How important is human capital in today’s economy? Absolutely critical.
In fact, I believe the right people can do more to drive the success of a software company than any other factor. You can have a fantastically differentiated product and an undeniable target market but if you don’t have the right people, your company can’t execute on these opportunities.
Trouble is, the “right” tech workers are as hard to find as ever. Software executives must make recruitment a corporate priority and incorporate new recruiting techniques In order to make the best hires in the ever-competitive technology industry.
The tough business of tech talent
As the overall U.S. economy struggles to minimize unemployment, the Silicon Valley – and the tech industry overall – continues to operate in a bubble. The global meltdown of two years ago that crippled the world economy left California’s technology centers largely unaffected. Since the dotcom crash ten years ago, most tech companies have grown slowly and steadily.
Even the national press has picked up on the tight market for skilled tech workers here in California. The ingenuity and diversity of IT companies continues to prove the industry is one of the most powerful economic drivers in the history of the world.
But the economic downturn and increased competition has heightened the need for talented employees. The differentiation between competing vendors can be subtle to the point that the customer has difficulty easily distinguishing products. We need to have the most productive salespeople, the sharpest engineers, the best managers in order to create a competitive advantage.
This year, MarkLogic will hire upwards of 150 new employees – and that’s on top of the 100 new hires we made last year. We need to hire the best possible people in order to keep up with the 45 percent growth in business year over year and 100 percent growth in customer base we experienced last year. That amounts to the most rapid hiring rate of any of our eight years in business. At the same time, many of our best people are
getting inquiries from other companies, so we need to work hard to keep our current employees satisfied.
The most difficult people to find
The toughest positions to fill these days occupy opposite ends of the executive spectrum: sales and engineering. On the one side, you have a high-end, “over quota” salesperson. Compared to the mediocre salesperson that is out of work or looking to change companies, the best salespeople are elusive. They can be making up to $1 million a year and they aren’t looking for something new, so they don’t want to be found. They may not have a LinkedIn profile, and they more than likely do not use Facebook. And even if you do find one, they are even harder to attract.
Very specialized engineers are the other group of difficult hires. They’ve got advanced degrees and they typically have a great cushy job with a big office and don’t want to be bothered. You won’t find their resume on DICE. Very often, they don’t even have a phone in their office because the only people who call are recruiters!
Other positions are not as difficult to fill. General administration employees are relatively easy to identify and recruit. Marketing people are good marketers – they network themselves like crazy. Finance experts use specific job terms in their resumes that make it easier to search for precise types of experience (“senior account specialists,” for example).
While finding candidates for these positions may be easier, finding the right fit is just as difficult. It is critical to hire someone who can not only do the job but fit in with the company.
Best practices for software hiring
As a tech company, we receive dozens of resumes every single day from potential candidates. The task of sifting through the applicants and finding the ones that are right for MarkLogic is a monumental one.
In the old days, companies would outsource as much hiring as possible to a recruiter. But these days, it pays to have a savvy practice in house as well. Here are some of the techniques which have fed our hiring success at MarkLogic:
- Bring recruiting “in” and “up” Recruiting is an expensive function. The traditional executive search firms begin charging on “minute 1” and can bill $75,000 to $100,000 per search, depending on the position. Contingency search firms typically bill 20 percent of the recruit’s base salary. This sounds more cost effective but if you’re hiring 20 people – that’s several hundred thousand dollars in fees.People are so critical to MarkLogic’s success that our investor, Sequoia Capital, hired me as employee no. 7, behind the company’s two founders. We set about developing an internal recruiting function to create the best talent base on which to build the company.I remain a member of the executive team so that we keep talent an overall corporate priority.
The leading software players – Salesforce.com, Microsoft, Apple – all have internal recruiting operations and senior executives in charge of talent. These companies have no doubt found that the cost of hiring internal recruiters can be high but remains less expensive than relying on outside recruiters.
Cost aside, the most important benefit of internal recruiters is their ability to find and hire the highest caliber people who fit best with your company. When a search begins, the internal recruiter already knows your corporate culture. He or she can sit with the hiring manager, meet other team members, and then go find the right candidates – not because there is a fee attached to the placement, but because the internal recruiter wants the right co-worker for his colleagues and wants the company to succeed overall. By far, the best hires MarkLogic has made have been made by the internal team. We know what it is like to work here and what it takes to do well.
While we continue to work with a select group of external recruiters for specific searches, we’ve found that too often, other recruiters are more focused on filling the position than the person they’re filling it with. It is a wheat/chaff situation: The Valley has little wheat and lots of chaff. Where internal recruiters are paid to find the wheat, too many external recruiters are focused on making money on the chaff.
- Tell employees to tell their friends The most powerful recruiting program a company can have is a compelling employee referral program. Ours is an unmitigated success: Today, MarkLogic gets approximately one-third of all of our hires through employee referrals.Yes, we pay employees a bonus if they refer the right candidates to us. But the real incentive is that our employees want to work with fun, smart, like-minded people who will improve the value of the company.Of course, the success of an employee referral program is greatly dependent on whether you have hired the right people to start with. This underscores the importance of staffing a startup with a foundation of thirty-or-so unbelievably-talented people. These core founding employees will help recruit new, unbelievably-talented people and maintain a high caliber of talent inside the company. Finding the right people becomes a self-fulfilling prophecy.
- “Show us what you got” For certain jobs, we’ve added a step to the last stage of the recruiting process: a demonstration of the candidate’s skills. This type of job demonstration is becoming more popular in hiring but still underused by companies in The Valley.For sales positions, we often ask candidates to come in and deliver a presentation to the hiring manager, someone on the People team, and perhaps a few other related executives. The candidate can present whatever he or she wants – either a current sales pitch or one for MarkLogic.For engineering and technical field hires, we have candidates download a free trial version of the MarkLogic server and build an application.
This final demonstration stage of the hiring process is important for three reasons. First, and most obviously, it shows what the candidate can do. Second, it familiarizes the candidate more intimately with the product (and if they decide they don’t like it, they drop out of the process). And finally, the project takes time, determination and focus – core strengths that MarkLogic values in its employees. If a candidate comes back and says, “I have an offer from another company that isn’t making me do a demo,” we know that he or she does not have the focus to be successful here.
- Trust the “blind” references I’ve come to believe that traditional references are nearly useless. Of course, candidates only give you contacts who will speak highly of them. So we try to find “blind” references: current or former colleagues who can give an honest assessment of a candidate’s ability (without damaging their current employment standing, of course.)It is important to ask the tough questions: How did he operate when he was stressed? What did she do to solve a tough problem? If possible, it is helpful to get executive references as well. Blind references then become valuable insight into a candidate’s character.
- Forget the “old days” One of the biggest recruiting mistakes I’ve seen tech companies make is relying too much on “old data” that is unrelated to the current job. There are Silicon Valley giants who are notorious for making this error. These companies work hard to check SAT scores and college GPAs and then impute intellectual horsepower and employee potential from those data points.If you are hiring someone straight out of college, then yes, these figures are key factors to incorporate in your hiring decision. But if you’re talking to someone with eight years of professional experience, it is difficult to tie job performance to any metric from the “old days.”Many of the execs in our industry are individuals who did not go to elite schools or score high on prep tests. Many of the best tech execs simply possessed the knowledge and drive to work themselves up the food chain and become successful.
In the end, MarkLogic relies heavily on past work experience and job performance as indicators of future potential – and we think our corporate success is proof that we’re hiring the best.
Josh Narva is VP of People at MarkLogic.