Corporate Alumni: An Oxymoron?

Time was when you left a company you left behind the friends you’d made there. This was particularly the case if you’d been sacked or lured away by the competition: your former colleagues would generally keep their distance, hoping to avoid any conflict of interest, misunderstandings, being seen as disloyal, or even an invitation to follow the same route. Leaving the company was a bit like breaking up, and even when litigation was absent, it resulted in cutting all ties with the person leaving. Sometimes, departures took place within a matter of minutes, with the former employee being asked to empty their desk there and then, their internet access cut off, and a security guard to accompany them down to reception.

But over recent years, these dramatic scenarios have become less frequent, in part thanks to part-time working arrangements, short-term contracts, flexi-time, working from home, and freelancing. As a result, joining and leaving a company is a more natural process, and it’s increasingly common for professionals to continue collaborating in one way or another with their former employer. In short, when we join a company, it’s rarely till-death-do-us-part.

At the same time, the social networks and the internet have made it easier to keep in touch with former colleagues.

We are also seeing a trend whereby outgoing members of senior management play a transitioning role, helping pave the way for their replacement and even working with them for a short period of time while they find their feet. I would argue that this more measured approach makes sound management sense.

What’s more, some organizations are going further, launching initiatives to maintain and build on relationships with former employees. Perhaps the best example of this new approach can be found in the alumni departments of many universities. Their job is to attract future alumni, particularly from the families of former students; they donate money, particularly in the United States, where there is a strong tradition of fundraising; they can sit on boards or consultative bodies; and in short, represent the old alma mater socially and professionally.

Many companies have followed this model, seeking to maintain contact with former employees. The pioneer in this regard was McKinsey, (1) and the practice has since been extended to other consultants and professional service companies, among them law firms and auditors, as well as to other sectors. In the corporate sphere, the reasons for creating alumni communities are mainly driven by financial considerations. For example, former employees can help consolidate current projects or bring in new business, as happens with consultants and lawyers who go on to work for a client of their former employee. They can also help identify and recommend talent.

Given that they tend to have kept in touch with their former colleagues, they can also be a reliable source of sensitive information, and are often open to new opportunities to collaborate. What’s more, they expand a company’s network of relationships beyond the existing stakeholders. Corporate alumni can also take on the role of pro-active ambassador for their former employees and colleagues. For example, a significant number of former Goldman Sachs directors are employed by the White House, regardless of the president’s political affiliation.

Not that creating corporate alumni is without its challenges. In universities, it is often said that the stakeholders most opposed to change are the faculty and alumni. Alumni in particular tend to have an idealized image of the institution, and want to keep things as they remember them. Similarly, former employees may have a rather out dated view of where they used to work, which can make change or the implementation of new strategies difficult. This is probably the main problem with corporate alumni communities: they can become an obstacle to change, blocking the development of a new vision or business opportunities that have been created after their time.

Another potential problem that needs to be taken into account when thinking of developing a corporate alumni community is what those former employees are going to get up to once they have left the company. Media coverage of the case of Rajat Gupta, who was convicted of insider trading, continually referred to his former employers, McKinsey. (2) That said, this potential danger exists with or without a corporate alumni community.

Care would also have to be taken to prevent former employees leaking information about the company’s plans, although in an increasingly transparent environment with real-time data flows, it’s difficult to keep beyond a small community of stakeholders.

The existence of corporate alumni communities can encourage greater turnover of staff: if the relationship between employee and employer is going to continue after the former’s departure, there is no stigma attached to moving on. What’s more, many companies run director development programs based on the principle “get promoted after some time or leave”, and in such cases, having an alumni scheme makes it clear that leaving the company is about norms, and isn’t personal.

Finally, when considering setting up a corporate alumni program, companies should think first about the cost. Unless former employees are going to bring in new business, the other benefits are pretty much intangible and hard to put a figure on. Businesses also have groups of stakeholders that are closer to the company and whose interests are more crucial to its mission. That said, it’s possible to maintain a community of some 3,500 alumni per facilitator. (3)

A noteworthy study commissioned by Xing identifies three types of corporate alumni communities based on their involvement in the company: (i) Independent grassroots, which, as their name suggests, are informal, set up outside the auspices of the company and tend to be used as a directory of members. Estimates suggest there are more than 118,000 alumni groups of this kind on LinkedIn. (ii) Company supported grassroots associations, which usually have some kind of corporate support, particularly in terms of information and technological support. Procter & Gamble is a good example of this kind of hybrid community. (iii) Company managed associations, created, financed and run by the firm. These used to be mainly in the professional services field, although many multinationals have copied the model. Around 98 percent of Fortune 500 companies have a community of this kind or the former.

Xing’s survey shows that most people who join alumni communities do so to boost their employment prospects and generate executive development opportunities, largely for the same reason that other professionals join networks. For companies, it’s a good way to identify talent and implement a recruitment network.

Below are a series of pointers, both for companies already running alumni programs, as well as those thinking about doing so.

- Setting up an alumni community needs to follow a clearly defined strategy, and can’t be simply the result of wanting to keep in touch with former employees. As we’ve seen, the main reasons for doing so are to boost business and generate new opportunities through networking. Which means close monitoring to measure whether these objectives are being reached.

In some companies, under some circumstances, setting up an alumni program probably isn’t going to work. For example, when large companies merge, it can be very difficult to manage highly diverse groups made up of people who identify with their former employers rather than the outcome of the fusion. In such cases, creating a community of alumni is more likely to prevent, rather than facilitate, developing a shared vision of the company’s mission or finding new business opportunities.

The same applies when a company is going through a bad patch, or when there is conflict between different stakeholders. Setting up an alumni community to deal with internal crises is a mistake. Far from resolving the conflict, it may well fan the flames.

Similarly, for companies with less than 500 employees, or where turnover is low, setting up an alumni community may well prove costly and ineffective. Alumni communities make sense for large, international companies, particularly those working in the professional services sector, where the advantages of global networking can be fully leveraged.

- Alumni communities can take on a life of their own, so it’s important to keep their mission aligned with that of the company. If the company manages the community, those in charge will need to report to the board, which will be responsible for decision-making and communication.

- Provided they aren’t direct competitors, companies with less experience in relationship management can join forces with other businesses to manage alumni groups. They can also team up with business schools experienced in the field, which can provide continuous training to members: one of the best ways to keep alumni in touch with the company is through professional development.

- Finally, while the benefits of creating alumni communities are clear, companies will need to exercise discretion: not every former employee will be a natural candidate. Needless to say, the rules governing membership need to be established by the company: it’s not unknown for some alumni groups created via the social networks to undermine the organization rather than supporting it.

Today’s reality is that most professionals will work for several companies over the course of their career. But this doesn’t mean that employers can’t have a long-term relationship with their employees, one that, through corporate alumni communities, continues to be mutually beneficial, even after the latter has moved on. After all, if both parties have invested time, energy, and resources in the relationship, surely it makes sense to look for synergies into the future.  

 Notes

Photo: Common room at IE Business School Campus in Madrid

(1)McKinsey Alumni Centre

https://alumni.mckinsey.com

Vid . https://www.economist.com/news/business/21597935-more-firms-are-seeking-stay-touch-former-staff-gone-not-forgotten

(2)Rajat Gupta

https://www.nytimes.com/2013/05/19/magazine/rajat-guptas-lust-for-zeros.html?_r=0

(3)Xing, Corporate Alumni Networks: Leveraging Intangible Assets, August 29, 2006

https://corporate.xing.com/fileadmin/image_archive/survey_corporate_alumni_networks_summary_english.pdf