Blog Post

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.

11 Responses to “F|R: Zoho Founder Offers 5 Rules for Recruiting Well”

  1. On the concrete vs abstract knowledge, this debate is utterly pointless. Simply visit a typical engineering college around Chennai, find out what is actually taught, and then evaluate they are serving any students or not. And they charge $2-3,000 dollars a year for that “education”.

    On the subject of reading academic papers, I have a PhD from one of the most “prestigious” schools out there – highly mathematical stuff. I actually try to read the latest in programming language literature (a subject I have a fairly active interest in). I cannot read any of the literature anymore. The academic and the practicing industrial worlds have long disconnected, with very occasional and rare exceptions – and in those cases, they do write fairly practical, accessible papers.

    In the US, Computer Science enrollment at the undergraduate level has plummeted 50% int he last 10 years. Have you thought about why? I content increasing levels of abstractions in academia has something to do with it.

    If AdventNet engineers (and the AdventNet CEO!) are going to have a problem that they cannot understand most academic literature in Computer Science, well, it is an honor they will share with much of the industry.

  2. Actually if we ignore point 3, around training, this is a really good post. We at Aroxo are currently hiring and I’ve already copied and pasted point 2 directly into a slide to work on.

    Great post and, personally, I’m very impressed by your approach to training.

  3. As far as I know, Product Development companies never hire a NIIT or an Aptech Grad, just by virtue of those degrees. These companies are surviving because they have a market created by outsourcing companies like Infosys.

    Forget about them being Arhcitects, Wirpo has few non-technical guys as managers handling mid-large teams and I only pity the “Engineers” working for them.

  4. annonymous

    I hate this Guy. Sometime back I read an article where he recruits high school kids to his so called his university and grinds them in his ZOHO factory.Leave the kids,let them enjoy their life. Let them realize what is good and bad for them.Then only we can expect people doing some extra-ordinary things.

  5. You talked about taking kids out of high school and training them with a heavy emphasis on “actual programming” – as if the rest of Computer Science, the abstract stuff, is irrelevant to “actual programming”. The kids might well prefer programming to theory. They’re too immature to know that they need the grounding of the theory. You should know better.

    What you’re doing is creating an army of programmers, whose careers will be stunted after 10,15 years at the most. Sure, they can be “retrained” on the latest, coolest scripting language, the latest platform, etc. How long will it sustain them? Will they ever climb the ladder to meatier roles? Will they be trusted to architect products and services, to design user interfaces? Will they know how to design scalable infrastructure? Will they even be able to read academic research or industry experience papers and bring that learning to bear in their jobs?

    If it’s any consolation, you’re hardly alone in this approach. Training institutes all over India (NIIT, Aptech types) have been churning out programmers for years now… We’re now starting to “discover” the limits to what they can accomplish. Not everyone can get a pure computer science education, but a proper engineering background at least is essential to ensure a successful 30-40 year career.

  6. Sridhar,

    As far as I know, AdventNet pays 5,000 INR ($USD 120) in a month for the recruited employees via other colleges. You do not pay them as they are not from good colleges. In South India every one is an engineer with engineering colleges being sprouted up everywhere like mushrooms. And yes, after 1 year you make them perment with salary I guess upto 10K/12K INR ($240 USD – $260 USD). I guess in the US, even street sweepers earn more than that.

    Honestly, it seems to be exploitative – even considering India, with per capita income of $950 USD (in a year, and I think that is the number). Yes, you do pay well to candidates from good collges.

    With all due respect, Sridhar, this model is going to work only in Chennai or many parts of Southern India (I guess it is where your office is located) as engineers are churned like a B grade movie flick. And not everyone needs to be do hard core programming, neither in an application like ZOHO (not to take away the credit of its being good) you do not expose them as a Sun or Google do via APIs or even if you do they are not going crash a NASA satellite launch.

    Nevertheless, as long as India can not feed its children, your efforts are really commendable and it is really a great humanitarian effort.