“Our philosophy is very simple – if you get the best people in the industry to fit into your culture and you motivate them properly, then you're going to be an industry leader.”

- John Chambers, CEO, Cisco Systems, in September 1997.

In 1995, global networking major, Cisco, found that despite hiring an average of 1,000 people every three months during the year, the company still had hundreds of openings. The recruitment pressure further increased the following year, when Cisco hired more than 1,000 employees every quarter – around 10% of the total jobs generated through the Internet in Silicon Valley. When Cisco's sales soared to $ 6.4 billion in fiscal 1997 and profits to $ 1.4 billion, (a 53% increase over the previous year), the company had to double its workforce and at the same time hire the best people.

The Cisco management realized that it had to adopt innovative recruitment measures to get the best people and remain the leader in the Internet era. Foremost among these was the first of its kind online recruitment called the 'Friends program'. Michael McNeal, Director, Corporate Employment said, “Friends is designed to put some grace into the hiring process.” Cisco recruiters also began to target passive job seekers, who were content and successful in their existing jobs. Analysts said that Cisco had maintained its lead in the global infotech industry, largely due to its streamlined and modernized recruitment policies. In 2001, the company recruited around 40-50% of its employees through 'Make a friend@Cisco' online program and other such initiatives.

Cisco was founded in 1984 by a group of computer scientists at Stanford, who designed an operating software called IOS (Internet Operating System). This software could send streams of data from one computer to another, which was loaded into box containing microprocessors specially designed for routing. This machine, called the router, made Cisco a hugely successful venture over the next two decades (Refer Table I for Cisco's growth).

In 1985, the company started a customer support site from where customers could download software over FTP2 and also upgrade the downloaded software. It also provided technical support to its customers through emails. In 1990, Cisco installed a bug report database in its site. The database contained information about potential software problems to help customers and developers. It allowed customers to know whether a specific problem was unique and if not how other customers had solved it.

By 1991, Cisco's support centre was receiving around 3,000 calls a month which increased to 12,000 by 1992. To deal with the large volume of transactions, it built an online customer support system on its site. In 1993, Cisco installed an Internet-based system for large multinational corporate customers. The system allowed customers to post queries related to their problems. Cisco also installed a trigger function called the Bug Alert on its web site. The Bug Alert sent emails on software problems within 24 hours of their discovery.

Table I
Cisco – The Milestones

Source: IBS Center for Management Research

Encouraged by the success of its customer support site in 1994, Cisco launched Cisco Information Online, a public website that offered not only company and product information but also technical and customer support to customers. By 1995, it introduced applications for selling products or services on its website. This was done mainly to transfer paper, fax, emails and CD-ROM distribution of technical documentations and training materials to the web to save time for employees, customers and trading partners, besides broadening Cisco's market reach.

In 1996, the company introduced a new Internet initiative, 'Networked Strategy' to leverage its enterprise network to foster interactive relationships with prospective customers, partners, suppliers and employees. In August 1996, Cisco launched transactional facilities including product configuration and online order placement connected to Cisco's ERP systems. In the same year, Cisco upgraded its network infrastructure to improve the handling of its transactions. In mid-1997, it introduced the dial-in access from desktop computers that enabled customers to place orders without accessing the Internet. In the same year, it also introduced customized business applications for its customers. These applications resided inside the customers' corporate intranet and automated the ordering process by linking directly to Cisco's internal systems.

In early 2000, Cisco introduced the Integrated Commerce Solution (ICS), which provided a dedicated server fully integrated into the customers' or resellers' intranet and back-end ERP systems. It facilitated interaction exchange between Cisco and its customers and speeded up transactions. It pulled order-related data directly from Cisco's back-end ERP systems online. At the same time, as the server was integrated into the customers' and resellers' back-end ERP systems, the end-users entered the order information once, which was simultaneously distributed to both resellers and Cisco's back-end systems eliminating the need for double entry. 

