Symptoms of disruption

A quick glance around the room you are in, and note first ten products you interact with, or think about the next few services you use, and consider everyone (at businesses both big and small) working hard to make them better for you. You’ll find a continuous disruption and innovation being created around.

Value creation and preservation will be the defining asset for many of these companies – those that do this will continue to surf the wave of disruptive innovations and stay atop their markets.

Unilever and P&G are masters at traditional marketing, mostly offline, but their struggle with the direct-to-consumer brand-building is evident from the some innovative startups eating into their core market shares with disruptive customer engagement strategy.(More about it in my next update) Again, the failure of large consumer and retail players to innovate is clear in the Walmart vs. Amazon battle.One category after another is being transformed by new brands as consumers demand more personalized offering.

 

Business Managers are oft seen struggling to keep customers, by dropping prices or offering comparable product features.This short term strategy won’t work since they might lack the the intrinsic advantage of the disrupting competitor.

Innovation is often the product of mistakes made, of caution thrown to the wind,and yet, the ability to be disruptive and quietly meticulous might just be the difference between a bubble-fueled fad and a business built to last.

Several businesses have exhibited this in recent past. And for a change today I am not going to speak a lot about e-commerce.

Living Spaces, a California based company started with a simple goal to provide a whole range of furniture under one roof at the same or better quality than some of the leading furniture brands at a fraction of the price. They blended in unique advantages ready stock and assured delivery within 24 hours, even special orders with furnishing of choice within 2 weeks. This was unheard of in the $100 Bn+ US furniture markets. In 16 years the company has expanded to 19 stores in California and aspires to be the leading lifestyle brand of the country.

During a time of one of the most profound shifts in America’s population, due to the silicon valley growth, Trader Joe’s has proven how cultural awareness can cultivate business growth, and a grass-roots marketing niche that draws viral consumer activity. Their non-conventional culturally-tailored approach and attitude is one that is deeply embedded in the roots of their business model:  from their packaging, product selection, store layout and graphics, to their vendors, employees and management.  Trader Joe’s knows its audience. Trader Joe’s is focused on product innovation and selling groceries and wine at a cheap price. Because customers know they can get high-quality stuff at a low price, they pack Trader Joe’s stores. Eighty percent of Trader Joe’s products are in-house, meaning that customers can’t get them anywhere else and the grocer can sell them at lower prices.

Warby Parker, the innovative eye ware company started by four Wharton B-school students,  is, overall, a daunting model to emulate, growing from 0 to 30 stores in six years.From Customer in store experience to the pricing the entire retail strategy, the company has disrupted local traditional optometrists who had been serving their local communities at much higher cost.By designing and manufacturing their own frames and selling directly to consumers over the Internet, they’re able to charge as little as $95 per frame, a fraction of what a similarly nice pair of glasses would cost at a typical optical shop. That price also includes prescription lenses, shipping, and a donation to a not-for-profit such as Vision Spring.

The learning here is to focus on what Clayton Christensen  would advise – to understand “what jobs does do customers want the product to perform ?” Successful entrepreneurs naturally look at opportunities in terms of the jobs they can do for customers to make the product work at a cost advantage.

Customers now expect to be welcome and respected participants in the brands they love. They don’t want to be persuaded that something is worth buying; they want to contribute to making that brand better.

 

Romancing the customer

In today’s world of information abundance and choice at fingertips, it’s important to make your customers feel special and to create a bond, just as you would in a romantic relationship

The digital revolution of ‘apps and taps’ enables quick choices and every brand is on the brink of getting chucked out by single swipe of the bargain seeking customer.

The biggest impact of the app disruption has been on the brick and mortar retail businesses. America’s leading home appliances brand Sears is closing 150 stores and selling its vaunted Craftsman tool brand, rival Macy’s saying it would close 68 locations, the department store concept itself is looking like an endangered species in wake of the online shopping explosion. In a retail landscape now dominated by online sellers like Amazon and big-box chains like Walmart and Home Depot, Sears finds itself in a search for a reason to exist. One of the reasons people liked to visit/browse/shop at omni channel retail stores was for a wide choice and selection, whereas today there is no wider choice than on the Internet, so a lot of the reasons for going to those department stores no longer exist.

