Power of Alumni Networks

November 15, 2016

It’s unfair to believe that your employees will want to stay with you forever. Nobody plans to work in the same office for 30 years. It just sort of happens. Or it used to. [ Click to Tweet]

It is currently estimated that Millennials will hold 12-15 jobs in their lifetime, which means that the largest age group in your office are transient. How does one maintain a relationship with these ex-employees? Why does a company even want a relationship with those who have left? That’s where alumni networks step in. We already know why organizations are jumping on the bandwagon for Alumni. But what’s the power of it? How do we know those benefits are a reality?

Let’s use the financial services sector as an example. A Harvard Business Review study examined trading decisions between mutual fund portfolio managers. This study compared investment decisions on “connected firms” - those connected by at least one senior official who had gone to the same college as the investor - and “unconnected firms". Results shows a strong correlation: US mutual fund portfolio managers placed larger bets on companies they were connected to. They also performed better on those connected positions than they did with unconnected ones - to the tune of 7.8% a year.

I like to think of it like this: would you prefer doing business with someone who, went to the same college or was a colleague at a previous organization, or with an unfamiliar face?

Another company, BCG, has created a motto for their own alumni network: “Bleed BCG Green” (the company’s color). Many of their former employees are now clients for the company - generating more revenue and creating a positive relationship with them rather than giving a goodbye hug and never seeing their face again.

Another point of contention for alumni networks exists in that it is beneficial for both the employer and the ex-employee. It serves both equally - not just for ROI, but the power of “word-of-mouth.” With social media as a tool for former employees, a company’s reputation can be severely impacted with a few clicks and keystrokes.

If an alumni network was in place, giving them tools to find jobs much easier as well as staying connected for any potential job openings, the need for a Facebook rant would be diminished. In this case, social media would work to foster the company profile as a thoughtful organization with the intent of maintaining fruitful alumni relations. That’s quite a different narrative

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