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Many companies find it makes business sense to hire back laid-off workers, even if job is different

March 29, 2006|By HANAH CHO | HANAH CHO,SUN REPORTER

Julie Runyan never imagined going back to the insurance company that laid her off from her human resources job about a year ago.

But Monday, Runyan said she found herself returning to the company's offices for her first day of work. She filled out paperwork in the same human resources office where she had worked for 12 years, this time taking a "new" job as a business analyst.

"I saw so many smiles, and people were excited to see me," said Runyan, 39, of Johnston, Iowa. "Going to a brand new job, I wouldn't get, `Oh my gosh, what are you doing here?'"

Runyan and other displaced workers like her are starting second careers with their former employers. With the job market on the rebound and a shortage of talent in certain fields, companies are increasingly tapping previous employees who were laid off during downsizing or restructuring to fill open positions, workplace experts say.

The hiring strategy can make business sense for companies that rehire former employees. It takes less time and money to train these workers, experts say. And for former employees, getting rehired allows a return to familiar surroundings. Some are able to negotiate better benefits and salary.

"First of all, in a lot of cases, when someone was downsized at no fault of one's own, it doesn't reflect on their performance," said Richard Lamond, a chief human resources officer at Florida recruitment agency Spherion Corp.

"It was a painful decision an employer had to make. If a similar job comes up ... a known quantity is there. You will see more and more of this."

Still, the practice can be risky for employers and workers alike, according to Hank Tufts, a senior consultant at the Boston office of RHR International, a management-consulting firm.

"When you hire somebody back, one of the things you risk is the degree at which that person feels loyalty to the company," he said. "Because he or she has been laid off once, there's tentativeness to the company."

And there's no guarantee that rehired workers won't face future layoffs.

"Burnt once, shame on you," Tufts said. "Burnt twice, shame on me."

Last year, one of 10 downsized workers were rehired by their previous employer, according to data collected by Right Management.

The company tracked more than 14,000 out-of-work employees who were placed in new jobs nationwide by the consulting and outplacement firm.

"Because of economic reasons or mergers and acquisitions, there are good people losing their jobs," said Clay Parcells, a regional managing principal at Right Management's market in Maryland, Virginia and Washington.

"If there are job openings, then the companies have a talent pool that they can immediately touch."

United Airlines, for example, called back several hundred flight attendants who had taken voluntary layoffs to meet increased passenger demand last summer.

Jamie Hale, a practice leader at global consulting firm Watson Wyatt Worldwide, who focuses on work-force planning, said companies in the health care, engineering and oil and gas businesses are more inclined to rehire former employees because of a shortage of skilled workers in those areas.

"They know your systems, they know the company, they know the culture, so there is less ramp-up time to get them integrated into the organization," Hale said.

Besides less training time, experts say companies can save money by going back to their former employees.

Cem Sertoglu and Anne Berkowitch, of SelectMinds, help companies develop employee alumni programs to keep tabs on former workers and create networking opportunities.

They wrote in a 2002 Harvard Business Review article that "it costs half as much to rehire an ex-employee as it does to hire a brand new person."

Sertoglu and Berkowitch said rehires are 40 percent more productive in their first quarter of work, and they tend to stay in their jobs longer.

In the past, once an employee left a company for one reason or another, the departure signaled the end to the employment relationship.

But that attitude has changed as employees, accustomed to job insecurity, are switching jobs more often. As a result, coming back to an old employer has become an option, experts say.

"Employees have been through this for a couple of years," said Lamond, the human resources executive at Spherion, noting that more companies are establishing alumni groups for former employees. They say, `I realize I don't have a job for life. I want to experiment by going to different places.' "

In a survey by executive search firm Korn/Ferry International last month, 64 percent of the 4,029 respondents said they would consider returning to work for a former employer, while 4 percent said they would not. The survey's margin of error was 3 percentage points.

Rob Harris, 48, of Kansas City, Kan., is back working for Sprint Nextel. He was laid off when a logistics unit at the supply-chain division of the telecommunications company was shut down in November, Harris said.

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