In addition to Sears, many retailers, including Kohl’s and J.C. Penney, have failed to innovate in ways that will continue to attract and keep shoppers continuously engaged. In the new era of e-commerce may witness the demise of many of legacy players, because of their inability to create a romantic interlude that keeps their customers connected.

Research reveals that the connections we make with brands can be as deep and emotional as the relationships we have with other people.  With some brands, we have wild, short-term flings. With others, we “fall in love” and enter a mutually beneficial relationship.

Having arrived at the above conclusion let us pin point to the single most contributor for a long lasting relationship- Respect !

A new study published in the Harvard Business Review recently in November 2016 reveals that Customers trust companies that they feel understand them and that they respect companies that they believe respect them in return.

In the survey of 20,000 customers, five of the top 10 performers were grocery stores, naturally a daily consumption item to which customers are naturally intimate. And because relationship is so constant that they have the potential to inspire intense emotion, loyalty, and passion. The tech-savvy empowered consumer expects to be heard and respected by their favorite brands, and it isn’t necessary they’ll stay loyal to the current leaders. Even a standout brand like Apple cannot afford to rest on its past and present successes.

Interestingly on a matrix where customers felt most or least respected by the class of businesses, the top rankers were household , personal care and technology industries while at abysmal bottom were the Telecommunications, Health Insurance and Government.

Recently the CEO of T-Mobile said in an interview revealed that their industry’s early ways of marketing where mobile manufacturers hid behind carriers where the phones were apparently given free under 2 year contracts where wireless carriers charged customers more than the phone retail price.  Moreover, it is well known that each smartphone is equipped with some unique features which some unaware customer doesn’t know triggers off data roaming and excess charges.

Customers would value companies they see as honest. Companies and brands that ‘mean what they say’ !  And so, consumers place a premium on brands that they believe to be direct, forthright about their values, and ‘Consistent’ in acting on them.

Are you asking the right questions?

 

Trust and respect are usually key experience sought in every human interaction. More so in case of customer service.

Every Company starts out to solve a customer issue with the best intentions. Unfortunately, success, growth and stakeholder’s interest (read business analyst’s strategic initiatives) change the culture as they mature and so the customers interest goes for a big toss as it gets institutionalized by a large department aka Customer service.

(Therefore, B2C has overtaken the go to market models and will be critical to success for emerging companies. But more about it my next update about digital disruption in retail)

And as companies grow into a self-absorbed mode, they tend to focus more on their needs as opposed to the customer’s needs. The simple act of calling a company for help with their product can be fraught with frustration because the company has set up systems that are non-friendly to consumers. To begin with there is quite frustrating and often irritating self-serve automated system which one has pass thru. They would hope a helpful sympathetic listener will serve the purpose but no there are idiots of customer service reps who escalate a comfortable and just curious caller into an irate or impatient one.

When they actually require a rep to act towards a quick identification of the problem and solution it gets into a long costly call (for the service provider/BPO). Listed below are some classic questions asked by the ebullient customer service representative after narrating the scripted welcome and acknowledgment of the reason for your call.

Customer : I have a question about my Bill?

CSR : What is that which different than every month ?

Interpretation : You are probably dumb or do not know what services you pay for.

Customer : I have set up an Auto Pay but it seems they charged me twice last month.

CSR : Let me ask you this , did you verify this information in your bank statement?

Interpretation : Probably you are duffer at managing your finances and don’t understand.

Customer : I have not received my last statement or bill.

CSR : Can I verify the address on account and have you recently moved?

Interpretation: You are not a organized person and didn’t bother to inform us.

Matthew Dixon, Lara Ponomareff, Scott Turner & Rick DeLisiv in their recent article in HBR “Kick-ass Customer Service” list 7 distinct type of customer service reps. According to the article while empathizers are the most preferred type of agents by the hiring managers and customers it is the   controller who is outspoken and opinionated actually do best at solving customers’ problems.

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If companies don’t hire the right people as front-line reps, or equip them to handle the increasingly complex challenges that come with the job their ratings will slide southwards and long term consequences could be a loss of bid for future contract.

Companies should also revamp their training practices, using new curricula and on-the-job coaching to help all types of reps learn to act more like Controllers. Another key step is building a culture that values and rewards Controller behavior. That might mean evaluating reps on their ability to use good judgment rather than follow a script, and soliciting their ideas to improve the organization.

