Employees First, Customers Second
In 2005, Vineet Nayar became the leader of Indian IT and consulting company HCL Technologies. As a result, 25,000 people looked up to him and waited for his direction. But there was a problem. "I knew in my heart that we as leaders had done nothing to win the trust of our employees."
HCL Technologies is an Indian IT and consulting company that was founded in 1976. It employs - nowadays - more than 140,000 people and operates globally. It is one of the pioneers on our Bucket List we yet have to visit.
Becoming the best company in the world
Back in 2005, HCL had a strong desire to transform into 'the best company in the world'. In his TED-talk, Vineet revisits a moment in history: "Transform is a very interesting word: changing the form of something permanently".
"In my mind you can transform a company in two ways. First, by innovating in what you do which is the obsession of the word. To be a Google, to be a Facebook, to be a Tesla. But there is a more interesting, human way of transforming yourself. It's about how you treat your employees."
Vineet decided to embark on the path of transforming how the company worked and how it treated its staff. Why they set out to do this was (according Vineet) pretty obvious. He asked himself and his colleagues three questions.
- "What business we are in?" We are in the business of creating unique value for our customers.
- "Where does it get created and how is it created?" It gets created where our customers and employees meet. We call that the value zone.
- "If our employees are creating the unique value, then what should the role of managers and management be?" The obvious answer was nothing but enthusing, encouraging, and enabling those employees to create a unique experience. What is not obvious about that?"
That's how the concept of "employees first, customers second" was born.
Making the change
Nowadays, many people realize there's a need to change how organizations work and how employees are treated. But realizing a need for change and actually making the change are two different things. So, how did Vineet approach the realization of the 'employees first, customers second' concept? What did he do in 2005 when he became the leader of an organization with 25,000 colleagues?
Creating the need for change
The first step that HCL took was to create unhappiness. This might sound contradictory, but Vineet aimed to clarify what HCL was lacking and why they needed to change. At that time, many of Vineet's colleagues did not think anything was wrong with the company.
It is important to say: mirror mirror on the wall, I am the ugliest of all. So we threw all our dirty linen in public for everyone to see.
Vineet: "It is important to say 'mirror mirror on the wall, I am the ugliest of them all'. So we made all our dirty linen public for everyone to see."
Only then - Vineet believed - could they actually change the way they worked. People needed to realize the way the company worked was hurting them. That it needed to be changed for the better. Not slightly, but radically.
How did Vineet go about this? The so-called "mirror mirror" exercise was all about communication. He met with employees throughout the entire organization. He wanted to address the elephant in the room: the reality everyone knew about but which had never been acknowledged.
Vineet took this process seriously. The day he took on the role of CEO he got on a plane to one of HCL's facilities. Upon arrival he met with 500 people and openly discussed how he saw the company's current status. He talked about how he felt HCL had lost its competitive edge and how they would end up a disaster if they didn't accelerate a transformation of the company.
Subsequently, he spent two weeks at that site - talking with as many people as possible - to better understand their perspectives. Many of the questions he got during those talks he couldn't answer. His main response? That he didn't have all the answers yet. That he may never have them. And that they had to come from them. As you can imagine, this confused people even more.
Within just a few weeks of his appointment as CEO, he flew to the US, UK, Germany, Japan and many of their Indian offices to repeat the same process. He talked with thousands of colleagues and transparently shared his inconvenient truth.
Defining a vision of tomorrow
"Why does an employee on Sunday spend his money, time, and energy to drive to a mosque, mandir or church and feel good about it? And why does the same employee get paid to come to our organization on Monday, and feel bad about it? Because organizations have a vision and purpose for themselves, but they don't have a vision and purpose for that employee."
Vineet set out to create a vision of tomorrow - for the employees. He spent hundreds of hours talking to people throughout the company. Jointly, they explored the idea of the 'inverted pyramid'. How could management be in service to front-line employees? How could they keep the good things about HCL and ditch the bad ones?
In this way they created a vision of tomorrow. Now, Vineet had a 'point A' (current state) and a 'point B' (desired state). Now, 'all' they had to do is figure out how to get from A to B.
