Social Hiring for Startups: Sharing innovative strategies to hire fast and for long-term success - Valerie Rozycki, ZipDial

Key Ingredient? People!

I asked the audience at a startup event in Mumbai recently what they considered to be the most important factor in being ready to take the plunge and start up. A quick live audience poll (using ZipDial, naturally) showed the following results:

• 37% said the business idea
• 32% said the money
• 21% said the people

I agree with the minority, and there are indicators in the market supporting this. Ideas and business models will inevitably change and evolve in a company’s early lifecycle. But the right people will always create (and recreate) the right business idea. Investors fund young companies mostly on the basis of the strength of the founders and team, hence money follows the right people. Many very early startups fail because of disagreements and fall-outs between founders. The people are simultaneously a startup’s biggest asset and biggest risk.

This thinking extends beyond the founding team as well. Employee attrition is one of the most significant risks companies face today; it can also be one of the largest costs. This is especially true for startups, where organizations are relatively flat and there is little room for redundancy in roles. The loss of even one team member can significantly set back a company’s momentum: knowledge is lost and managers’ time must be invested in recruiting and hiring replacements instead of building the business.

From the sample of respondents to the ZipDial poll in my column last week (“The Culture of Equity”) we’ve learny that 78% of respondents work for startups, 24% of which are smaller than 50 people. Clearly, these are exactly the type of smaller organizations most likely to feel the significant adverse affects of any employee turnover that may occur.

Given the impact that every team member has on the organization, it is important to discuss ways to ensure that the people really are a strong asset rather than a risky investment.

Innovative model of “social hiring”

Rather than reiterate existing discussion of company culture, I’d like to focus on the most innovative human resources strategy I have ever encountered, namely “social hiring” used by Satya Yerramsetti, Co-Founder & CEO of SMS Country Networks. SMS Country’s growth in the past year speaks for itself:

The company’s incredible increase in employee base is even more impressive when taking into account that SMS Country has achieved 87% employee retention (13% attrition rate). This achievement is extremely impressive, especially when contrasted with statistics such as the BPO industry’s 55% attrition rate (as reported by ASSOCHAM for the December 2010 to April 2011 period). Even taking into account differences in industry, Satya’s success is quite impressive.

How has SMS Country achieved this employee growth? You might guess: months of due diligence, interviews and reference checking? No. Generally, SMS Country does not even review resumes! Satya calls it “social hiring”, and here’s how it works:

SMS Country recruits their sales teams on college campuses. They visit a campus to host a company presentation and call for applications. Every attendee is asked to name the eight other people from the class that he or she would want to work with on a sales team. The eight names that get mentioned the most frequently are hired. It’s that simple.

Rather than relying on a 20-minute interview with a stranger, SMS Country leverages the collective knowledge in the two-year “interview” conducted by fellow classmates. Brilliant! But the process doesn’t stop there. The 8-member team elects their own leader as well as finds and establishes their own office in their sales region.

This is the most innovative and direct way I’ve encountered to build a high level of social equity within a company. Every employee is highly invested in his or her colleagues. As it is with the joint liability groups of microfinance borrowers, they are motivated to succeed for the sake of themselves and their colleagues/peers. This social equity is directly in line with the long-term goals of the company.

Unfortunately, this strategy is not applicable when hiring for more specialized, individual roles that require more experience. If a company needs to hire, for example, one chief architect, social hiring will not work.

However, there are other strategies to extend the principles of social hiring. Simple examples involve testing a work experience through internships, leveraging employee referrals, ensuring that as many people as possible on the team interview any candidates, etc. The important thing to ensure as well is that employee incentives are tied not only to their own performance, but also to the success of the team.

While this hiring approach is most suitable for large, young teams, there are still many lessons to be learned from this novel approach.

Classic strategy with a twist!

One strategy that may be missing in Harvard Business School case studies – table tennis! This classic startup game is of course merely symbol of ways that companies build a positive and long-lasting culture. The importance of such a game is partly a rejuvenating break from long startup work hours, and partly a way for team members to interact in a more social setting where they can learn more about each other, feel more bonded, and stay more connected to the company.

However, rather than only singles or doubles, I highly recommend the “Around the World” game that allows ever team member to play at once and will surely leave everyone laughing out loud. If you want a demo, visit us at our Bangalore ZipDial headquarters. There is a standing invitation for a game of TT!

This is a guest column by Valerie Rozycki, the CEO & founder of ZipDial, an interactive mobile-based platform for marketing and customer relationships management. A post-graduate in Economic Sociology from Stanford University, Valerie comes in with valuable cross-disciplinary and multi-cultural experience with stints in organizations like Goldman Sachs, Ning and eBay.

Having recognized the potential of the Indian market early on, she moved to India to head strategic initiatives at mChek and turned entrepreneur with ZipDial. Through this series of columns, she will be sharing with YourStory readers her experiences, observations and insights about startups, entrepreneurship and business ideas.

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