The silver lining in employee departure

Leaving parties are about to take on a new dimension. According to new research, it's not all bad news when employees leave. Rather than taking all their knowledge and skills with them, they might in fact feed information from their new firm via informal network with their former colleagues.

by Knowledge@Wharton

The key, according to Wharton management professor Lori Rosenkopf and researcher Rafael Corredoira, is to think of employees as 'social capital', not just 'human capital'. The idea of social networks is not a new one - many CEOs have been hired on the basis of they knew.

The same goes for employees, the research argues. Rosenkopf and Corredoira based their study on the semicondutor industry, because "it is an industry where intellectual property is really important", and where patents would provide a good way of gauging knowledge flows.

By looking at the engineers and the companies cited in the patent, it became apparent that companies that have 'lost' an employee stood to gain. More specifically, the research found that a firm that had lost an employee to another firm was 8% more likely to cite that firm in the patent rather than competitors. This effect was even more pronounced when the employee moved to another region. The probability then went up to 22%.

"By having one of their own going to that firm, work in the receiving firm gains credibility and saliency. The firm receiving the employee thus becomes more highly monitored for innovation opportunities," write the authors. This may also be because ex-employees keep in touch with their former colleagues.

The researchers say that this is not to celebrate an employee's departure, but they point out that cultivating ties and making the parting amicable could pay dividends.

Source: The social network benefit: losing an employee doesn't have to mean losing knowledge
Knowledge@Wharton, Oct 4 2006

Review by Emilie Filou


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