Trust through transparency
Obviously it wasn't that straightforward. Small groups throughout the company came together to discuss the steps they had to take together to realize the vision. One hundred representatives from those groups came together in Delhi for a three day conference - the so-called 'Blueprint meeting'. The question they set out to answer: "What should we do next together?"
In both his TED talk and his book Employees First, Customers Second, Vineet discusses how they've turned the company upside-down. The focus on increasing trust through transparency was one of their prime focus areas.
For instance, HCL unleashed the power of transparent management evaluations. All managers (including Vineet himself) would receive feedback from their colleagues and all the feedback was published on their internal web for all to see. This gave employees a voice and it gave them the opportunity to be part of the change.
They increased transparency by allowing everybody to see all financial data from the company and its business units. It helped to boost motivation and pride because people had a better understanding of their performance and how it related to others.
An online forum was created to bridge the gap between leaders and employees. Employees could ask questions directly of leaders, and leaders would reply to them. Everything was made transparent to further boost trust levels.
Did HCL and Vineet succeed?
"Honestly, I don't know", Vineet says. But the results speak for itself. In the first four years of the transformation employee attrition fell by nearly 50%. Employee satisfaction increased by 70%. The number of customers grew five-fold. Revenues tripled.
It's a powerful story of yet another workplace pioneer, a company that truly believes employees come first. A company that shows if you put employees first, your business will flourish as a result.
Nowadays, many people realize there's a need to change how organizations work and how employees are treated. But realizing a need for change and actually making the change are two different things.
HCL Technologies and Vineet Nayar are on our Bucket List of workplace pioneers we still need to visit. Our visits allow us to dive much deeper into the specifics of the transformation. What were the barriers? Which mistakes did they make? How are they doing now? And what has happened with Vineet after stepping down as CEO? There is still a lot to be learned.
Ask them anything
What questions would you like to ask Vineet and HCL's employees? What ideas and comments do you want to share? Let us know in the comments below and we'll ask them as soon as we visit.
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Molex where I worked for 18 years combined customer, people and innovation and completed 75 years recently. As long as Fred family was at the helm of affairs people came first. It will be interesting to study why Fred sold to Koch brothers and with that what was the transformation. Was it for good of people
For study of HCL I have following questions
1. How many people were given pink slip
2. How many were asked to take VRS
3. How much of revenue was invested in reskilling
4. What percentage of top management were home grown
In our complex, interconnected, unpredictable and rapidly changing world, it is impossible to define the path from now to our vision.
Isn't it better having (or being?) an embodied intention and experimenting along the way, feeling comfortable with the unknown?
How do you manage the blurring frontier between employees and customers? Careful with the dualistic approach employees/customers!
I like to know from HCL the following:
1. How long did it take for the chaos (that raised after implementing transparency across the organization) to subside and to start work out positively?
2. How many employees at leaders level and employees level were asked to leave the organization in this context?
3. How did Vineet's subordinates and successors honored this initiative and took it forward?
4. Is it being practiced even today at HCL?
I see that the starting point was to work on trust by mean of increasing transparency.
is it really enough? shouldn't we work on consciousness of behaviours and organizational epigenetic?
People don't know how is to work in a positive workplace if they don't experience the need and the habit, they cannot either imagine!
Employees First, Customer Second. This seems to be the ideal approach in today's changing times and fully support this. However I would be interested in knowing the following:
1. Making the feedback public, did they face any data privacy restrictions?
2. How much percentage of leaders actually willingly supported this initiative?
3. Is this approach now become a part of the culture even after Vineet Nayar?
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Social capital and social networks are becoming increasingly important in today’s economy at large, and for individuals within organisations. For my MSc dissertation in Organisational Psychology, I researched how newcomers transition into a self-managing organisation (Lee & Edmondson, 2017), an organisation where authority is decentralised and classic manager-subordinate relationships are absent.
It’s all about your people. Now more than ever. But in knee-jerk reactions to the coronavirus many companies are laying off large numbers. I want to shout out to the shareholder-value managers driven by their spreadsheets: “This is not only inhumane. It is bad for your business!”. Why? It will harm your company. Companies that treat their people best in bad times emerged as winners in the past.