In mid-2000, Cisco entered into a distribution agreement with FedEx to manage orders and maintain inventory levels in a cost-effective way. Cisco introduced a web-based e-commerce system, 'Configuration Express' to provide a web-based software configuration, testing, customer labeling, customer documentation and customer equipment. The company entered into an alliance with Ariba in October 2000 for integrating its web-based ordering tools with Ariba's web-based purchasing tools. By 2002, Cisco operated through direct sales force as well as distributors; value- added resellers and system integrators in around 115 countries (Refer Table II for the Cisco's worldwide presence).

Table II
Worldwide Presence of Cisco

Source: www.cisco.com
*This list is not exhaustive.

'The Cisco City' in San Jose emerged as one of the biggest Internet economy industrial parks with around 13,000 employees spread over 40 buildings in the campus. Cisco believed that in the ever- changing environment of the IT industry to remain leader it required the best people in the industry.

Cisco sources revealed that the company had a policy of attracting the 'top 10-15%' people in the networking industry. It believed that if it could get the best people in the industry and retain them, it would remain the industry leader. According to Cisco's vision statement, “Attracting, growing and retaining great talent is critical to sustaining Cisco’s competitive advantage.” Thus, effective recruitment was used as a powerful strategic weapon by the company. The company began to use revolutionary techniques like the 'build-the-buzz' strategy, which was centered on the primary market for its products, i.e. the Internet.

Cisco's recruiting team identified the candidates whom they felt the company 'should hire,' and then figured out the way those potential candidates did their job hunting and designed hiring processes to attract them to the company. Cisco recruiters targeted even passive job seekers – people who were happy and successful in their current jobs. Barbara Beck (Beck), Vice President, Human Resources said, “The top 10% are not typically found in the first round of layoffs from other companies, and they usually aren't cruising through the want ads.” Since the most sought after employees were not accessible, Cisco devised a strategy to lure them.

As part of its strategy to attract the best talent, Cisco changed the way it used wanted advertisements in newspapers. Instead of listing specific job openings, the company featured its Internet address in its ads and invited prospective candidates to apply. This move helped Cisco to direct all job seekers to its website where it could inexpensively post hundreds of openings and provide information regarding them. It also advertised its website in cyberspace to reach candidates who surfed the net from around the world. The company was thus able to monitor and measure its recruiting programs through the number of visits to its site. Since most people visited Cisco's website from their jobs, the company could identify their place of work.

Cisco worked towards removing some of the frustration associated with applying for jobs. The company learned to attract happily employed people through focus groups. These focus groups targeted senior engineers and marketing professionals in other companies and found out how they spent their free time, the websites they visited and the how they felt about job hunting. These insights helped the recruiters. For example, it was found that most professionals liked to watch movies in their free time, websites on 'corporate cartoon Dilbert' were extremely popular and most professionals hated job hunting.

Cisco, thus, linked its website to the Dilbert web page (www.dilbert.com), which registered around 2.5 million hits per day, mainly from engineers and Internet-savvy mangers. It also bought space on websites like Travel Quest (www.travelquest.com), a reservation service provider. These steps turned Cisco's website into an extremely useful recruiting tool. The website also offered features through which applicants could fill their resumes online or create one with the help of Cisco's resume builder. In this way Cisco attracted active and passive job seekers.

The focus group's exercise made Cisco realize that a candidate would approach the company if he had been informed by a friend about better opportunities at Cisco. This led to the launch of the friends program in April 1996. Cisco also reached out to potential applicants through a variety of routes which were unusual in recruiting. It began frequenting art fairs, beer festivals and certain annual events in which people from Silicon Valley participated. These places proved to be very 'fruitful hunting venues' as they attracted young achievers from various successful infotech companies. Cisco recruiters mingled with the crowd, collected business cards from prospective candidates and spoke to them informally about their careers.

More than 1,000 Cisco employees volunteered for the Friends program, attracted by the referral fee, which started at $ 500 and a lottery ticket for a free trip to Hawaii for each prospect they befriended and who was ultimately hired. In this program, Cisco employees were matched up with people who approached the company as prospects and who shared similar backgrounds and skills. The Cisco employees then called the prospects to inform them in their own words about life at the company. Cisco advertised the friends program in movie theaters in San Jose and received around 100 to 150 applications each week. By 1997, about one third of new recruitments were made through the Friends program. Cisco launched a tool called Profiler on the employment page of its website to accelerate and standardize online resume submission. The Profiler asked applicants to provide educational and employment information through appropriate selections from pull-down menus.

