Alumni programs drive business growth

24 March 2009 8:51am

Maintaining a good relationship with departing employees not only ensures a supply of part-time and temporary labour, but also drives business and employee referrals, says global expert on alumni programs, Professor Ian Williamson.

Williamson, an associate professor of management at Melbourne Business School, has completed a range of empirical studies quantifying the value alumni programs deliver for employers.

His research shows that the programs - particularly in the professional services sector - can become a crucial source of new business, because former employees who leave on good terms generate goodwill for the company.

This is because, "you've got a group of individuals out there who will say positive things about your organisation and its products".

Williamson says many employers hold the mistaken view that in most cases, their former employees go to work for competitors.

"But in many cases they don't, they end up joining what we call 'co-operative firms'. These might be organisations that are suppliers of yours, current clients, or - even better - potential clients."

Once former employees are in these types of organisations, Williamson says, "their natural inclination, if they're on good terms with their former employer, is to refer that organisation".

Williamson argues that good alumni programs are particularly important for service-based companies that are often "hard to evaluate until you've actually tried their service", such as accountants, lawyers, IT consulting and business advisory firms.

"These are all services which you can't evaluate until after you've consumed them. It's these situations where your former employees can really make a difference in generating referrals for your organisation."

Williamson, who has been in HR academia for 10 years, has completed a landmark six-year empirical study in the US quantifying the amount of business that former employees of law firms generated for their old firms.

"We found that if a law firm had sent a lawyer to a potential client company, it significantly increased that firm's likelihood of getting business from that company."

Cut recruitment costs

Williamson says alumni programs generate substantial savings in recruitment and contract labour costs.

"Say you have a particular project that has a very unique skill set requirement... the cost of actually going out and finding someone to do that either for a full-time position, or through a recruitment company or temp agency, will be very expensive.

"But if you've done a good job of maintaining relationships with your former employees, who might have done this type of work for you in the past, it can be relatively inexpensive to bring them back [on a temporary basis].

"As well, you're going to get them faster, and they're going to be able to come in and ramp up faster and they're going to know your systems, and more importantly, they're going to know the people they have to talk to get relevant information."

Outplacement the key to effective alumni

Employers forced to make redundancies in the current market should think very carefully about the outplacement plan they offer these employees, Williamson says.

"If you're in a company that's forced to make redundancies, one of the first things you should think about is 'Can I place these people with potential clients?'.

"We've shown it's worth putting resources into that because it can pay significant dividends for you down the line.

"One of the reasons employers don't put resources into it [their redundancy and outplacement strategy] is that they don't understand the value of what these programs can deliver".

Williamson argues that the cost of managing effective outplacement and alumni programs is "minimal" compared to the value they generate.

His research underlines that redundancy programs should focus on offering effective outplacement services, and a key part of those services should be placing departing staff with potential clients.

"This does two things: first it places the person in a position to develop a social connection between your company and a potential client; and second, it helps facilitate goodwill because your former employee knows that in a time of crisis you looked out for them.

"And our research shows that they will reciprocate. When the time comes, they are going to say positive things about your organisation rather than negative."

Some organisations are very sophisticated about the way they do this, says Williamson.

For example, Ernst & Young has an "office of retention" which focuses, in part, on how to place people who are leaving the organisation with potential clients.

Williamson says the other key consideration is to ensure the resumes and skills of departing employees are available on an easily accessible talent database that line management is encouraged to use when contract skills are needed.

"This works out very nicely, because it helps your former employees keep their skills sharp and stay engaged with your organisation, and you get someone who can immediately come in and get to productive work."

Williamson will deliver an address on alumni programs at the Australasian Talent Conference in May.

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