HIRING FOR EXCELLENCE AT CISCO SYSTEMS

³Our 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.

CISCO
Cisco Systems Inc. was founded in 1984 by Leonard Bosack and Sandy Lerner, a husband-andwife team working in computer operations at Stanford University. The invented a technology to link the separate computer systems at Stanford. Cisco¶s products enable computers to communicate with each other, offering customers end-to-end network solutions. Cisco has been at the heart of many historic changes in technology. The company helped catalyze the industry¶s move toward internet protocols and is now at the centre of fundamental changes in the way the world communicates; it is worldwide leader in networking for the internet. It is leading the transition to a network-centric technology environment. Almost 14 billion devices will be connected to the internet by 2010. As the network evolves into a platform, users will be able to communicate from any device and in whatever mode they choose. As $12 billion high-technology Company, Cisco went public in 1990. Its revenue growth has been nearly hundredfold in seven years. It is the fastest-growing company of its size in history, faster even than Microsoft, with a market capitalization of over $200 billion. Cisco competes in markets where hardware is obsolete in 18 months and software in six. Cisco¶s stock has risen roughly 50,000 percent during the decade between 1990 and 2000. In fiscal 2005, Cisco achieved record performance across almost all financial and operational metrics and generated $7.6 billion in cash. The annualized revenue per employee, a measure of productivity, was approximately $7, 00,000 in 2002, up from approximately $4, 50,000 in fiscal 2001. This is significant given that the firm also increased headcount in fiscal 2005 by 12 percent, primarily in sales. Cisco is one of America¶s great success stories. µThe 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.

both company and candidate are encouraged to assess each other. and investors¶. Cisco values the ability to sense when the market has moved and the ability to adapt accordingly very highly. Its business purpose is µto shape the future of global networking by creating unprecedented opportunities and value for our customers. product leadership. trust. If one cannot do one¶s work. and 5) doing more with less. Another important value is frugality. Cisco sees it as a two-way process. µmy definition of leadership is. from the top down. and culture of the company. Cisco¶s culture was founded on the principles of open communication. don¶t ask someone else to do something you wouldn¶t do¶. always fly economy class. partners. teamwork. empowerment. 2) not recruiting and developing the right people. the key elements of Cisco¶s culture are having stretch goals. Cisco espouses five core values: 1) dedication to customer success. Three things that can get someone fired at Cisco are 1) not producing business results. policies and practices. According to Fowler. 4) teamwork. one get pushed out fairly quickly. self-effacing manner. John Chambers¶ kindness is never mistaken for weakness. fun. Australia. integrity. and giving back to the community. market share. These same values thrive at Cisco today. current initiatives. 2) innovation and learning. the ability to drive change. 3) partnerships. Cisco¶s CEO. employees. Ross Fowler faced 18 interviews before he was hired as managing director. CULTURE AND VALUES A John chamber. This is to ensure that the value is delivered to the . has an energetic. and 3) not being a team player. and giving back to the community. and profitability¶. Not many companies take their culture as seriously as Cisco in managing the business and in hiring. Each of these values is continually articulated and reinforced in the mission statement. Many of these interviews were conducted to ensuring that the culture and values fit between Cisco and Fowler was good. Cisco defines its mission to µbe the supplier of choice by leading all competitors in customer satisfaction. The single most important value at Cisco is competence ± one has to be good at what one does ± and is enforced more by peer pressure than by management.CISCO¶S LEADERSHIP. all Cisco employees.