The Profiler also asked a few questions regarding the applicant's background. (Peak usage of Cisco's employment page was between 10 am and 3 pm), To avoid applicants from being caught by their current employers while using Profiler, Cisco designed each screen with an escape button that opened webpage about gift suggestions for co-workers.

Cisco also found that applicants and recruiters were not totally comfortable with, the time-consuming recruiting process. To speed up the hiring process, Cisco hired in-house headhunters to identify qualified candidates for managers.

Cisco also encouraged internal referrals for recruitment through a program called 'Amazing People.' This system allowed Cisco employees to refer their friends' acquaintances for positions within Cisco. The system kept track of referrals, resumes and related information and forwarded them to Cisco's recruiters and hiring managers around the world. Employees were given a bonus if the company hired the person they referred.

After streamlining its recruitment policies, 1996, Cisco conducted an employee survey to find out how the new recruits felt on their first day at work. This exercise stemmed from the company's belief that new employees typically treated the first day as 'the most important eight hours in the world.' The survey showed that some new recruits felt lost on their first day – their phones did not work, their computers had no software and if it did they had no idea how to use it. It was also found that most of the employees did not get their email addresses for two weeks. To address the above problems, Cisco launched Fast Start, a employee-orientation initiatives. Cisco installed a computer software, which tracked the hiring process and alerted the team about the new recruit's arrival. As a result, every new recruit started with a fully functional workspace and a whole day of training in desktop tools.

According to company sources, Fast Start not only eliminated all problems but it also enabled new recruits to know about 'life inside the company.' Every new recruit was assigned a 'buddy' who clarified all doubts and answered questions about Cisco and work in general. New recruits also had a two-day course called the 'Cisco Business Essentials,' which covered company's history, its networking market and business units. The managers of the new recruits received an automatically generated email two weeks after their new recruit arrival. It reminded managers to review their departmental initiatives and personal goals. The above initiatives enabled the new recruits to get adjusted to the work environment fast.

Cisco believed that its new recruitment philosophy should also be made a part of the overall corporate culture. By late 1999, Cisco's job page was recording around 500,000 hits per month. The company generated a stream of reports about who visited the site and fine-tuned its strategy accordingly. By the time the new recruitment initiatives were established, Cisco, which was hiring approximately 8,000 people a year, received 81% of the resumes were from the web. Eventually, 66% of the new recruitments were from the candidates who had sent their resumes through the Cisco website. It was also reported that about 45% of company's new recruits came from the Amazing People program.

Cisco's hiring cycle also came down to 45 days from 68 days. The recruitment costs in this 'direct mode' amounted to $ 6,556 per capita, which was around 40% below the industry average. Referral rates at Cisco were twice the industry norm and that created a performance edge, as most recruits were qualified employees with vast experience. By 2001, referrals and the friends program accounted for 50- 60% of new employees. Most importantly, the retention rate at the company had also increased. The employee turnover figure was 6.3% in 1999, a very low rate compared to the industry norms, which varied from 18-28%.

According to company sources on average Cisco employees accessed the corporate e-HR site 16 times a day for information about job cuts. Analysts claimed that Cisco's innovative and aggressive recruiting initiatives were to a large extent responsible for the company's expansion at 40% per year and recruiting 250 employees every week despite the global dot-com slump. Industry observers felt that other players should also change their recruitment policies to keep up with Cisco's 'power-staffing' recruitment (Refer Exhibit I).

1. 'The changing dynamics of the global infotech industry necessitated Cisco's decision to change its recruitment process.' Comment on the above statement highlighting the company's decision to adopt innovative recruitment methods.

2. The 'Friends,' 'Amazing People' and 'Profiler' initiatives were designed to integrate the Internet effectively with Cisco's recruitment philosophy to attract the best talent in the industry. Analyze the various recruitment strategies adopted by Cisco.

3. Comment on the efficiency of the various tools used by Cisco. How beneficial were these to the company?

Exhibit I
The Need for a New Approach towards Recruitment

Source: IBS Center for Management Research