Should you welcome back a former employee?
Should you welcome back a former employee?
A first-of-its-kind study measures performance and turnover of boomerang employees compared to internal and external hires
One of the more interesting debates in human resources over the course of the pandemic has been on rehiring employees who have left an organization. A quick search results in a long list of articles that present the pros and cons of what are typically called "boomerang" employees. The broad consensus of the articles in favor of the practice suggests that an employee who returns to an organization can help demonstrate that the job market is not as good as expected and that the company she returns to is a better alternative than others.
It is not difficult to imagine the reasons why boomerang employees may seem attractive to a hiring manager. Former employees are well-known to the organization, so the risk of getting an unexpected outcome should be lower. They understand the company culture and business, and thus they should require less time and effort from their rehire date to reach full productivity. Often, they are known to and liked by current employees. For these and other reasons, a practice that was once almost unheard of has been gaining in popularity, especially given the recent staffing shortages many companies are facing. In fact, many organizations, notably in the high tech and consulting sectors, maintain "alumni" networks to keep former talent aware of new opportunities and to make it easy for them to return to a former employer.
Despite the seeming attractiveness of rehiring a former employee who left on good terms, behavioral consistency theory suggests that past behavior is a good predictor of the future. Someone who found reasons to leave an organization in the past is likely to find reasons to do so again. Likewise, an employee who was not worth keeping not too ago is unlikely to have transformed into a must-have human capital asset.
Surprisingly, given the strong reasons for and against hiring former employees—and also the rising levels of boomerang hiring—serious analyses of the phenomenon are hard to come by. Almost all hiring literature on new employees assumes they are just that—new—and ignores what happens when former employees are rehired. Likewise, almost all literature on promotions assumes candidates are either (true) new hires or internal candidates. A new paper from John D. Arnold (Missouri), Chad H. Van lddekinge (Iowa), Michael C. Campion (UT Rio Grande Valley), Talya N. Bauer (Portland State), and Michael A. Campion (Purdue) provides what may be the first systematic analysis of boomerang employee performance, and it should become required reading for hiring managers considering bringing back former employees.
The authors set out to explore an important question: How do rehires really perform compared to internal hires and first-time external hires, both initially and over time? For their research, the authors used the employee lifecycle presented in Figure 1 below, and they explain the framework as follows:
Moving from left to right in Figure I, the boomerang lifecycle includes (A) an initial period with an organization, (B) a separation event, (C) time away from the organization (e.g., returning to school, working for another organization), (D) a rehire event, (E) post rehire performance, (F) a (potential) post-rehire promotion, and (G) a (potential) second separation.
Figure 1: Comparisons of the Boomerang Employee Lifecycle With Internal and External Hire Lifecycles (Source: Authors)
In addition to these events, the authors examined boomerang employees' post-rehire behavior in detail, "including their promotion rates (F) and the likelihood of a second separation from the organization (G)." They also used the framework to make "additional comparisons between rehires and the lifecycles of internal and external hires."
The Study
The authors based their findings on an analysis of human resources data obtained from a large U.S. retail organization. As with many retail companies, the organization hires managers at various levels and has a high enough turnover average (30%, in this case) to make rehires a viable option. The company provided the research team data on approximately 31,000 employees hired/rehired into the management trainee position. 1,318 (4%) trainees were former employees who left and later were rehired, 20,850 (68%) were external hires, and 8,546 (28%) were internal hires promoted from a lower-level position within the organization.
The authors used supervisor ratings to gauge performance in five competency areas (time management, communication, leadership, drive for results, and flexibility) and ten responsibilities (e.g., sales growth, inventory management, and customer service). Supervisors also considered the accomplishment of specific goals in their overall ratings.
The authors recorded trainees promoted to manager as well as how long it took for the promotion to be made. For internal hires, "time to promotion reflected the number of days from initial promotion into the manager trainee position to the date of promotion to assistant manager." For rehires, "time to promotion reflected the number of days from rehire date to promotion date." In addition, the authors tracked whether managers remained with or left the organization, as well as the mode of (voluntary or involuntary) and reason for the departure.
