Success Tip: Put Employees First, Customers Second

Last week, I had a chat with Vineet Nayar, at an event organized by the Wall Street Journal in London.

Vineet is the CEO of HCL Technologies (70,000 employees) and he has recently published a book called Employees First, Customers Second. The book is all about a shift of management and company culture that HCL Technologies embarked on back in 2005. The company was on its knees back then and something radical had to change or HCL would be in serious trouble.

What’s the secret formula?

The philosophy of Employees First, Customers Second was to bring about a drastic change of corporate culture, to empower employees, open up to transparency, reducing the power of managers and to ensure the value zone is equipped to make their magic happen. Vineet sums it up by saying it’s about “putting human beings back in business”.

Managers serve their subordinates

A classic case of servant leadership, HCL have a policy where it’s the obligation of managers to ensure their subordinated have all the tools they need required to create value. It is all about the manager helping, supporting, coaching and mentoring the staff as opposed to simply telling them what to do and following up on a weekly basis. Vineet says that “simply setting goals and writing evaluations doesn’t make you a manager”.

At HCL, employees evaluate the managers and vice versa. Subordinates are constantly asked whether enough is being done to help them in their job, what additional training they require and what other ideas they might have to improve the business.

The value zone

Vineet talked a great deal about the “value zone” – this is where value is being created for the benefit of clients. This value is created by employees, normal workers and not managers or executives. In the case of HCL this would be technology consultants that create “user-friendly solutions out of complex systems” on behalf of their clients. Value is created wherever your business is charging, either a product or a service.

The central idea is that anyone in management should support the value zone as much as possible, only by stimulating value creation will the company thrive and deliver to its clients. Hence the employees come first and not the customers.

Full transparency

HCL decided to make a great deal of previously select information open to all employees. This included how the company was performing in sales and delivery, what internal concerns have been raised and how they have been dealt with and what career plans people have. Even 360 assessments of all staff (including the CEO) have been made public.

My favorite element of this transparency policy one was the sharing or CEO problems. This was basically Vineet telling everyone about the challenges he has in his job, we can only imagine he has a few. By involving everyone in the business, he was able to get buy-in from the organization at the grass root level. And once a positive outcome has been achievied, the employees would own the results as they helped bring this about themselves.

Did it work?

Yes! HCL grew 20% year on year, and took big bites out of the competitors’ market share in a very tough market from 2005 onwards. Interestingly, although being put second the customer satisfaction went up as the employees of HCL were happy and fulfilled a state which tends to create great results in any organization.

Will this work in other companies?

Vineet told me there are a number of large corporations in publishing, banking and other industries who are using this philosophy at the moment. It’s too early to say whether it will work and once it does work, these companies are likely to put their own name on their journey, just like HCL did.

Employees first, customers second has obviously worked very well for HCL and there are a few gems in the approach that other companies can make use of. There are no one-size-fits-all management fixes and every business will have to adopt the change that will work for them.

Final thoughts

All in all, I have read about similar cases to HCL Technologies and I even recall Scandinavian Airlines publishing a book called Moments of Truth which was all about turning corporate pyramids upside down back in the eighties. Servant leadership and corporate transparency are neither new nor untested theories.

What makes this case stand out is the sheers scale of the success and that an entire company turned round its fortunes. It proves that it can be done and most CEOs should have a read of this book to cherry pick ideas and get inspired.

I did ask Vineet about what HCL thought of letting their secret out in the shape of a book, his answer was that it was discussed at the board level. In the end they concluded that HCL have been doing it for five years so the secret is pretty much out anyway and the company is now on to their next magic formula to sustain their growth – I’m sure we’ll be reading about it in another five years.

  • pun saradeth

    Hello sir,I would like to ask you “If (Employee first style) is very
    good why any company didn’t use it to run their company? and what kind
    of company that fit with this style?
    please reply me soon through my address “radethpun@gmail.com”

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