Who says talent development has to stop when an employee moves on?

Who says talent development has to stop when an employee moves on?
Image: Natasha Dzhola for Quartz
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Graduates of US colleges know what it means to be alumni: A steady flow of beseeching mail seeking donations, and the occasional homecoming football game.

But what does it mean to be an alum of a company?

For a small but increasing number of professionals, it means being part of a network of former employees organized by their ex-employers to take part in reunions, networking opportunities and for some, a chance to return to their former place of work.

As corporations redefine the traditional relationship between employers and employees and find new ways to invest in talent development, they’re also looking differently at the value of those they’ve already invested in. One estimate says 8% of the companies in the Fortune 1,000 have some form of alumni program, offering seminars, career-networking events, or discounts on products, just like a university would.

The advent of the corporate alumni network reflects new ways of thinking about career progression. Once, in the Platonic ideal of the American corporation, employment was for life. Workers would join in their early 20s, work their way up to management, and retire in their 60s with a gold watch and pension.

But that model, never particularly accurate, has been discarded first by companies happy to outsource and offshore jobs, and more recently by workers eager to exploit a tight labor market for better opportunities. Now, former employees are viewed as customers, brand ambassadors, sources of referrals, and even future employees.

At Microsoft, roughly 15% of its hires are “boomerang employees”—ex-employees who have returned, says Rich Kaplan, general manager of employee services. “I want them to come back and work here,” Kaplan says. “Maybe they went somewhere else because they thought the grass was greener on the other side, and they found out it was brown. But they only come back if you treat them with respect, and make sure they are fans and advocates.”

Finding a new identity

In part, that means managing their exit process, and plugging them into Microsoft’s alumni program when they leave. The Microsoft Alumni Network is unusual in that it is a separate nonprofit entity, and legally not part of Microsoft, although the company has come to embrace it as a valuable human resources asset. Founded by ex-employees in the mid-1990s, it charges dues ($99 a year for US alumni) to its 20,000 active members, who receive access to lectures and other events at Microsoft’s Redmond, Washington, campus, and discounts on company products.

Lynne Walker worked in marketing at Microsoft in Redmond from 1988 to 1998. She left to care for her ailing mother, but missed being part of the company. “I felt as soon as I left Microsoft I lost a part of my identity, so to speak,” she said. ”Joining the alumni network was a way to find a new identity.”

She takes part in the network’s philanthropic efforts, such as funding grants for area schools, and helps organize its events. One particularly satisfying evening was a “wrecking ball reunion” that took place in one of Microsoft’s original buildings. It was slated for demolition to make way for expansions on the campus. The old offices were decorated with memorabilia from the company’s early years, and filled with former employees. “If I was not a part of the network, I wouldn’t have known about it and missed out on a really great opportunity to re-engage with old friends and experience those memories,” Walker said.

Tony Audino was one of the Microsoft employees who first pitched the idea of an alumni group to then-CEO Bill Gates and his lieutenant, Steve Ballmer, in 1994. “Bill and Steve wanted nothing to do with that,” Audino said. “It was a highly competitive environment. ‘Why we would do that?  Why we would encourage people to leave? You’re either on our team, and if you’re not, we don’t care about you.'”

Audino, who left Microsoft to work in venture capital, founded the nonprofit alumni organization in 1995 in part as a way to keep tabs on talented former employees who might have promising ideas. “Wouldn’t it be great to put a bucket under the Microsoft spigot, and catch them as they left?” he says.

In 2006, Audino founded Conenza, which sells software for corporations to manage their own in-house alumni networks. When he pitches companies on the value of alumni programs, he notes that ex-employees contribute 39% of company reviews on Glassdoor, and that there is a marked improvement in Glassdoor scores when companies have alumni groups. “Do you think you should invest some money in these people who are out there every day talking about your company?” Audino tells HR managers.

The four main draws of corporate alumni programs

Ex-employees tend to join alumni programs for four reasons, Audino says: Career advancement (via networking and job postings), to connect with old friends and colleagues, to get discounts on products and services, and to take part in philanthropic programs. Companies that meet some combination of those objectives can run successful programs without much investment, while theoretically benefitting from a community of happier, more engaged alumni, he says.

One recent convert is First Tennessee, a regional bank based in Memphis. The company rolled out its alumni network last year, and has seen it pay off with several former employees rejoining the company, says John Daniel, the chief human resources officer of First Horizon, the bank’s parent company. Embracing former employees represented a change in attitude about why people were leaving the bank.

“We have people who work for our company who have upward goals or sideways goals we can’t meet,” he said. “If you hire great people, they’re not all going to stay forever. We didn’t have a model or mindset for that.”

Alumni programs come in different shapes and sizes. Some have traditionally been oriented around retirees, such as Coca-Cola’s, which was launched in 1981 and has 4,500 members whom the company mobilizes for its philanthropic campaigns. Taco Bell uses its successful alumni as role models for current workers, with the hope of reducing the high-employee turnover that plagues fast-food restaurants. The company now has 250 alumni profiles on its Share Your Road website, including that of Fred Mossler, a former senior executive at Zappos.

“We’re in a really competitive market for team members, and we want to let our current team members know that they’re important to us,” said Ferril Onyett, the HR executive who runs the program at Taco Bell.

No industry, however, has made as much use of its alumni as management consulting. Firms like McKinsey & Co. and Boston Consulting Group have long benefitted from a symbiotic relationship with their former employees. Consultants are typically hired out of college or MBA programs, spend a few years at the consulting firms, then leave to begin careers elsewhere, often at the clients of their former firms. As they ascend the corporate ladder, they frequently can be counted on to retain their former employer when their new employer needs consulting services.

“If we do it right, they’re more likely to hire us”

BCG has calculated that when an alum is involved in pitching a new client engagement with a guaranteed fee, it’s 40% more likely to win the business than without that connection, says Justin Manly, a managing director who heads BCG’s alumni program. To assure its 22,000 alumni they are valued, the firm lavishes them with perks and benefits, such as a free in-house head hunting service to match former employees with job opportunities. The firm will also arrange special events for like-minded alumni, such as a forums for chief strategy officers to talk shop.

“We see our ability to develop our alum’s careers, and their ability to have an impact on the world, as an extension of what we do within our four walls,” Manly says. “If we stay connected and we do it right—and were not perfect at this yet—but if we do it right, they’re more likely to hire us.”

Manly isn’t surprised that more companies are building out their alumni networks. While few industries will see as direct of a return on investment as consulting (and its close cousins in the legal and accounting professions), almost any company can gain from a program, either by creating a web of customers and referrals, or simply as an aid in recruiting. “There’s a value to being able to say, ‘We’ll be there for you once you’re gone,'” Manly says.

Of course, not all (or even most) former employees have warm and tender feelings toward their ex-employers. If you were eager to leave, you might look askance at an invitation to join an alumni program. But unlike other alumni groups, at least these won’t be asking you for money.