38. in 2005. The culture and values are also emphasized is communications through the company intranet. Diversity Initiatives at Cisco Cisco is dedicated to connecting business. dry cleaning services. it recognizes that inclusion and diversity of thought is a business imperative. A range of mechanisms is used to reinforce values. and mobile dental clinics with appointments made via e-mail. Consistent with its emphasis on people management. Its employees believe that µIt¶s addictive to work for Cisco. Attempts are made to create an exciting environment. They also provide other employee services. However. Women who were vice presidents or even more senior numbered 33 at last count. As a leading global company. and today. At Cisco. characterized by high levels of motivation. more than 47. Working with Cisco is an experience in itself. Therefore. the company had more than 26. It can take over your life if you let it¶. its HR group ensures that the culture is aligned with the business strategy and continually reinforced. but about getting the µbest value¶. and communities. empowerment.000. DECENTRALIZATION IS ENCOURAGED Employees do not have to take permission on every little thing. senior management gets cubicles in the centre of the fluorescent-lit space while employees get the windows. Cisco employees are always smiling. people. fitness centers. such as onsite stores.000 employees operating in over 54 countries. Cisco has a voluntary attrition rate among employees of about 8%. PEOPLE AT CISCO In 1999. much lower than the average 30% employee turnover at Silicon Valley.shareholder. ATMs. because it is a great place to work and they are all getting rich from stock options. Important events are delivered to the desk top computers of employees. Cisco has parties. . Cisco¶s values are considered very important for continued success.056. including a Christmas bash with 100 food stations and entertainment. All offices are of the same size. and was ranked fourth on Fortune¶s list of America¶s most admired companies in 2000. the company was ranked 24th on Fortune¶s list of the µ100 Best companies to Work for in America¶ in 1999. frugality at Cisco is not about being cheap. automobile oil changes. and recognition. Talk about the culture is backed up by actions. µAll hands¶ meetings are held quarterly to communicate the company values and to ensure that everyone feels included.

775.467. In contrast. Cisco boasts of a global workforce. identities. Employees at Cisco come from different cultures and geographies. This figure can vary depending on experience. or nationality. re-assign. In comparison. about $5. EMPLOYEE COMPENSATION AT CISCO Cisco Systems: Employee Compensation Data Company reviews of Employee Salaries at Cisco Systems provide a salary comparison between various positions. color.843. and 3% in central and South America. senior software engineers at Cisco have a median salary of $104. 9% in the Asia Pacific region. regardless of race. After twenty years of experience. and helps the firm understand the needs of the customers better. Software engineers at Cisco earn a competitive median salary of $82. dramatically higher than median salary at Cisco. promotes better decision-making. Cisco¶s Equal Opportunities Policy commits the company to recruit.097. Other company data on Median Bonuses at Cisco shows that the median bonus for senior level positions is about $12. Cisco encourages networks that enable employees to connect with other employees who share cultures. this median salary increases to $119.099. 2% in Japan.000 for those promoted to the senior level. Recent college graduates can expect a median salary of $68. To promote and foster an environment that supports diversity.000 higher than the median entry-level salary at Cisco.000 for more experienced workers.202. gender. and be more responsive to customer needs.000. you can see that median salaries there are higher than those at Cisco. and values. about $5. this employee salary data also shows that senior software engineers at Sun Microsystems have a median salary of $116. unique backgrounds.000 for entry-level employees to $15. experiences. from $5. Looking at the Company Data for Sun Microsystems. Cisco believes that such a diverse workforce gives the company access to new ideas. In 2005.633. and train people. or career goals.Achieving business objectives is seen as directly related to the advantage of having an inclusive workforce and a diverse group of suppliers. with a variety of viewpoints and styles of interacting. religion. Cisco employees with less than one year of experience can expect a median salary of $63. promote.000 less than the median salary at Cisco. Another company in the same industry. an increase of about $29. has similar employee salaries for software engineers. sexual orientation. A workforce of inclusion also allows the firm to be well-positioned to anticipate important market changes. 71% percent of the employees at Cisco were based in the US. . software engineers have a median salary of $77. Employee Compensation by Years of Experience can also be relevant to company salary research. age. At Sun Microsystems. including software engineers. Employees at Sun Microsystems who have at least twenty years of experience earn a median salary of $120. disability. Sun Microsystems.641. 15% in Europe and Middle East.