Moving from a connected to programmed world

When the world around went wireless, we could stream music and movies from our home PCs to any room in the house, we can play music from our phones on car stereos and we can go to any number of public places and hook up to the internet.

According to Similar Web’s State of Mobile Web US recent report, roughly 56 percent of consumer traffic to the leading US websites is now from mobile devices.

For the first time ever there are more gadgets in the world than there are people, according to data from digital analysts at GSMA Intelligence, the number of active mobile devices and human beings crossed over somewhere around the 7.19 billion mark.

This was possible only because of constant up gradation to newer smarter devices which had better technology, storage and facilitated speed of operation and to do so they required faster wireless speed.

In 1960 E. Jerome McCarthy proposed the four Ps classification of marketing mix which has since been widely used by marketer. The third P = Place, refers to providing the product at a place which is convenient for consumers to access. In the present context of digitized world that P is the wireless carrier.

Gone are the days of laptops and tablets as the preferred devices to connect to internet, now most of us rely on a smartphone as our primary conduit to the internet, at least when we’re mobile.

As a result of this smartphones markets proliferated and improved data speed and wider connectivity gave a jump start to the apps development because apps needed devices and devices needed connectivity.

However, a decade after Wi-Fi put all our computers on a wireless network—and half a decade after the smartphone revolution put a series of pocket-size devices on that network—we are seeing the dawn of an era when the most mundane items in our lives will be able to talk wirelessly among themselves, performing tasks on command, giving us data we have never had before.

Once we have embedded connectivity in every aspect of our lives, the idea of using a search bar or an application in order to interface with the internet will be disrupted. We will no longer consume 80 percent of our internet through applications that we download from an app store, but instead the internet will be embedded into our lives in a way that provides what we call a conversational interface.

But we’ll soon have connectivity in, appliances, clothing—in basically every sort of device or component of our lives. When that happens, it will not only democratize the way we engage with information, but how we engage with each other and businesses.

This is the language of the future: tiny, intelligent things around, coordinating their activities. Toasters that talk to radio alarm clocks. Air conditioners or Televisions that can talk to motion sensors. Manufacturing machines that will talk to the power generator or to warehouse shelves. Devices that capture data about how we live and what we do.

Soon we’ll be able to choreograph them to respond to our needs, solve our problems, even save our lives. There will be no more trolls or updates on twitter instead Facebook’s Live platform will allow streaming from any device or services to whom you want to keep informed and updated. Fewer nannies, home daycare and well monitored invalid and elderly care.

And mind you, most of these devices aren’t actually on the internet directly but instead communicate through simple wireless protocols. Other observers, paying homage to the stripped-down tech embedded in so many smart devices, are calling it the Sensor Revolution. Google’s self-driven car has driven more than 2 million miles and are currently out on the streets of Mountain View, CA, Austin, TX, Kirkland, WA and Metro Phoenix, AZ and Amazon Go is currently open to Amazon employees, will open to the public in early 2017 at Seattle Washington, will give a shopping experience made possible by the sensor fusion, same types of technologies used in self-driving cars.

The shop of things now

The new retail shopping season has begun. After a booming Thanksgiving weekend, retailers are on track for holly jolly sales to cap the year.
With deep discounts expected to snare the more than 150 million shoppers from Thanksgiving Day to Sunday, the number of shoppers is expected to jump by a couple of millions this year, according to the National Retail Federation and Prosper Insights Analytics.
The most significant aspect in this year is the convergence of both online and foot traffic in stores. For the overall holiday shopping season, IHS Global Insight is forecasting sales to rise 3.7% from 2015 levels with clicks eventually outpacing visits to bricks-and-mortar stores.
The National Retail Federation (NRF) found in its survey that 43.8% of consumers shopped online during the four-day span, a 4.2% uptick over 2015. And Black Friday online sales topped $3 billion for the first time, jumping 21.6% over last year to $3.34 billion, according to Adobe Digital Insights. Meanwhile, mobile shopping saw its biggest day ever, accounting for $1.2 billion in revenue – a 33% jump compared to 2015.
The traditional Turkey and pumpkin pie might have been staples at dinner tables across America Thursday night. But digital marketplaces were shoppers’ best friends as online sales surged which broke records as shoppers scouted deals on their tablets before heading to the mall or made a final purchase with the click of a button. 
People are shopping, and it’s a festive atmosphere and happiness among people. And, these days, consumers don’t really care where they shop — whether it’s online, in store, or a mix of the two like services that allow shoppers to order online and pick up in store. What really matters to holiday shoppers is getting the best deals. 
Therefore brick and mortar stores like Walmart, Macy and Nordstrom who just three years ago pretended as if the internet doesn’t exist have changed focus to the e-commerce model to woo their customers. This year witnesses a trend of family making shopping decisions on the dinner table, placing online order and post dinner drive thru to pick up the merchandise. No hustling in the rush and no waiting in queues to checkout.

