Why Did the Salary of Boomerang Employees Who Rejoin After Resignation Increase? [Jjinbit]

[Asia Economy Reporter Jeong Hyunjin] 'Boomerang employee' refers to an employee who leaves a company and then returns to work there again. Following the surge of the Great Resignation triggered by the COVID-19 pandemic, boomerang employees have been increasingly appearing in the U.S. job market. Many employees who left their companies during the heated job market to seek new challenges or higher compensation have been returning to their original workplaces.

According to a report by Bloomberg News on the 18th of last month (local time), citing social networking service LinkedIn, 4.2% of new hires at U.S. companies with job openings in the first quarter of this year were boomerang employees. This means that out of every 100 new hires, 4 were returning employees. This is an increase from 3.3% in 2019, before the COVID-19 pandemic. Bloomberg noted that "familiarity with the previous company, fear of economic downturn, and regrets following the Great Resignation are driving employees to return."

◆ 'Boomerang experienced hires' earning higher pay among experienced workers

One notable point is that the value of boomerang employees has been rising since the COVID-19 pandemic. According to CNBC, Visier, a Canadian human resources data company, analyzed data from 3 million employees across 129 global companies and found that between January and April this year, the average salary of boomerang employees increased by 28% compared to their salary at the time of resignation. This far exceeds the typical 10% salary increase for workers who switched to other companies last year (according to Pew Research Center). In other words, among experienced workers, boomerang experienced hires who return to their previous companies receive greater compensation.

Experts interpret this as boomerang employees receiving a kind of premium. From an employer's perspective, there are advantages to hiring boomerang employees. Andrea Duller, Head of Research at Visier, explained to CNBC that boomerang employees receive this premium because they have a high understanding of the company's organizational culture and work processes, and have gained new experiences through their job changes. Some analyses also suggest that hiring boomerang employees can save 33-66% of recruitment-related costs.

Ben Reiker, a professor at Henry Business School, wrote in a February article for the MIT Sloan Management Review that boomerang employees can adapt more quickly and naturally than new hires, stating, "In today's competitive job market, they can be very valuable talent."

Additionally, from the company's perspective, hiring new graduates or experienced hires from other companies involves a certain risk of assessing their job performance after joining. However, with boomerang employees, the company already knows their past performance, reducing this risk. Especially amid the Great Resignation triggered by COVID-19, some employees left not due to dissatisfaction with their previous company but to seek new challenges or due to FOMO syndrome (fear of missing out), and their return is expected to reflect high satisfaction with the company and contribute positively to work performance.

So, do companies welcome all boomerang employees? Not necessarily. It is important whether there were any issues during their previous tenure. In particular, job performance during their previous employment is the most critical factor companies consider when deciding on rehire. According to a January 2020 study cited by Bloomberg, conducted by Professor John Arnold of the University of Missouri and his team, which surveyed 30,000 boomerang and existing employees over eight years, those who performed well when first hired also performed well upon rehire. Since companies have information on job performance compared to new hires or other experienced hires, they carefully review this to reduce personnel risks associated with rehire.

In South Korea as well, research shows that performance was important in judging employee rehire. A 2020 survey by Saramin, a domestic job matching platform, of 389 companies found that 6 out of 10 companies had boomerang employees at the time. Nearly half of the respondents cited "excellent previous job performance" as the reason boomerang employees could be rehired (multiple responses allowed). This suggests that if an employee is judged to be a high performer and a talent the company wants, the "label" of being a former employee is accepted.

◆ From betrayer to returnee: "Coming back home"

In fact, boomerang employees were not welcomed decades ago. Leaving a company was often seen as a betrayal of the company and colleagues, and rehire was sometimes refused. Regardless of job performance, simply being a former employee was subject to criticism. Professor J.R. Keller of Cornell University's ILR School said on BBC last month, "In the past, some companies had policies that prohibited reemployment. Hiring back former employees sent a message that the company tolerated low loyalty, which could encourage others to leave."

Professor Keller analyzed that this situation changed in the early 1980s due to an economic downturn. At that time, mass layoffs occurred, and the job market changed significantly, making career-building through job changes a common phenomenon. He explained, "It seemed irrational to exclude candidates who left for better opportunities and wanted to return just because they had once resigned." The concept of a lifelong career at one company broke down, and both companies and workers began to accept that employees might return if better opportunities arose at their previous company during their career moves.

This trend appears to have rapidly expanded over the past decade. According to data released by LinkedIn in March, the proportion of new hires at surveyed U.S. companies filled by boomerang employees was less than 2% on average in 2010 but more than doubled to 4.3% last year. The average time between leaving and returning to the previous company decreased from 21.8 months in 2010 to 17.3 months last year. Global companies such as Deutsche Bank, EY, and Deloitte have been welcoming boomerang employees by sharing their stories on blogs and social media.

Salesforce, a corporate software provider, prominently promoted the story of Lindsay Siegel, an HR partner who left and then returned, on its official blog in July last year. Siegel worked at Salesforce from 2015 to 2018, moved to a startup, and returned to Salesforce in April 2020. She said, "It feels like coming back home. When I meet people, I first say, 'I'm a boomerang employee,'" expressing joy at the opportunity to apply the experience gained at other companies to Salesforce.

Salesforce Blog Post Promoting the Return of Boomerang Employees (Photo by Salesforce Blog)

The 'return' of boomerang employees continues. This is a representative example showing that companies in the global job market are rapidly lowering barriers that were previously considered obstacles to acquiring talent. It means that more global companies are flexibly accepting employees who perform well than in the past. As competition for talent intensifies domestically as well, it will be interesting to see if boomerang employees begin to return more frequently in South Korea, where the job market is relatively conservative.

Editor's Note[Jjinbit] is short for ‘Jeong Hyunjin’s Business Trend’ and ‘Real Business Trend,’ a corner that showcases trends in corporate management such as organizational culture and HR systems. Based on analyses from foreign media and major overseas institutions that have not received much attention, we will deliver fresh and differentiated information and perspectives.