Ex-Employees, Social Networks, and the Reverse Flow of Knowledge

Originally posted at Wikinomics.com

In my research on how social networks can be leveraged for talent purposes, one of the core themes that has emerged has been how organizations can evolve relationships with candidates throughout a more complete employment lifecycle. Traditionally, ex-employees have been viewed as unloyal, traitors and not to be trusted. After all, an employee who leaves is likely taking all their knowledge with them to the next company, right?
But in an economy so demanding of maintaining relationships with talented individuals, does it make sense to cut ties with those who walk out the door? And does it necessarily mean that an organization loses that knowledge altogether?

Lori Rosenkopf, a professor at Wharton School of Business, says losing an employee doesn’t have to mean losing their expertise. A fascinating article I read recently described how Rosenkopf’s team’s research proved that losing an employee to another company can actually yield benefits to the previous employer, in the form of “a reverse flow of knowledge”.
Their paper, titled “Learning from Those Who Left: The Reverse Transfer of Knowledge through Mobility Ties” (PDF), examined more than 40,000 patent records from over 150 semiconductor companies around the world, tracking which firms and employee names were cited. This allowed them to see when one firm would draw on the knowledge of another.
Here’s what they found:
“Contrary to the view that companies lose something when a worker leaves, the study found that they stood to gain. Specifically, firms that lost an employee to another firm were 8% more likely to cite that firm than other equivalent firms, Rosenkopf says. The reverse flow of knowledge was particularly pronounced when the employee moved to another region. Then the old firm was 22% more likely to cite the new firm. The outbound mobility effect held even when the researchers controlled for other factors that could influence patent citations, such as hiring, alliances and technological similarities between firms.”
They cited two main reasons for why this may be the case (which fit nicely with the weak ties argument and the effects on innovation):
  1. New communication channels may be established between the old and new firms
  2. Colleagues from the old firm gain an increased awareness of the new firm as a resource for knowledge


Interestingly, the team labels this as the difference between ‘human capital‘ and ‘social capital‘ when thinking about a comprehensive talent strategy:
“When people are viewed strictly as ‘human capital’, the departure of an employee results in the former employer’s loss of that person’s intellect and talent, and the corresponding gain of those same valuable attributes for the company doing the hiring…But Rosenkopf says the picture is different when employees are viewed in terms of ‘social capital’. Workers aren’t just silos of knowledge and skill onto themselves, but rather are part of social networks of workers from various firms.”
So the next time you’re about to lose an employee, you might want to rethink the relationship you’ll keep in the future. While alumni networks have been around for a long time, they have mostly served the purpose of creating large referral networks or, in the case of universities, establishing pools of potential donors. Designed properly, however, social media and collaboration tools can form online networks which could be a great addition to your innovation or new product development strategy – allowing current employees to more easily maintain weak ties with former colleagues who have moved on to other firms.

One thought on “Ex-Employees, Social Networks, and the Reverse Flow of Knowledge

  1. Great post Kevin. I love the distinction between human and social capital. In my opinion, these findings should be motivation for more leaders to view things with a network lens- this brings about a whole new mentality for some firms that don’t see the value a departing employee brings.

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