Make it happen

In one of my previous jobs I had the good fortune to be mentored by successful business scion and noted philanthropist. During my various journey to the dry land I would seize an opportunity to visit his oasis for some inspiration quench my thirst for some worldly wisdom.

During one of our interactions, he asked me to give him my visiting card. Perplexed by his demand, I tentatively pulled it and handed him my card. He read out my designation and asked me about my primary job responsibility. “To take care of our company’s customers” I replied. To which he gave me a muse “is there a difference between a daycare and mother’s care?”

Bemused by his own take on me he further added.” When a child is hungry the ayah/nanny at the daycare would ask him what he wants to eat. While a mother will give a sweet or cake what the child loves, but didn’t know how to express the desire as the basic need was to satisfy hunger.” Similarly, you do not take care of your customer but focus to give them what they really need.

So you can’t ask customers want they want until you can define the real need.

… not if your goal is to find a breakthrough. Because your customers have trouble imagining a breakthrough.

You ought to know what their problems are, what they believe, what stories they tell themselves. But it rarely pays to ask your customers to do your design work for you.

So, if you can’t ask, you can assert. You can look for clues, you can treat different people differently, and you can make a leap. You can say, “assuming you’re the kind of person I made this for, here’s what I made.”

The risk here is that many times, you’ll be wrong.

But if you’re not okay with that, you’re never going to create a breakthrough.

We like to think of ourselves as a Customer Service company that happens to fly airplanes- Southwest Airlines.

To glorify God by being a faithful steward of all that is entrusted to us. To have a positive influence on all who come in contact with Chick-fil-A. –Corporate Purpose Statement .

 

Disruptive Technology and Digital Economy

Endless terror. Refugee waves. An unfixable global economy. Brexit. Surprising election results. New billion-dollar fortunes. Miracle medical advances. What if they were all connected? What if you could understand why?

We are surrounded perplexing events occurring all around us. But day after day, new figures and forces emerge that seem to have overpowered this turbulent times and disrupted established criteria.

Imagine a handheld super computer, or genome sequences, or artificial brains chatting amiably about weather while playing DJ on the kitchen counter. A simple question about a doctor’s bill will lead first to a touchscreen, then to a robot, then to a voice caroming off to a satellite from a call center in Mumbai or Manila.

American Historian Henry Adams noted in his autobiography (page 381; The Dynamo and the Virgin) “The new forces were anarchical”. With those five words he wrote an apt motto for the chaos and technological disruption to follow, all the way down to this moment.

Modern Capitalist regime stood upon the foundation laid by the Industrial Revolution. As the technological innovations dispersed to a larger areas of making money (business) this created need for paper currency and invention of banks to park the money and issue credit/give loans. Hence common paper became as precious as gold, and risky long-term loans being transformed into safe short-term bank deposits. At their core both ideas were revolutionary and almost magical but the new waves (and needs) is going to make them outdated.

E-commerce has been major disruptive factor. Online sales which began one and a half decade back, mainly with the sale of books and CD’s, rapidly expanded in the last decade to almost all retail sectors. With an online penetration of around 70 percent, the sale of music and books has become predominantly digital. Clothing and even daily groceries are also increasingly being purchased online. The total revenue of Amazon in 2015 was $107 Bn (source NASDAQ) and it operates only in a dozen of countries of the world including India (competing with local player Flipkart; est. $15.5Bn) and China (competing with Alibaba; Rev $156.38 Bn-NASDAQ).