such as infiltrating art fairs and microbrewery festivals and other places they frequented. Cisco sources revealed that the company had a policy of attracting the µtop 10-15%¶ people in the networking industry. Developing innovative sources to find the best people is just as important as the selection process. The team then innovated a hiring process that reached these potential applicants through a variety of routes not usually used in recruiting.´ Thus effective recruitment was used as a powerful strategic weapon by the company. the top performers are not likely to be usually cruising through the µwant ads¶. Silicon Valley¶s annual home and garden show has been a particularly fruitful venue. such as the number of visits to its site. an achievement by any standard. The recruiting team at Cisco first identified the kind of people they needed to hire. Cisco has averaged over 1. but rather than listing specific job openings. Cisco is known for its non-traditional recruiting methods. growing and retaining great talent is critical to sustaining Cisco¶s competitive advantage. vice president for human resources says they µusually are not cruising through the ³want ads´. It believed that if it could get the best people in the industry and retain them. Since most prospects visit the website from their workplaces. Cisco continues to place newspaper help-wanted advertisements. On the internet. the advertisements feature its internet address and an invitation to apply.RECRUITMENT AND SELECTION Effective recruiting can be a powerful strategic weapon. To attract the highest caliber people. the company can even tell where they work. collecting business cards from prospects. Beck also notes. that the top 10% of the highest-performing employees are not typically found in the first round of layoffs from other companies. According to Cisco¶s vision statement. the recruiting team found out where these people spent their time and how they hunted jobs. As Barbara Beck. . The website has a built-in monitor that measures important aspects of its recruiting programmes. Through these focus groups. you won¶t be able to leverage HR¶s capabilities¶. Therefore. The challenge is not only hiring the right people. The first-time homebuyers that the event attracts also tend to be young achievers at successful high-technology companies. Beck notes that Cisco is a high-technology company and µif you don¶t leverage the technology. Besides this. Moreover. their ideal recruitment targets.000 new hires every three months. and speaking with them informally about their careers. Cisco¶s recruiting team targets what they call passive job seekers ± people who are happy and successful where they are ± because the most sought-after employees are not very accessible. the strategy for recruiting the high performers relies heavily on the internet. but to find them before the competitor. They then held focus groups with the ideal recruitment targets. it would remain the industry leader. such as senior engineers and marketing professionals from competitors. it can post hundreds of job openings in expensively and lots of information about each one. ³Attracting. For the past several years. since Silicon Valley is one of the tightest job markets in the US. Cisco recruiters work the crowd.

The website has caused 30-50% of all resumes to be submitted electronically and routed automatically into a database that can be accessed immediately. It will let users click on pulldown menus and profile themselves in 10 minutes. They then call these prospects.000 hits per month. After five interviews. the volunteer friend/host may pick the recruit up at the airport. to tell them in their own words about life at the company. Cisco is developing software to make life easy for stealthy job-seekers. Cisco sought to learn how happily employed people could be enticed to interview for a job. The firm goes beyond technology. She received a call from a printed circuit board designer at Cisco. A designer of printed circuit boards clicked on the µMake Friends @ Cisco¶ button at the website. The volunteer referred her to his boss and a few days later she visited Cisco. The website actively targets passive job seekers by making it fun and easy to match personal skills and interests to job openings. Their µMake Friends @ Cisco¶ button begins the process of establishing an µe-mail pal¶. introduces the visitor to the right people. Having a µfriend¶ made the difference. The response µI¶d do it if a friend told me he had a better opportunity at Cisco than I have at my current employer¶ caused Cisco than I have at my current employer¶ caused Cisco to launch an initiative-the µfriends¶ programme-to help prospects make a friend at Cisco who could describe what it was like to work there. escort them through the interview day. with the heaviest load occurring between 10 am and 2 pm. According to Fortune. If the boss walks by. Cisco establishes connection with a potential employee on their website. the recruitment team realized that their jobs page recorded over 500. users can hit a button that activates a screen disguise. The Friends programme on Cisco¶s website involves potential recruits by allowing them to pair up with a volunteer µfriend¶ from within the company. The new friend teaches the visitor about Cisco. who talked about life at Cisco. show them around the area.000 Cisco . It works like this. the volunteer friend. and leads the visitor through the hiring process. To help facilitate this practice. The recruits are then swept into the recruiting pipeline. One can also file a resume or create one online using Cisco¶s resume builder. This meant that people were looking for jobs on company time. changing it to µGift List for Boss and Workmates¶ or µSeven Successful Habits of a Great Employee¶.com/jobs) has become a turbo-charged recruiting tool.cisco. 1. or µvisitors¶ as they are called at Cisco. even though she had been with her earlier firm 11 years and was not really looking to leave. The objective is to connect potential recruits to real people in the company. she accepted a job. By monitoring the website. An individual looking for a job at Cisco can search by keyword to match one¶s skills with the job openings. and generally be the µat-ease-link¶ in the recruitment process. Cisco employees are matched with people who have approached the company as prospects and who have approached the company as prospects and who have similar backgrounds and skills. Focus group results showed that referrals from friends were a powerful factor in the job search process. When a recruit is invited to visit the company. Through focus groups.E-recruiting at Cisco The company¶s website (http://www.

