Putting employees first and customers second

By Karuna Kumar

“Any transformational journey requires innovation both in what you do and in how you do it.” That’s the description Vineet Nayar, CEO of HCL Technologies, gives to the journey he made to make HCL one of India’s largest technologies company.

Nayar believes that “the asset base of his organisation resides in the talent and creativity of his employees” who determine the internal culture of HCL. He is a strong advocate of the management approach that puts employees first and customers second which happens to be the title of his recently released book. In the insightful book, he shares his approach of management and relates how he transformed his company into becoming a market leader with an engaged workforce.

The journey

Through various chapters in ‘Employees First, Customers Second’ (EFCS), Nayar explains how his thinking migrated from old to the new. He attempts to break through the traditional hierarchical structure to one that decentralizes power, responsibility and accountability for value creation. The cultural influences to this approach of management and the need for honesty, transparency, trust and dialogue at all levels of the organisation is what Nayar stresses in the latter part of the book.

Managing Gen Y employees calls for a new set of capabilities. Amid the current boom in knowledge-based businesses, the need to have an excited team of individuals to take on one challenging task after another is pertinent for a company’s productivity, according to Nayar. “There lies an inherent value in every employee, in his or her knowledge, creativity, commitment to tasks and capacity to collaborate and focus,” he writes.

He begins to narrate his journey of organisational transformation that started as early as 1976 when HCL took shape in a barsaati, (the Indian equivalent of a garage) through the efforts of a group of young entrepreneurs. Nayar describes the year 2000 as the profound moment of change. “In the year 2000, we fell into rough waters and competition took over HCL by surprise,” he recalls. In the book, he explains this period as one that made him realise that HCL was using a wrong mix of services for a changed marketplace.

“When the brakes fail, the change is instant and you have no choice but to try to think of options for action.” With this thought Nayar dives into a sea of strategies and begins a process of organisational transformation.

To describe his tactical approach he divides the book into distinct chapters, each detailing an aspect of the EFCS approach.

Reflections in the mirror

The first chapter, titled Mirror Mirror, describes the process of creating the need for change. Nayar explains how he forced his employees to look into the mirror and recognize that the change in the company had taken place for the worse. He asked his employees to point to aspects that they didn’t like about the image they saw in the mirror. He directed their thoughts by asking them to perceive the future as the romance of tomorrow and motivated them to press the accelerator of change to the floor even when logic was telling them to step on the brake.

“Once you have created the need for change there is often a significant gap between the intent to change and the actual act of changing,” Nayar points out in the book. Creating a culture of change is what the second chapter of the book entails.

The reason for this gap as pointed out by Nayar is a lack of trust among employees.
Giving HCLT’s example he elaborates, “At HCLT, we focused on one specific trust-building action: pushing the envelope of transparency. When you bring this information out in the open and make the challenges public, employees feel included.”

Inverting the organisational pyramid and building a structure of change is one of the more profound approaches explained by Nayar in the third chapter of the book.

“Even when people see the need for change, after a culture of trust has been created, and employees have started taking actions towards positive change, structural flaws can still get in the way of optimal results,” Nayar says.

For HCLT, the problem lay in not identifying and supporting the efforts of value creators who are placed between the customer and the employee. The value creators stood accountable to managers who are typically located at the top and do not directly contribute to the value zone. This isolates the higher management from the process of value creation and robs the actual value creators of the recognition they deserve. A radical change in this organisational structure is what made the difference in HCLT.

Thinking out of the box

Nayar dissuades people from conducting new age business with centuries old structures and recommends that companies seek sustainable change through radical organisational restructuring.

Pointing out one of the structural flaws, Nayar says, “The leader holds too much power in a traditional management system which prevents the organisation from being democratized and hinders the energy of employees.”

Recasting the CEO

In the fourth chapter, Nayar talks of the role of the CEO and how transferring the responsibility for change can give a competitive edge to a company in a knowledge economy. “As CEO, you must stop thinking of yourself as the only source of change. Others must be seen as the source of change. CEO’s must start transferring ownership of the organization to the next generation of leaders who are closer to the value zone.”

To create a company that is self-run and self-governed, one in which employees feel like owners and are excited about their work and constantly focus on change, the employees must be seen as the source of change by the CEO. “One must think carefully of the office of the CEO and not just the role of the person who holds the job at the moment,” Nayar says.

Blue ocean droplets

Nayar calls each of these actions catalysts of change and explains, “Catalysts are simple actions, rather than elaborate programs of organisational change that plod on for years and years and can help transform a locked up culture into one that can constantly evolve.”

As “blue ocean droplets,” Nayar says, these small ideas can create an ocean of change and enable a company to enter an entirely new performance zone, no matter what its current situation may be. “It just takes one catalyst idea, one droplet to begin the transformational journey.”

Creating your own path

Nayar concludes the book by saying, “You must make your own journey. Your thinking phases are likely to be different from ours. Your catalyst may be different too. One thought, however, should be fundamental to all our journeys; turning conventional management upside down by putting employees first.”

So what do other companies think of Nayar’s management approach?

We asked Sandip Mallik, HR Director of Aviva India, if Nayar’s approach would work effectively for his industry and his company.

“With 180+ offices spread across the country delivering a consistent employer experience is extremely difficult. Unlike IT companies that consistently feature in the top employer lists we do have a single campus or two to work on.”

He adds, “We therefore bank very heavily on two things. One, a defined engagement calendar which is announced at the beginning of each year for every single location, irrespective of size; and two, more importantly, leadership behavior which creates the culture and work environment on a day-to-day basis.”

So does Mallik agree with Nayar’s school of management of putting employees first and customers second?

“For us, all stakeholders drive our success. I am very familiar with the employee first model but that too is eventually meant to benefit the customer or the other stakeholders like the shareholders or the society at large. We are sharply focused on all four stakeholders – shareholders, employees, customers and the society. It is never a tradeoff between one or the other.”

He elaborates, “I can’t imagine a successful company making a choice of one or the other. The employee first campaign is more a branding strategy to differentiate workplace practices from other companies. It creates the right kind of buzz for employees and leads to differentiation as we compete for the same resources.”

Adding a human touch

While Mallik differs with Nayar in terms of approach, the recognition of employee engagement seems ubiquitous.

“All of us, regardless of country or culture, have a sense of our own significance – that we matter, that we deserve to be treated with dignity. Interactions which abuse that sense of ourselves tend to frustrate and anger us, while those which acknowledge and appreciate us are highly satisfying,” Mallik explains.

He continues, “We at Aviva recognize that small human touches can make a huge difference to an employee’s experience. It is very clear to us that by taking extra care to recognise employees as individuals, each and every time we engage with them, we will connect more powerfully, serving their needs better – and our business will benefit from their engagement and loyalty in return.”

Simply worth a read?

Nayar’s book with its systematic approach and tactical layout makes for an impactful read. It succinctly encapsulates Nayar’s journey to transform a traditional hierarchical structure that hinders decentralization of power into one that engages the workforce and accelerates the company goals and productivity. The book is inspiring in the way it validates the reasons for change and encourages leaders to make that bold step.

In support of Malliks view, choosing one stakeholder over another may not seem pragmatic to many companies, particularly small businesses. The approach cannot be considered as a capsule for guaranteeing a company’s performance.

Nevertheless, the book makes for an intriguing read and throws a fresh perspective into organisational restructuring and employee engagement.

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