While the potential and success of an online strategy depend to a large extent on the degree of complexity and commoditization of the product and on the efficiency of distribution, the double digit growth can largely be attributed to the penetration of mobile internet. Mobile internet represents around 20 percent of all online sales, but with growth percentages of between 20 and 30 percent, it is gaining market share by the day.

In total, it is projected there will be 34 billion devices connected to the internet by 2020, up from 10 billion in 2016. The network of physical devices, vehicles, buildings and other items—embedded with electronics, software, sensors, actuators, and network connectivity that enable these objects to collect and exchange data, such devices will account for $24 Bn, while traditional computing devices (e.g. smartphones, tablets, smart watches, etc.) will comprise $10 Bn. Nearly $6 trillion will be spent on Internet of things solutions over the next five years.

With more EFT or online money transfers as electronic alternatives to traditional paper methods like checks and money orders, are associated with security concerns at any of the levels from ODFI (Originating Depository Financial Institution), and forwarded on to the Automated Clearing House (ACH) for delivery to the payee’s financial institution, called RDFI (Receiving Depository Financial Institution).

So irrespective of diverse opinions of financial experts, the rise in popularity of cryptocurrencies cannot be ignored. Today, there are a number of billion dollar businesses that accept Bitcoin as a form of payment. These include Dell, Reddit, Expedia, PayPal, and most recently, Microsoft. So for the uninitiated who have not yet grasped what Bitcoin and other cryptocurrencies are, but this is not something that should be ignored. Block Chain Protocol and the emerging ecosystem that is growing on it is here to stay.

Businesses will be the top adopter of these solutions.

Three ways it can improve their bottom line by 1) lowering operating costs; 2) increasing productivity; and 3) expanding to new markets or developing new product offerings.

Governments which are focused on increasing productivity, decreasing costs, and improving their citizens’ quality of life will be the second-largest adopters of these new methods.

Much of what will happen in the next thirty years is inevitable, driven by technological trends that are already in motion. From virtual reality in the home to an on-demand economy to artificial intelligence embedded in everything we manufacture—can be understood as the result of a few long-term, accelerating forces. These larger forces will completely revolutionize the way we buy, work, learn, and communicate with each other. By understanding and embracing them, it will be easier for us to remain on top of the coming wave of changes and to arrange our day-to-day relationships with technology in ways that bring forth maximum benefits.

Treat your customers the way they want to be treated

Often the industry’s efforts to streamline and expand the technological efficiency create confusion among customers seeking “human touch”. In this fast developing app based economy, sometimes too much of information and jargon turns out to be counter productive. 
Agreed in today’s time of disrupting technology, which is creating more and more competition, customers are more empowered by the available information and so loyalty is much lower than ever before.
Brands are no longer about what company say, but what people experience. Too much of automation is leading us into a “voice mail jail”. If you doubt this statement try calling your bank, mobile service provider or insurance. Even after pressing zero to talk to a CSR, who greets you in very warmly businesslike tone he/she is in haste to “wind”you up because the maximum time they should spend with you over phone is 620 seconds, as that is the benchmark for a call center executive’s world over.
We as human beings desire the human touch! Relationships are built on human interaction- and these emotional connections are what customers really want. May it be a product or service buying decisions are weighed by its utility, convenience, and cost.
The best way according to me is to work towards simplifying it by asking the following questions from the customer’s perspective, say for a mobile service:-
Is it simple to understand?
What is it? ; How does it work?; What is so good about it?    
Is it simple to deal with ?
How much time will it take for me to get it? Can I return it or exit easily if I don’t like it?
Is it simple to use?
Can I turn it on/off easily? Is there a lengthy procedure to avail it? Do I need to refer a manual every time I have to use it?
In a bid to establish how superior they are compared to their competition marketing executives often tend to provide such detailed information about their company,product features and/or services which may be so overwhelming for the customer that it turns counterproductive.
Anecdote :
A customer goes to a grocery store in India and asks for drinking water bottle. Customer “One Bisleri Please”;
Shop owner ” Which one”
Customer “Kinley”

Morality of Marketing

When I visit a physician friend of mine, who is very ethical and has a respectable and rewardful  practice, I notice a board in his clinic which informs his consultation charges.

