F|R: Zoho Founder Offers 5 Rules for Recruiting Well

Finding good employees is challenging for companies of any size, but for cash-strapped startups in the midst of a talent war, it’s particularly difficult. AdventNet, Zoho’s parent company, is no longer small (now more than 700 employees), but our recruiting strategy was forged from the challenges we faced when we were just starting out.

Most HR departments use fairly conventional criteria to identify talent, namely an individual’s academic and employment pedigrees. There is nothing wrong with this, except that when everyone uses them, the candidate pool gets over-fished. As a bootstrapping startup unable to compete with compensation, Zoho had to recruit a different way.

Since we didn’t find any significant correlation between traditional pedigrees and real-world performance anyway, we thought, why not look to non-pedigreed workers and evaluate talent in terms of actual job performance? OK, performance can only be evaluated after a candidate is hired. But Zoho has developed a practice that allow us to recruit non-traditionally — and effectively.

Keep in mind that most of Zoho’s staff are in India, so our experience must be taken in context. But we have used the same recruiting rules for our operations in the U.S. and Japan, if on a smaller scale.

1. Use internal referrals
The best recruitment source is our own current employees; almost two-thirds of our hiring is done through this route. Rather than relying on monetary incentives for referrals, which merely produce a flood of resumes, we ask referrers to indicate how well they know the candidate and if they would be willing to make a strong recommendation. Referrers build a track record and hiring managers stay in close touch with them, which creates accountability.

2. Evaluate for passion, determination and adaptability
What about the remaining one-third of employees not coming in through a referral? We look for strong analytical and reasoning skills. Crucially, we also look for an ability to passionately argue a point of view, or for a level of enthusiasm and initiative in some non-academic area, such as sports. Particularly in India, where sports is barely encouraged in schools, people have to jump through hoops (no pun intended) to excel in sports. Since we have fairly flexible role definitions, we also look for a willingness to adapt, a key attribute of successful employees.

3. Be willing to train
For a system like ours to work, we have to invest in training. We used to simply have colleagues mentor and coach new hires. We still do that, but we augment it with classroom instruction if we feel that a new recruit has a substantial gap to cover.

The ultimate extension of this philosophy is what we call AdventNet University. In southern India, where colleges are little more than degree-granting mills, we found that college just doesn’t provide much in the way of an education. We decided to offer an alternative, and take students directly after high school.

We have a full-time faculty that devised a curriculum based on a typical undergraduate Computer Science course, with a heavy emphasis on actual programming. (We noticed that our students prefer the practical to the abstract. One reason college students get turned off Computer Science is the heavy emphasis on theory.) The program has been very successful for us, and it has been expanded recently, which has also allowed us to bring in fresh recruits from our Japan office.

4. Be flexible on role definitions
We find that it helps not to centralize job definitions too much, particularly for fresh employees. We have fairly fluid boundaries between development & QA, systems administration, sales and marketing, and so forth. We leave it to ground-level team managers to determine the role/responsibilities that will best leverage an individual’s talents.

5. Be patient
When we do these things right, the rewards are high commitment, high productivity, high job satisfaction and low attrition.

So, what’s the catch? Our approach requires patience: We cannot ramp up hiring quickly. This has implications for a VC-funded company with time-bound exit expectations, which is one reason we have elected to bootstrap, growing at a pace our recruitment model can handle.

Sridhar Vembu is co-founder and CEO of AdventNet, parent company of Zoho. Check out GigaOM’s video Q&A with Sri and his co-founder, Raju Vegesna, at Structure 08 here.

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