Banks should stay in touch with ex-staff

If the story has a moral behind it, it is that people like to stay in touch. Many feel an irresistible urge to catch up with old acquaintances from school or work and see how their lives have unfolded.

Unfortunately, investment banks show little inclination for tapping into this fascination. They have made thousands of their employees redundant over the past two years; many will never speak to each other again. Those who do will do so of their own volition, because investment banks do not run alumni networks.

This refusal to make provision for their alumni is in stark contrast with management consultants and accountants. Firms such as McKinsey, Bain and Pricewaterhouse-

Coopers (PwC), put considerable effort and expense into ensuring that former employees stay in touch.

Their motives are not entirely altruistic. They feel the networks benefit the firms that run them, as well as being a source of advice and gossip for the alumni.

Glen Williams, a partner responsible for Bain alumni in London, says good relations with alumni - known as alums - help to promote Bain: "Alums are great advocates of, and ambassadors for, the firm. Having an alumni network is very important. It can be a great source of career opportunities for our people as well as having the potential to generate new clients."

Patrick Figgis, a partner at PwC, says alumni often become clients or business leads. PwC even uses its alumni as a ready-made focus group. "We bounce ideas off them. Because they worked for us in the past and are now on the outside, they can provide valuable feedback on whether a particular initiative might work. We often look for their input before a programme is formally launched," he says.

These advantages appear to have passed investment banks by. Neither Goldman Sachs, Morgan Stanley, Citigroup nor Deutsche Bank, runs an official scheme to stay in contact with former employees. Given that many go on to achieve success and power in a variety of fields, they could be missing an opportunity.

A former head of European human resources at one US financial services firm says banks are blinkered about the potential benefits of their alumni: "If someone just stopped and thought they would realise that it is a great idea. An alumni network offers useful contacts and potential clients."

Simon Barrow, chairman of People in Business, a management consultant, says attitudes to alumni reflect a broader healthy approach to employee relations: "If a company cannot point to outstanding ex-employees, then why should people want to go there? Capable prospective employees think of what they will gain from a five-year stint and what the next options are likely to be. If firms do not have a reputation as a springboard, what does that say about them?"

Other organisations appreciate this aspect of the alumni equation. Figgis at PwC says: "The alumni service is part of the contract we offer to people who come to work for us. It shows that we will continue to be interested in them and to support them, even after they have left. People find that appealing."

At Bain, Williams says alumni often rejoin the consultancy, bringing new skills and knowledge with them. The firm is in the process of putting together a job bank detailing vacancies elsewhere.

All this is a far cry from investment banks, for whom out of sight most definitely means out of mind.

Jane Houzer, head of graduate recruitment at Deutsche Bank, says alumni networks are inappropriate when employees go on to work for rivals: "If someone left for Goldman Sachs, we wouldn't want to get together with them. It wouldn't work due to client confidentiality."

This crucial difference between investment banking and consulting or accounting probably explains why alumni networks have not emerged at banks. Their former employees tended to circulate around the same few firms, leaving one only to pop up in another, while most PwC employees leave to work for corporates, not competitors.

Until now, that is. Research by Penna Meridian, the outplacement provider, shows that 58% of bankers who have been made redundant leave the industry. With many setting up their own businesses and others working for client companies, the benefits from keeping in touch have never been greater.

Informal alumni networks show that bankers have the urge to do so. The unofficial Chase Alumni organisation has 1,200 members in 12 locations worldwide including London. The website (www.chasealum.org) provides everything from cookie recipes to news about ex-bankers who are now running vineyards.

Before the merger with JP Morgan, Chase apparently resisted efforts to persuade it to take "ownership" of the alumni group.

Chris Church, co-ordinator of the London branch, says this was a mistake. "The alumni association is the hidden salesforce. No one seems to have sat down and considered its value," he says.