Case study: Hiring and retention at Naukri

The story
Naukri.com, the Indian online recruitment company, was founded in 1997. At that time there were only 14,000 internet users in India.

Twelve years and an estimated 50m internet users later, the company had come a long way. After an initial public offering and expansion into other related businesses under the umbrella of its Info Edge parent company, Naukri had become India’s leading online recruitment company by 2009.

From the start, Naukri had encouraged an organisational culture that valued energy, enthusiasm, youth and experimentation. This contrasted with the more hierarchical structure at many Indian companies and made Naukri the hot dotcom business in India for young, bright talent.

The challenge

One of Naukri’s attractions had been its employee stock option plan (ESOP). But when the Indian stock market plunged following the onset of the global financial crisis in late 2008, this lost its appeal as a hiring and retention tool.

Senior executives feared that several employees would be tempted by job offers from other technology companies.

Personnel decisions had always been key to Naukri’s growth and development. Now the challenge for
the company was to adjust its hiring and retention strategy, and to keep employees motivated.

The strategy

The company decided to focus more on providing a compelling rationale for why anyone should want to work for Naukri.

Knowing that the falling share price had made the ESOP less attractive, Sanjeev Bikhchandani, the company’s co-founder and chief executive, and Hitesh Oberoi, who went on to become the chief operating officer, took two quick steps to address employees’ financial concerns.

First, instead of offering new ESOPs at the market price, which had been standard policy, the company issued ESOPs at the lower price of Rs10 – so employees could see value in them.

Second, the company introduced monthly financial incentives for its sales team, replacing the previous quarterly scheme that was similar to those at many other Indian companies.

Mr Bikhchandani and Mr Oberoi also emphasised the company’s culture, portraying Naukri as a business that represented the new, young, vibrant India, offering a fun work environment and the chance to grow within the organisation. The team highlighted Naukri’s huge brand equity, respect in the market, easy access to top management and the incentive of seeing one’s work reflected in customer traffic to the company.

Naukri’s leaders pointed out that working for a large US tech company might seem tempting but employees would probably have to wait much longer to get to a senior level with the ability to make things happen. At Naukri, by contrast, anyone in the marketing or technical department with an idea for improving the company website could get this implemented immediately and see the impact.

The results

Most of Naukri’s top team from the founding stage have stayed with the company. Personnel turnover is low compared with other companies in the online recruitment sector, and in particular when compared with India’s tech and business-process outsourcing (BPO) industries.

In addition, several key executives who did leave Naukri subsequently returned.

The lessons

Companies must have a compelling rationale at all times for why anyone should work for them. They should be ready to manage talent through the boom and bust cycle, especially in an emerging economy.

When designing ESOPs, they should be realistic about the pull of this tool when the economy is sluggish, and be prepared to adjust the terms.

Companies can contain the cost of talent with sound retention policies – such as putting people in jobs that play to their core strengths, empowering them so that they can perform to their best and having an energetic, vibrant and entrepreneurial culture.
- Financial Times, 23 Apr 2012