Employees First Customers Second

Course Coordinator: Dr. Kanika T. Bhal

 Employees First, Customers Second: Turning conventional management upside down  Published on June 08, 2010 by Harvard Business Press  Vineet Nayar’s, CEO of HCL Technologies, firsthand account on transformation of HCL from slow decline to vitality & growth  Foreword by C. K. Prahlad: University Professor, Ross School of Business, University of Michigan Content Organization 1. Introduction 2. Mirror Mirror: Creating the need for change 3. Trust Through Transparency: Creating a Culture of Change 4. Inverting the Organizational Pyramid: Building a Structure for Change 5. Recasting the role of the CEO: Transferring the Responsibility for Change 6. Find Understanding in Misunderstanding: Renew the Cycle of Change 2

 Between 2000-2005, it started losing market share and started falling behind in mindshare, after remaining #1 for many years  Compound annual growth rate (CAGR) of ~30% over previous 5 years compared to Market leader was achieving 50% CAGR  In 2005, Shiv Nadar, chairman & founder, appointed Vineet Nayar as CEO of HCLT  Vineet told Shiv: “I want to be free to adopt an unconventional approach” and Shiv agreed. 3

 In new role, Vineet spent the  Identified 3 types of employees during next 2 weeks visiting conversation: facilities and talking with as  Transformers: many people at all levels as  Frustrated because unable to make he could changes they thought necessary Wanted change immediately & fast  He shared current situation  with employee as:  Lost Souls:  Convinced that that absolutely nothing  HCLT had lost its competitive we could do or change anything edge  Fence Sitters (largest of three):  Company could crash any Speak less in the meetings; When day and have limited time to  eyes meet, they would smile. Mainly in prevent disaster “Wait and Watch” mode  Only way to prevent disaster  Vineet decided to focus on the is to accelerate, move faster transformers so that once they are and transform the company aboard they would bring a lot of fence- sitters. 4

 Employees started talking about  Plan of action based on 3 future vision but still there were fundamental beliefs: plenty of uncertainty  Flexibility and Transparency:  As next move, he called a meeting Offering it of a kind customers of hundred most senior managers to have never seen before (even discuss with them future plan from the big players)  Shared following data:  Centricity: Put energy into  Fact #1: Market worth is of $500B (Big players were: increasing the value for the IBM, Accenture, EDS) customers rather than trying to  Fact #2: Top 5 Indian companies accounted for build volume of business HCL do just $6B with them  Fact #3: Indian players seems to be satisfied  New Standards for value with the 1% delivered: Major differentiator,  Fact #4: IT outsourcing customers are seeking Employees First Customers Second, higher transparency, greater flexibility and will enable HCL to unleash more attention positive energy and passion of  Fact #5: Customers wanted to regain control by employees, to create “wow” in the collaborating with their outsourcers value zone for customers. 5

 Post-discussion top hundred reached to  Trust through Transparency: 5 main consensus that they need to make a bold reasons move 1. It ensures that every stakeholder knows  Realized that first job should be of building company’s vision and knows how trust his/her contribution assists 2. It ensures that every stakeholder has a  There are 4 dimensions of trust: deep, personal commitment for the organization  Credibility: If the person has deep knowledge and follows good practice. 3. Gen Y expect nothing less in their ways  How can I ensure credibility in terms of long 4. Customers wants us to be transparent term strategy? with them  Reliability: Revealed through actions over time 5. New hires can be effective as easily as  Did my managers think of me as reliable in possible through sharing issues & July of 2005? concerns and complete transparency  Intimacy: Its about emotions. about strength and weaknesses  There was many meetings with all levels of employees but people had seen the result of  Amsterdam Window: sharing and soul searching. I might yet betray  Why do you have such large windows in them Amsterdam?  Self-Orientation: Its about motives and the things you care about  Bigger your windows the more glass you have in your house, the more visible the dirt  What did my managers think about my will be to you and everyone who visits or motives? People may make all kind of passes by assumptions about a leader’s motives. 6

Open the window of financial information • Employees have access to financial information to their projects but not of their business units or whole organizations • People would be able to see if they are rolling downhill or moving up. • Financial info of each Employee’s team was available on his/her desktop • This led to actions at grassroots level: • Motivated the teams that were doing well (recognition of effort) • New sense of purpose and direction was quite visible in the teams U&I Portal: an Online forum for employee’s queries • Answers would be given by Vineet along with his leadership team if it remain unanswered • Everyone was able to see the question, the questioner and the answer • Employees felt that they have leadership team that did not claim to know the answers and they are willing to acknowledge dirt • Employees on their own started working on the problem reported by other since they believed they have answers • Simply by allowing questions to be asked, they improved likelihood that answer would emerge from someone, somewhere 7

