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Sep 16, 2014

Departing staffers can become a source of new networks and competitive intelligence.

Given the effort and expense in recruiting, identifying and hiring talent, organizations want to retain their employees at all costs. But in the increasingly mobile labor market, companies should view departing employees as continuing assets and employee turnover as a source of long-term strength.

A team of researchers from the Wharton School of the University of Pennsylvania and the University of Maryland studied linkages between the firms on both sides of an employee move and patterns in the way the firms cited patents. They found that after an employee changed jobs, both firms became more likely to cite the other firm’s patents and gained knowledge.

Both firms became more aware of the other and its ideas, leading to a cross-pollination of concepts and intellectual capital they likely wouldn’t have encountered otherwise.

The value of social capital

The mechanism behind these knowledge flows was social capital — personal relationships that stayed strong despite the employee’s departure – introducing a connection between the firms that might not have existed. When employees at two firms know each other, collaboration, and even competition, can become more effective.

Forward-thinking companies are learning how to integrate social capital into their recruiting, marketing, and outreach strategies.

Many organizations have alumni networks that allow people to retain ties to their former employer and are actively tapping into these networks to hire “boomerang” employees — those who have left the firm and then come back. Boomerang hiring is low cost, carries lower risk, and results in faster reintegration. After all, the employee and the company have much better information about each other than employees with no direct experience.

Beyond rehiring, corporate alumni programs take advantage of social capital by focusing on strengthening the firm’s brand in the marketplace, encouraging word-of-mouth referrals, and building opportunities for strategic alliances.

Assessing the threat/opportunity

To determine the real business risk from a departing employee, companies should distinguish between those leaving for current and potential cooperators — a group that includes clients, suppliers, and partners — and those leaving for companies that pose a direct competitive risk.

For the first group, companies need to become better at seizing opportunities for gain. Amicable departures can help pave the way for future collaborations, turning ex-employees into allies who can provide critical insider insight into those companies.

For the latter group the loss is clearly more of a threat. But even in those cases, a company that may be your competitor in one product line or service may well be your customer in others.

Mutual benefits are possible

Moving from a zero-sum state of mind to one focused on mutual benefits is not easy for anyone, especially market competitors. However, competition and cooperation do not make up an either/or proposition, but rather two ends of a dynamic spectrum.

Some turnover will always be inevitable, and in the right context, it’s a sign that the company is succeeding in developing its people. Retention is important, but it’s not the only objective.

Equally important is the ability to turn those inevitable employee losses into gains. By adopting the right mind-set and approach, a company can gain market attention, new partners, and goodwill ambassadors in the industry at large.

The post originally appeared in a somewhat different form on

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