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HCM lessons to be learned from Zoho

Rebecca Wettemann Profile picture for user Rebecca Wettemann March 31, 2023
Summary:
As Zoho increases its presence in the global software landscape, HR will clearly be an area of focus for the company.

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In the HR technology market – often more than other software areas – there’s a lot of talk about creating culture. HR leaders think a lot about how they can develop an engaging corporate culture and a quality employee experience, and the tools and technologies that can help them enable it.

In the past few years, employee experience and company culture have become hot topics. Venture funding has flooded into startups promising to improve employee experience, and valuations of publicly traded HR software firms have soared.

As a software industry analyst, I’ve followed Zoho for a number of years, mostly covering their customer relationship management (CRM) and collaboration applications, and more recently, their growing portfolio of capabilities for HR and talent management. In February 2023 I was invited, along with a group of my peers, to visit Zoho’s corporate headquarters in Chennai and learn more about Zoho’s culture and what makes it different.

If you know Zoho, you’ve probably heard about its approach to transnational localism, its focus on products and engineering, not marketing, and CEO Sridhar Vembu’s belief that growing organically without outside investment or IPO pressures enables them to do things that publicly-traded software companies (or those that aspire to be) cannot. 

I wondered: as Zoho sets its sights on competing in the HR software space, what really makes it different, apart from being an Indian company? In a sector where the stated end goal of the technology is supporting corporate culture and employee experience, what does Zoho bring to the table?

A different approach to talent

When most tech companies talk about talent, that usually means investing in recruiting, paying competitive salaries, and providing attractive perks. Zoho’s approach is very different: unlike in Silicon Valley where the focus is on competing for talent, Zoho’s focus is on creating it from the ground up:

  • For 17 years, Zoho has been providing young people in India with an alternative to college, training more than 1400 graduates in technology, design, and business. Its educational programs are provided at no cost to the students – in fact, they receive a stipend to attend. It’s important to note that Zoho education is not just about building a low-cost army of coders. We saw firsthand how Zoho art and design students were building their art and design skills, and applying them across Zoho, from building a model of the new campus under construction and designing Zoho marketing and branding content (including Zoho’s own font) to providing the musical backdrop for Zoho events.
  • Zoho’s Marupadi program, launched in 2022, is designed to help women re-enter the workforce, and so far has trained more than 60 women with a 90% job placement rate.
  • At the Kalaivani School we visited in Tenkasi, Zoho has built a campus where more than 100 students from preschool to high school learn math, reading, writing, and science, but also arts, culture and self-sufficiency – and there are plans to build a number of similar schools in underserved areas.

Obviously teaching future employees the “Zoho Way” before they enter the workforce goes a long way toward teaching and onboarding them with a certain culture, and giving them greater economic opportunity drives high loyalty (Sridhar estimates a USD $10K investment per student in a Zoho-provided education increases each of their annual productivity by $18K per year). Today, more than 10% of Zoho employees are graduates of Zoho education programs, and the average tenure for Zoho employees is far longer than the average at other software firms.

For a software company, this has some advantages: earlier onboarding and less turnover mean more institutional knowledge, less effort needed to retrain new hires on new company processes and culture, and more continuity in product teams. However, it may also present challenges: lack of experience (both good and bad) at other firms means Zoho doesn’t benefit from that an external perspective, and that relative isolation from the rest of the industry makes competitive intelligence and product differentiation at the application level that much more difficult.

Titles aren’t important

There’s a lot of talk about personal responsibility at Zoho, and an organization that operates with a relatively flat org chart, where decisions are made by directly responsible individuals at all levels and individuals are evaluated based on their ability to make an impact, not their title or the number of direct reports they have. In an ideal world, this is great, and a departure from the workforce model that looks at employees as replaceable parts in a well-defined hierarchy – if you make people real owners of their jobs, they take responsibility gladly and are more productive, and small teams are great for driving innovation.

A corollary to this at Zoho is the idea of lots of little experiments, from new software products to investments in regenerative agriculture and relatively low-cost medical devices that meet specific needs for rural India (we visited the site where Zoho is developing them). 

This lack of hierarchy and the general energy around the Zoho campus clearly drives a lot of innovation, as evidenced by the rapid stream of new applications and capabilities coming out of Zoho. However, as Zoho grows, as key part of its value proposition is the value of its platform and the core, common capabilities running across all its applications, such as collaboration and artificial intelligence (AI). Presenting a clear voice about its value proposition in the HR space will require close coordination across multiple product teams if potential customers are to fully understand what Zoho brings to the table beyond the functionality of different modules. To really sing, that voice will need to articulate how Zoho’s values and intentional culture inspire and nurture its unique approach to human capital, and how that’s reflected in its HR applications.

Corporate Social Responsibility (CSR) is not a division

At Zoho’s campuses in Chennai and Tenkasi, we saw first-hand how capitalism and doing good are not mutually exclusive. The underlying theme for many of Zoho’s non-tech investments is that sustainable economic development driven from the inside is good for India and good for Zoho. The company is investing in education, health care, and the environment, and encourages its employees to bring their causes to work – where they can promote their efforts through internal blog and HR portal postings (and Zoho provides some level of matching funds for many projects). 

On Zoho’s own campus, employees at all levels, including the maintenance staff and construction workers building its new adjacent campus are fed three meals a day, largely from food raised on Zoho’s farms. Composting and the redistribution of leftovers to the community are part of the catering teams’ operational model.

In a tech industry where philanthropy and CSR sometimes seems to wax and wane with market valuations, it’s clear that giving back is a core tenet of Zoho’s philosophy. As Zoho promotes its value to the HR buyer, communicating more of this story – in Zoho’s unique voice – will be important. Although Zoho hasn’t done a lot of television advertising in the North American and European markets, we saw advertisements it had developed for the Indian market that did a great job of communicating the vision, strategy, and benefits of Zoho. It would behoove Zoho to share them with the broader global market. 

My take

Zoho’s approach to talent, org charts and employee enablement, and CSR, although not replicable everywhere, offer a lot to emulate. That strong culture flows into Zoho’s approach to HR software development, from an employee-centric focus on communication within the application to decentralized development of functional requirements and roadmaps. As Zoho increases its presence in the global software landscape, HR will clearly be an area of focus for the company, and in a market segment where culture and thought leadership are powerful differentiators, Zoho has a lot to share.

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