What do Tesla, You Tube and LinkedIn all have in common? Apart from being three of the highest profile and most innovative brands of the past decade, they were all created by the alumni of one company – PayPal.
Reid Hoffman, one of the founders of LinkedIn, has written about the importance of strong corporate alumni networks in his book – The Alliance: Managing Talent in the Networked Age.
Hoffman says: “Lifetime employment might be over, but a lifetime relationship remains the ideal…Establishing a corporate alumni network, which requires relatively little investment, is the logical step in maintaining a relationship of mutual trust, mutual investment and mutual benefit in an era where lifetime employment is no longer the norm.”
The power of corporate alumni networks even extends to the financial markets. A study by Harvard Business School examined 15 years’ of US investment data. It revealed that fund managers placed larger bets on companies to which they were connected through an education network and also performed significantly better, to the tune of almost 8% a year.
Here in Asia Pacific, an increasing number of companies are considering the benefits of setting up a corporate alumni network and whether they are at a disadvantage in not doing so.
The benefits of a successful alumni network include:
The Power of Data: Former employees can be great sources of ideas and intelligence, aiding businesses to understand new trends, technologies and potential investment opportunities.
As Hoffman says: “Not only do [former employees] have knowledge of the outside world that a company’s current employees do not, they also understand how the organisation works….At LinkedIn, reports and rumours about emerging technologies such as WhatsApp are taken more seriously when they come from former employees than from random commentators.”
Brand ambassadors: Building and maintaining relationships with your alumni can enhance the company’s Employee Value Proposition (EVP) and brand.
Hoffman talks about the importance of alumni in helping to build brand value via the likes of social media, commenting: “If they promote a product or initiative on social media or respond to the tweets of customers or prospects, alumni have a credibility that current employees simply can’t duplicate.”
Investors: Ex-employees often still retain shares. Maintaining good relations with these ex-employees can increase the odds that they will hold on to those shares for the long run and maybe even invest further.
Perhaps the biggest benefit of a strong corporate alumni network, and the one that I have seen work incredibly well in organisations, is the ability to hire great people – and continue hiring them.
Recruiting returnees who return with new skills and experiences can be extremely beneficial. It costs half as much to re-hire an ex-employee as it does to hire a new person. Re-hires are 40% more productive in their first quarter at work and they tend to stay in the job longer. Research suggests that the average Fortune 500 business could save around US $12 million a year by actively recruiting alumni. Even more important is that alumni are known quantities - the risk of a costly wrong hire is almost completely eliminated.
Alumni are also a growing source of referrals with some companies offering alumni compensation for referrals who are hired.
Hoffman says: “The very presence of a properly implemented corporate alumni network can help an employer close great candidates….Recruiting great people is expensive. An alumni network that generates just a few hires a year is easily worth six figures on hiring value alone.”
For the alumni themselves, staying connected, maintaining relationships with people and networking are significant benefits. For many, it is a career management tool, where they can find new jobs or business opportunities.
What a number of corporate alumni networks have found is that whilst connecting with the network digitally, people love to attend face-to-face events. These events can range from sponsored exhibitions, talks by alumni to year-group gatherings. This provides an opportunity to network with members enjoying learning about other people and how they have become successful.
Poonam Jeswani, HR Business Partner at travel technology giant Sabre, is a firm advocate of corporate alumni networks.
She says: “Such networks are growing in importance as employees spend less and less time at a single company. In today’s corporate world, people move jobs, roles and industries at the drop of a hat. As a corporate, former employees can and will act as promoters for the talent brand and overall brand if given the forum to do so.”
Poonam, who until recently was Senior TA Partner with Experian in APAC, added: “The Experian Alumni Network was formed to provide our alumni with a forum to connect with us, to stay in touch with the brand and all that it’s associated with and to truly provide a vehicle for significant benefits to be realised by either party through opening doors, finding new jobs or business opportunities.
“In 2016, over 6% of Experian’s total hires in APAC came from our alumni network and in 2017 the company is on track to overtake that target.”
Armstrong Craven is a global talent mapping and pipelining specialist with offices in the UK and Singapore.
Follow Heather @singaporeAC