First Consultation(in clinic): X amount

First time Visit at patient home: X+ Z amount

Repeat consultations in clinic : X-Y amount

Second and third visits : Z amount

Emergency Visit Charges : X+Y+Z amount (highest)

If mood and time permit, I pull a fast one on him asking what would be his obvious action if a critically ill patient is bought for the first time in serious condition and which charges will apply? He pulls off an equally fast one on me and gives a wise answer ” First I will make all efforts to revive and save the life of the patient”. And then adds tongue in cheek ” thereafter I would refer the patient to be admitted at a hospital where I am a visiting doctor”.

Taking this friendly banter to a more serious note, I want bring on the table, how market values started to dominate our lives in various respect.

Over the period of time we have knowingly or unknowingly embraced the market mechanisms in our everyday lives and so the market values – of demand vs supply play a much greater role in our social lives than before.

To prove this point let me cite another example from the medical practice :

A person diagonized with rheumatic ailment needs to consult a specialist and call the clinic of renowned Rheumatologist gujarat for an appointment but the earliest appointment is after 2 months. The doctor would never answer a mobile call. But if you have some influence , send a text message with the name of your reference.A open appointment is granted with an estimated wait time of 4-6 hours but the doctor will squeeze in a consultation between some two scheduled consultations, for a handsome fee.

Tell me how different  is this practice from a corrupt train conductor who sells you a berth at some “price” during an urgent unscheduled travel when no reservation is available.

Today the logic of buying and selling is no longer applicable to material goods alone.In our greed to possess  “just now” , things which we should be granted have turned into a commodity because it is up for sale and has a price tag. Consider for example the ‘for profit’ education institutions, hospitals and social organizations which sell “naming rights” to parks and civil places. In certain cases of non violent prisoners and celebrity there are ‘extra’ facilities available in jails!

So what’s wrong with this ? Why worry if everything in the society is up for Sale? When there is price tag on everything only the affluent will have the right to have it.      

This in turn leads to inequality and corruption. Market triumphalism and greed leads to the moral failing of the heart.

Why complain if we chose to live in a market society? But are we devaluing human life? 

Slavery was appalling because it treated human beings as a commodity. But present times has also seen human life as instrument of gain and object of use.

No I am not referring the world’s oldest profession. But consider this, a person agrees to be a guinea pig for an extensive drug trial by a pharmaceutical company for $7500 and it can be higher or lower depending on invasiveness  of the procedure and discomfort involved. 

If a terminally ill patient wants to purchase a organ like kidney or liver , and a consenting adult is willing to sell, the only question is Price?
Recently a celebrity actor fathered a boy through surrogacy. Services of an Indian surrogate mother is available at as low as $2500 much lower than going rates in USA. Increasingly western couples seeking surrogates outsource from India.

During the Afghanistan and Iraq war there were many private armies fight with US troops and many enrolled with military contractors for handsome fee starting $1000 per day and it varies according to qualifications,experience and nationality.

Society and markets don’t wag fingers at these transactions or arrangements of profit.Nor do they discriminate between worthy and the unworthy because each party in the deal has decided the value for the exchange.

Well, in a society in which the singular moral value is the acquisition and concentration of wealth and the power and influence it can buy, there is thin moral line between ‘charity’ and ‘exploitation’. Are we aware of the price we pay for living in a society where everything is up for sale.

Have we come to live with the fact that what once was a civic right like safe drinking water is now available for 20 cents a litre.

European Unions sells the rights to pollute the earth’s atmosphere by selling carbon credits in the carbon-dioxide -emission markets that enables Chemical companies to buy and sell their right to pollute. So are we going to pay the price for clean air in future?

The myth of community, shared values and sacrifice, shared goals for civic betterment…have faded from the public arena…[markets] know the price of everything and the value of nothing.

Intellectual debates only allows us to analyze problems in the context of the objective measure of  financial impact and its detrimental effect on society.

In a non judgmental way the economic (read marketing) community at large should take the onus of arresting the commoditization of things that can be owned.

A gift  to your spouse is an expression of true affection and not in exchange of anything !