000.employees have volunteered for the programme. This source provides about a third of Cisco¶s new hires. The recruitment costs in this µdirect mode¶ amounted to $6. which was around 40% below the industry average. the retention rate at the .000 hits per month. and a continued low turnover rate. The real power of Cisco¶s website is not that it helps active job seekers move more quickly. The company generated a stream of reports about who visited the site and fine-tuned its strategy accordingly. Chambers says. µOur philosophy is very simple-if you get the best people in the industry to fit into your culture and you motivate them properly.000 people a year. Referees are eligible for other prizes such as stainless steel commuter mugs and athletic bags. By late 1999. REAPING THE BENEFITS Cisco believed that its new recruitment philosophy should also be made a part of the overall corporate culture. eventually 66% of the new recruitments were from the candidates who had sent their resumes through the Cisco website. referrals and the friends program accounted for 50-60% of new employees. the Cisco employee gets $500-2. Cisco¶s hiring cycle also came down to 45 days from 68 days. Since hiring a new salesperson six months earlier can mean several million dollars in incremental revenue.556 per capita. which was hiring approximately 8. Cisco is also making their managers¶ time-consuming recruiting process easier by hiring inhouse headhunters. Cisco uses internal communication tools such as newsletters and the intranet to update employees about the referral programme. By the time the new recruitment initiatives were established. The firm targets the passive job-seeker. Cisco¶s job page was recording around 500. It is believed that about 60% of the people who join Cisco do so because they have a friend there. Every time a referral is hired. Cisco receives 100-150 requests each week from applicants wishing to be introduced to a friend at Cisco. It was also reported that about 45% of company¶s new recruits came from the Amazing people program. it is that the website sells the company to people who are happy and satisfied in their current jobs and have never thought about working at Cisco. expediting the hiring process far outweighs the expense of the additional staff. the networking giant believes its talent pool remains undiluted. Though the programme is advertised only in local movie theatres. Referral rates at Cisco are twice the industry norm. enticed by a generous referral fee and a lottery ticket for a free trip to Hawaii for each reference hired. Most importantly. By 2001. Based on performance reviews conducted three months after employees start work. Cisco. Referral rates at Cisco were twice the industry norm and that created a performance edge as most recruits were qualified employees with vast experience. received 81% of the resumes were from the web. then you are going to be an industry leader¶.

there are roughly around 2. . Due to the above reasons. which varied from 18-28%. shrinking pool of younger workers. real challenge faced by the companies was in hiring and developing the best talent. companies turned to novel and creative recruitment solutions which led to wider use of e-recruitment. a mismatch between the technological skill in demand and supply of those skills. which face the problems of an aging workforce.3% in 1999. they target specific market segments. chat rooms or newsgroups and company websites have emerged as the major techniques. mainly because it is a paperless process. the labour markets were not able to satisfy these demands. E-recruitment is not one specific technique. Commercial sites. Thus.company had also increased. the demand for µquality employees¶ increased substantially. Analysts claim that the primary source of competitive advantages in the infotech industry are a firm¶s human resources. However. Services offered by most of sites are free. It consists of various tools and there are many ways to use them. Employers. which would be critical for its success in the long term. They have a limited reach due to lack of uniformity in postings and the cumbersome search process. This meant htat they needed to aggressively target qualified personnel. specialized job sites. particulary. according to reports. with two million or more resumes on file.3% in the late 1990s. THE NEED FOR A NEW APPROACH TOWARD RECRUITMENT Traditional sources of competitive advantage are believed to have become less important for companies in the internet era. Thus. Newsgroups and chat rooms generally allow open postings that include resumes and job announcements. Some analysts have pointed out that though e-recruiting offered many advantages. the quality of labour had also declined over the years. Analysts opine that tools like e-recruitment.com and naukri. Staffing costs are also less. the labour force growth rate was declining from an annual rate of 2% in the early 1990s to a rate of 1. it also exposed companies to several challenges to the recruitment process. This is all the more crucial for companies in western countries.500 such sites. are necessary to meet a company¶s staffing objectives. The distribution and collection of the computerized resume databases reduces the time and cost compared to traditional recruitment processes. The employee turnover figure was 6. the low labour force growth rate combined with skill supply/demand mismatch made companies face constant labour shortages.com. During the IT industry boom. Surveys of CEOs and Senior HR managers in the US revealed that as many as 35-50% of job applicants did not have the basic skills. The specialized tracking software allows applicants to match specific job criteria. faced two trends. The lack of skilled labour produced structural unemployment. a very low rate compared to the industry norms. Job sites are commercial µall-purpose¶ websites like HotJobs. However.

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