Do Grades Matter? How About the College? One Company Says the Answer is No

On this long 4th of July weekend, here is an Email from "KC" regarding the costs of education. "KC" writes ...

Hi Mish,

I've emailed you before on this subject. Today, I came across an article where a small company has started recruiting directly out of high school.

If education costs soar, I believe this is the future. I've been suggesting to many people for a while now that it's a win-win for both employer and student to hire straight out of high school. The student gets four years of work experience and income which is a tremendous head start compared to the debt of a four-year degree. As the author suggests, after two years the quality of work is indistinguishable between one of his recruits and someone with a degree. For the company, the benefit is lower salaries and a more stable work force, at least until other companies start hiring directly out of high school also.

With fewer students, education costs must come down and this will make it possible for those who want to become academics to pursue a meaningful and rewarding career; academic salaries are just not high enough to compensate for the debt burden while retaining the talented.

Keep up the good work.

KC

Recruiting at Zoho/AdventNet

"KC" was referring to How We Recruit - On Formal Credentials vs Experience-based Education

I was recently interviewed on Fox Business News. The anchor Liz Claman told me one of the things that interested them about Zoho/AdventNet is our recruitment model. It is a subject I am passionate about -in fact, I spend about as much time on it as our products or technology. After all, AdventNet has about 700 people, and we are hiring at a steadily increasing pace, so recruitment, motivation and retention are important topics for us.

Our company in India always faced trouble recruiting, because most college graduates, particularly from well-known colleges, would prefer big-brand-name firms. Simply out of sheer necessity, we started to disregard the kind of college a person graduated from, and the grades they obtained. In India, that task was made even easier, because much of the Indian industry is boringly conventional, and job advertisements that specify things like "Must have a minimum of 80% average in college" are fairly common (so if you got only 79%, don't bother to apply). As a result, we get a lot of the arbitrarily-cut-off category applicants. What we found over time was that there is a lot of really good talent in that pool, which the industry had overlooked. Based on a few years of observation, we noticed that there was little or no correlation between academic performance, as measured by grades & the type of college a person attended, and their real on-the-job performance. That was a genuine surprise, particularly for me, as I grew up thinking grades really mattered.

Over time, that led us to be bolder in our search for talent. We started to ask "What if the college degree itself is not really that useful? What if we took kids after high school, train them ourselves?"

That proved to be an outstanding success. Within 2 years, those students would become full time employees, their work performance indistinguishable from their college-educated peers. We have since expanded the program, with the latest batch of students consisting of about 20, recruited not just from Chennai but smaller towns and villages in the region.

Keeping the US Education Bubble Alive

While Zoho is hiring out of college, President Obama is hellbent on keeping the
education bubble alive by throwing more money at Pell Grants.

Education is generally a good thing, but a policy that pushes everyone receive a 4-year degree is certainly the wrong policy. Countless graduates have found that out the hard way.

Pell Grants are part of the problem as is any policy that helps keep the cost of education up. Worse yet, students graduate from college, deep in debt, unprepared for the real world, and poor job prospects to boot.

I am quite certain that education costs and administrative costs are both going to fall like a rock at some point simply because the current system is unsustainable. What cannot be sustained by definition won't be.

As always, timing of the setup is problematic. However, locking in the cost of a 4-year degree now for kids still in grade school seems unwise.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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