to ecosystem@darwinmag.com.

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