How Your Ex-Employees Could Save You Millions
While there are many reasons to invest in a corporate alumni network–attracting top talent, acquiring new business leads and attaining industry insights–the real story is in the numbers.
The first, and most widely recognized metric derives from ‘boomerang employees’ or rehires. Experts estimate it can cost as much as twice an employee’s salary to recruit, hire and train a new worker, according to the New York Times. And this is without considering the lag time in a new hire’s productivity as they adapt to company culture and gain trust with colleagues and clients.
Each boomerang employee can save a company an average of $18-20K in recruiting fees and hit the ground running twice as fast as a new hire.
Boomerangs also mitigate risk, boost morale, and lead to higher retention rates. Employers know what to expect when they hire a former employee, and returning employees know what they’ve signed up for.
Now consider the industry skills and contacts that were acquired while they were away (on someone else’s dime). Dr. John Sullivan, a professor of management at San Francisco State University, says: “Having worked for a competitor can be worth a lot.” Take LeBron James, for example. “After amassing championship rings with the Miami Heat, James returned to Cleveland with a new understanding of what it took to come together as a team to win a championship,” says Brian Hughes, CEO of Integrity Marketing & Consulting.
What kinds of numbers are we talking about here? In December 2014, according to the Bureau of Labor Statistics, 2.7 million workers voluntarily left their jobs, and this number is expected to grow as millennials seek instant gratification, personal fulfilment and upward mobility. Even highly sought-after companies like Google and Amazon have average new hire tenures of just over a year, according to a 2013 Payscale report. Companies that have some type of online network for past employees can easily fill 15 to 20 percent of their open positions with rehires. With an average savings of $20K per hire, you’re looking at a $10.8 billion discount in U.S. recruiting costs alone.
It’s no wonder that 2016 was coined “the Year of the Boomerang.”
But what about those that leave for good? Even if they aren’t interested in returning, alumni can refer talented friends and colleagues who would be a good fit, giving employers access to trusted referrals. Alumni become the recruiters and are incentivized to leverage their own social connections to make a match. The average optional referral bonus ($1K-2,500) is just 10% of the cost of outsourcing a professional recruiter.
Other 2016 workplace trends also highlight the importance of corporate alumni networks. The growing gig economy means that more of your alumni are available for project-based or temporary work, saving the 25-150% of the worker’s salary charged by temp agencies.
With Millennials representing 75% of the global workforce by 2025 and more than 60% of Millennials leaving their company in less than three years, the time to develop a strategy and implement an alumni engagement effort is now. When considering the investment, think of all the money you’ll save!
Stay tuned for Part 2 of this blogpost, as we explore how your ex-employees can MAKE you millions!