Home >Industry >Human Resource >After Covid, should companies rehire ex-employees?

The Covid-19 pandemic has devastated U.S. labor markets, with 9.4 million jobs lost in 2020. As the economy recovers, many organizations seeking to rebuild their workforce will face a common question: Do we hire back our ex-employees, or look for new talent?

The case for hiring back employees who had been laid off or quit seems compelling and obvious. Hiring them will decrease recruiting and onboarding costs. Recruiting an old employee also will feel like a safe move—you know them, they know you, and they will be easy to reintegrate into the organization. They even may have gained new skills or perspectives in the interim. And besides, it seems only fair.

But my research and the research of others suggest that the situation isn’t quite that simple.

The research suggests that most, but not all, former employees perform no better than new hires—and are typically more expensive. What’s more, although many rehired workers feel more engaged and loyal to the organization, that may not be true in a post-Covid era, when fired workers are likely going to feel betrayed and less committed to their former and current employer.

Poor performers

Let’s look more closely at what the research shows about performance. My colleagues and I tracked the performance of employees in a large, professional-services firm in the U.S. for five years and found, surprisingly, that rehired employees didn’t outperform similar employees who never left the firm, as measured by manager ratings.

Similarly, research led by John Arnold, a professor at the University of Missouri, on a large retail employer in the U.S. found that rehired employees performed no better or worse—as measured by annual performance reviews—than internal and external hires in the first year. However, the rehired employees performed more poorly after the first year back. What’s more, these employees are more likely to leave the company than other employees.

The case for rehired employees gets worse when you consider cost. My colleagues and I found that not only were rehired employees, at best, equivalent performers, but they were also more expensive, earning just over $10,000 more annually than a counterpart who stayed at the firm.

Better performers

Still, the picture isn’t entirely one-sided against rehires.

One bright spot in the performance of rehired employees comes from a research team led by JR Keller, a professor at Cornell University, studying a large healthcare organization in the U.S. from 2009 to 2016. They found that rehired employees outperformed new hires, as measured by manager-rated performance, when the rehires returned to the same manager, and when they worked in one of two kinds of jobs: those that required building and maintaining interpersonal relationships with others in the organization, such as human-resources specialists, customer-service representatives and lawyers, and those that required higher administrative coordination, such as purchasing managers, IT project managers and civil and environmental engineers.

The study suggests that for these types of jobs, the rehires’ pre-existing knowledge of the firm and the ability to quickly reintegrate into the organization’s social networks enhanced performance upon return for these specific types of rehires.

That isn’t the only benefit found with rehired workers. My colleagues and I found that rehired employees enjoyed increased meaning in—and commitment to—their work as compared with other employees who never left. The improved attitude of rehires was seen in additional time spent on projects meant to improve the long-term success of the organization, such as in recruitment, mentorship and strategic planning. That contrasted with other employees, who spent more time on billable client hours.

Still, these rehires, while they may have been happier, weren’t actually better performers. The question remains as to whether a rehire’s value as happy but average performers justifies their higher salary.

Post-Covid hiring

So, what does all this research say about hiring in the post-Covid economy? After all, all of this research was conducted before the pandemic, and while the samples included employees who left voluntarily as well as those who did not, we need to consider: If the performance benefits of rehires are ambiguous during good times, when the majority left the firm on their own volition, what will happen post-Covid, when leaving the organizations wasn’t necessarily their choice?

While we won’t know the definitive answer to that for some time, I’d offer two, somewhat opposing, thoughts based on research.

First, in comparing the performance of rehires to that of existing employees, there were no performance differences between workers who left voluntarily and those who left involuntarily. That’s good news for scores of organizations that may feel it’s the ethical decision to prioritize rehiring their laid-off employees when the economy rebounds. And that’s especially good news for organization filling jobs where rehires have been shown to outperform new workers.

Second, a competing argument is that a rehired employee’s potential as a happy but average performer is questionable in post-Covid times. Organizations and hiring managers may need to work hard to address the psychological toll that involuntary layoffs may have had, since workers may view the dissolution of their employment contract with their employer during a global pandemic as particularly egregious. In these instances, firms and hiring managers will need to invest significant time in repairing and rebuilding trust. Whether organization and hiring managers are willing to invest this amount of time and energy into a rehire, without the expectation of better performance, and whether this psychological hurt is even surmountable, is unclear.

As a result, a solid argument—for both employees and employers—can be made that organizations forgo rehires in favor of exploring new talent, at least for most jobs. Such organizations looking to the external market should find a plethora of talented employees let go by competitors. Although it will take longer to onboard and train these new employees, the organization has a chance to build an entirely new relationship with them, which may yield improved performance, job satisfaction and commitment to the firm. This fresh start may be just what both organizations and employees need to move forward in a post-Covid world.

This story has been published from a wire agency feed without modifications to the text.

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