The Findings
Perhaps the most important question of the study was whether rehires would demonstrate higher, similar, or lower levels of performance before and after being rehired. The authors found that performance after rehire was generally the same as in past employment. To illustrate, "62% of managers received the same performance rating on their final performance evaluation of their initial tenure and their first evaluation after rehire." In other words, the findings were consistent with behavioral consistency theory: the performance of boomerang managers tended to remain the same (rather than increase or decrease) upon being rehired.
One of the study’s hypotheses predicted that boomerang managers whose initial turnover was voluntary would demonstrate better post-rehire performance than boomerang managers who had been fired. Consistent with prior research, "rehires who initially left voluntarily did, indeed, have higher average post-rehire job performance ratings than rehires who initially left involuntarily." Interestingly, the authors also found that the indicated reason for the initial departure was not a significant predictor of rehire performance.
Speaking of performance, the authors found that in the short term rehires performed about as well as new hires. However, external hire performance was better than rehire performance at Year 2, though this effect leveled off by Years 3 and 4, as shown in Figure 2 below. In practical terms, "rehires initially outperformed external hires by 1% on average, but external hires improved enough by Year 3 to outperform rehires by an average of 4%." When compared with the internally promoted managers, the results were broadly similar. Rehires performed similarly to internal hires at Year 1. Internal hires continued to improve more than rehires at Year 2, but, again, differences in performance change leveled off by Years 3 and 4.
Figure 2: Type of Hire as a Predictor of Job Performance Over Time (Source: Authors)
Taken as a whole, the authors conclude, both internally promoted and newly hired managers performed better than rehires in the long run. The authors also found that that rehires were also more likely to leave or be fired than new hires or internal promotions, as shown in Figure 3 below.
Figure 3: Cumulative Survival Rate by Hire Type (Source: Authors)
Perhaps not surprisingly, the results showed that rehires' reasons for turning over a second time tended to be similar to their initial turnover reasons. What is surprising is that, as shown in Figure 4 below, despite the inferior performance and higher turnover, rehires were 1.24 times more likely to be promoted than internal hires. To the authors, the promotion data suggests that "organizations may use promotions to try to retain boomerangs, even though such employees may not be as effective as other employees over the long term."
Figure 4: Cumulative Likelihood of Promotion by Hire Type (Source: Authors)
Taken as a whole, the authors conclude, "these findings call into question some of the proposed benefits of rehiring former employees."
Conclusions
A 2017 study looked at what happens when NBA teams rehire athletes who had played for them in the past and found that boomerang players' performance decreased once they were back on their former team. In the different world of retail, this study found outcomes that were broadly similar. Rehires tend to underperform over time, and they tend to turnover for much the same reasons they left in the first place.
As noted above, the findings question the advice presented by articles recommending that companies bring back former employees. For the authors, any claimed benefits "may be short lived," given that other types of hires tend to improve more over time and are more likely to stay with the organization. Consequently, the authors conclude their paper by highlighting the advantages of promoting existing employees: "internal hires are less likely to tum over (20.9%) than both rehires (36.6%) and external hires (33.5%)." Furthermore, "internal hires tend to require lower starting salaries than external hires, and organizations are thought to feel less pressure to promote internal hires due to their commitment to the firm."
The authors do note that in a limited set of circumstances—short ramp-up times or on short-term contracts—a rehire may be the best option. Overall, however, this first-of-its-kind study concludes that barring those special situations, companies are better off promoting from within or hiring someone new than bringing back a former employee.
Your Thoughts?
This paper is a novel study that will require future research to refine and confirm its findings. However, it would be interesting to hear from Thematiks readers—an overwhelmingly executive audience— your take on this paper’s conclusions. Below is a link to a short 3-question poll on boomerang hires:
I will share the results in my next post.
The Research
Arnold JD, Van Iddekinge CH, Campion MC, Bauer TN, Campion MA. Welcome Back? Job Performance and Turnover of Boomerang Employees Compared to Internal and External Hires. Journal of Management. 2021;47(8):2198-2225. doi:10.1177/0149206320936335