Few Employees Many Customers Most: Value Zone Management  On completion of critical project  Reverse Accountability: What if CIO briefly said hello to Vineet and then  focused his attention on the HCLT team, “I we made the boss as want to thank all of you for the excellent accountable to the value zone as work.. You have gone far beyond our the value zone was accountable expectations. Vineet, you don’t know how to the boss lucky you are to have such wonderful  That is, certain elements of people working for you.” hierarchy: enabling functions,  For project which was complete disaster managerial chain of command, influencers; to be more  CIO told Vineet, “The problem was that accountable to the value zone your organization didn’t support them properly. If it had, I’m sure they would have been able to meet our objectives” 8

 Employees were accountable to  In February 2006: 300 Customer Finance, HR, Training & representatives journeyed to Delhi Development, Quality and  Explaining EFCS: Administration  By putting our employees first –  Supposed to be supportive but doing everything we can enable reality was different those people who bring real value to you – we will server you far better than ever before  Smart Service Desk: Transparent  It doesn’t mean we take customers process for resolving issues between for granted. Never. We want to enabling function and employees unleash the power of our bright  Soon 30,000 tickets were being minds. opened per month: It was victory for  We want them to align themselves honesty, transparency and openness with your challenges and become  Later by looking at the pattern of your enablers or facilitators issues, they tried to fix root causes of  To realize EFCS potential, we need most problems your approval & understanding and  Few years after SSD, HCL ranked also active involvement #1 in employees satisfaction survey 9

 Opening up the 360-deg review  Decided to allow anyone who had given feedback to a manager to see the results of that manager’s 360  Earlier, manager’s superior often disregard the 360 because of his/her own concerns and perception, but now it was just one voice among many  Optional for managers to open their 360: Vineet led it by opening his 360 to every employee  Happy Feet: a new instrument  Any employee could choose to do a 360-degree evaluation of any of the managers they believed they had an influence – positive or negative  To avoid popular managers get highest rating and more disciplined but effective get lower marks, questions were carefully designed  Does this manager help you enhance the value you deliver to the customer?  After discovering that you have a problem, does this manager help you define the problem and identify its solution?  People began to reach out to others with helping hands 10

 Huge emails:  Responsibility for managing  The employees were sending many the company should be shifted questions of “What do you to employees from CEO office recommend?” or “What should we for 3 reasons: do?”  There were two reasons:  CEO office is far away from the value zone  Simply a habit: In a typical command-and-control organization  Impossible to possess all kind  They didn’t want to take complete of knowledge by CEO office responsibility of the outcome  CEO is one who asks more  My Problems: new section under questions than answers U&I portal  The role of CEO is to enable  Vineet started posting question people to excel, help them received to him on this portal discover their own wisdom,  This created a shift in responsibility of actions from CEOs office to the engage themselves entirely in other people in organizations their work and accept  CEO office was now able to focus responsibility for making more on other important tasks change 11

2nd misunderstanding: Don’t need it 1st misunderstanding: It won’t because times are good: work when times get tough: • It’s the way for you to keep growing even if times are good • During mid 2008 and end of 2009, • Company may exceed expectations there was economic crisis. • Through Smart Response program 3rd misunderstanding: Customers will never leadership asked employees: How see the value should we respond to this challenge? • Customer sees the value very clearly before the • Response was massive and immediate. leadership of organization sees it 15 of them were implemented which resulted into huge cost savings for the 4th misunderstanding: Implementation company without any lay-offs. requires large scale initiatives • Employees felt included and assured • HCL relied on small-scale catalyst in form of U&I portal, about their future and started to focus SSD, lots of communication on creating more values for customers 5th misunderstanding: This has nothing to do with performance • 70% of major deals by HCL was against 4 big players • Number of customers five-folded • Employee attrition fall by almost 50% • 70% increase in employee satisfaction survey • Revenue tripled • Operating income also tripled 12

 Looked into the mirror and recognized that they had changed for the worse  Stepped on the accelerator and surged forward: achieved 3X revenue growth in 4 years  Changed from a workplace of high attrition and low attraction to being the #1 best employer in India, Best employer in Asia and the UK  Became a thought leader and innovator: emerged as top 5 emerging companies to watch  EFCS was a cycle of activity, a journey that begins over and over again  A simple route to success: a catalyst that sets the process in motion  Gained attention and praise with coverage in major business publication: For ex. Case study at Harvard Business School 13

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Employees First Customers Second

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