And to end it on a humorous note

Vajesingh bapu was running an errand for Rohit Seth’s daughter’s wedding and in haste ran his luna moped through red signal. The constable who tried to stop him got a slap and so chased him up to Seth’s house to arrest him or pay the fine. In midst of the event Rohit gave Bapu Rs.500/- to settle the matter. The constable demanded Rs.100/- fine for traffic rule violation and Rs.100/- for the slap. Bapu slapped him three more times and gave the Rs.500/- note as he didn’t have change.

 

 

 

 

 

 

Be backs or boomerangs ?

According to a survey most sought after companies like Google, Amazon and Aflac all have an average new-hire tenure of just over a year. (Source: business insider)

payscale

Even with strong recruitment and retention programs in place, some employee turnover is inevitable as more and more professionals utilize job-hopping as a strategy to advance their careers.

Based on a survey results, published by a reputed business journal in September 2015, nearly two third of HR professionals claim their organization are hiring more returning employees today than in the past.

The earliest corporate alumni networks were mostly social in nature, (for e.g. the company where I’d worked had a Vice President who maintained personal contact with every employee who left the company) but rarely an integral part of corporate strategy but now with social media sites, like LinkedIn, it is easier for company leaders to stay in touch with former employees, whether they’re in the office next door or halfway across the country.

The resentment is obvious to let go a good employee who leaves for greener pastures, but with today’s workers changing jobs and career paths more frequently than in the past, someone’s departure should seem less a betrayal and more a smart choice to gain new experience.

But what if that employee later wants to return?

The number of these “boomerang employees” — the nickname given to employees who leave but ultimately return – is on the rise, according to the New York Times.

A quick analysis identified “four flavors “of boomerang employees:

  1. Those who left to further their career. These are the ones who worked for an employer for a number of years, but saw an opportunity to add new skills and progress and then came back at a higher level and higher pay. They may have been gone three to five years.
  2. Professionals with a career itch to scratch. They had been at a company a fairly long time. Their colleagues may have moved on to do something different. They saw an opportunity they couldn’t pass up. Or they came to the conclusion to try something different, maybe an opportunity to change industries or follow a passion. But get disillusioned and hope to return.
  3. A life event forced them to leave. But the ailing relative passed away or the young child which needed care has grown up so now they are ready to return as a contract worker, or work remotely with some flexibility.
  4. Those who boomerang on purpose. Season workers seen more in the western countries. Or some adventure sports passionate who takes a break for mountaineering or a skiing enthusiast.

 

Now, you would agree that even the most rigorous interview process and pre-employment aptitude exams can only provide a very small snapshot of how a person performs in the organization, while actual experience at the company can speak volumes.

 

Former employees also are cheaper to hire because firms can avoid external recruiters and a prolonged slog through résumés of unqualified applicants. Some of the other benefits of rehiring a former employee are:

  • Save money and time, with faster on-boarding: Former employees have an advantage on other applicants because they understand the work structure, are familiar with the organization’s culture and require minimal training to get them up to speed.
  • Add new skills to your company: Returning employees may bring everything from new industry skills to expanded networks.
  • Strengthen company loyalty and commitment: Rehiring a former employee can be a big boost to office morale, especially if the employee was well liked and respected by the office before his or her departure. And when high quality talent returns it sends a message to other employees that their workplace isn’t as bad as they had possibly thought.
  • Increased commitment: Employees that have departed your company for supposed greener pastures once before are more likely to have longer tenures of employment than those that have not.

Bottom line – Before deciding to rehire a boomerang employee company should consider the following:

Needs of the company: consider whether or not your company even needs the skill sets that this individual embodies.

Assess past performance: Make sure to chat with former coworkers and managers to understand if the employee was a great contributor or easily replaceable.

Original reason for leaving: Dig into the reasons why the employee left in the first place. Was it a financial issue? Restricted growth? A poor cultural fit? Understanding the issues, and whether or not you now have solutions, is very important to predicting the future satisfaction of this individual.

Reason for returning: There are ‘right’ reasons to return to a job and there are most definitely wrong ones. Have a heart-to-heart conversation with the individual to figure out his/her motives.When it comes time to fill a new position, then don’t rule out the possibility that your next hire may already have worked for you!

I am not trying to persuade your hiring practices to include, or not include, boomerang employees.Instead, I would encourage you to research both the pros and cons and make the best choice for your company. You never know, your next top performer could come knocking at your door (again!).

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