Media Interviews

Employees come first

24 June 2010 | Source: Hindu Business Line
Vineet Nayar

“When the brakes fail, the change is instant and you have no choice but to try to think of options for action. But with gradual change, like ageing, you don't really notice it until something forces you to.”

D. Murali

Once we transfer the ownership of our collective problems from the supposedly all-powerful CEO to the employees, people want to transform and deal with their professional and personal lives in a very different way than they ever did before, writes Vineet Nayar in Employees First, Customers Second ( Employees then begin to see the company as their own enterprise, and start thinking like entrepreneurs, with a higher energy quotient, he adds.

“And when that happens with a critical mass of employees (usually, 5 or 10 per cent is all you need) throughout the company, it creates a kind of fusion — a coming together of the human particles in the corporate molecule that releases a massive amount of energy.”

The book revolves around empowering people within so as to create a self-governing and self-organising company. In the process, EFCS overturns the conventional idea of putting customers first. For, the true value in any services business is created, as the author reasons, in the interface between the customer and the employee.

By putting employees first, you can bring about fundamental change in the way a company creates and delivers unique value for its customers and differentiates itself from its competitors, he argues. “Through a combination of engaged employees and accountable management, a company can create extraordinary value for itself, its customer, and the individuals involved in both companies.”

As a result, Nayar assures, the greatest beneficiary is the customer, gaining in a far more transformative way than through traditional ‘customer care' programmes, and thus actually coming first!

But will the customer see the value? “Not only does the customer see the value very clearly, but the customer often sees it before we, the leadership, see it ourselves,” he replies, with the experience of having led HCL Technologies (HCLT) to a 43 per cent rise in customer satisfaction scores during the 2008-09 recession.

Options when the brakes fail

What are your options if you are in the middle of a race and the brakes failed? Most drivers do one of two things, Nayar learns from a co-passenger in a long flight. “First, they try to get the brakes to work. Or, second, they slow down.”

But there are problems with both these options: While the first option distracts the driver and puts him at risk of a crash, the second option makes him a hazard to other drivers and also puts him at risk of a crash.

So, what should you do, asks Nayar. “Speed up. Accelerate past the other cars and then take whatever action is necessary.”

In the middle of 2005, the author finds that his company in a tight spot, not too different from the scenario painted by the race story. Once one of India's corporate stars, HCLT was growing more slowly than the market leader in its industry (a company which had achieved a 50 per cent CAGR over the last five years) and slower than its immediate rivals, losing market share and falling behind its mindshare, too, he reminisces.

Danger with gradual change

From 2000 to 2005, the company had fallen back, and somehow it didn't see itself slowing down (though 30 per cent annual growth doesn't sound slow!), with competitors racing past. Maybe it has to do with the way the brain is wired to deal with change, Nayar wonders. “When the brakes fail, the change is instant and you have no choice but to try to think of options for action. But with gradual change, like ageing, you don't really notice it until something forces you to.”

This happens to companies all too often, he rues. “Unless the company becomes obsessed with constant change for the better, gradual change for the worse usually goes unnoticed.”

It is not very often that we get a firsthand account from a CEO about how he transformed his organisation from a slow decline to an engine of vitality and growth, as C. K. Prahalad acknowledges in his foreword. He speaks of three perspectives emerging from the book. “First, we get a glimpse of a major transformation from Vineet's viewpoint as the CEO — his doubts, his process of discovery, the validation of his ideas, and the building of consensus.”

Second is the migration in the CEO's management thinking from the old to the new, from a focus on the traditional hierarchical structure to one that decentralises power, responsibility, and accountability for value creation. And third is a discussion of the cultural prerequisites for the new approach, ‘the need for honesty, transparency, trust, and dialogue at all levels in the organisation.'

The author presents the transformation journey in four phases, viz. mirror mirror (creating the need for change); trust through transparency (creating a culture of change); inverting the organisational pyramid (building a structure for change); and recasting the role of the CEO (transferring the responsibility for change).

Face the reality

The first phase is about forcing oneself to face the reality of the company's trailing position. But doing so once is not enough, instructs Nayar. “We learned that it is necessary to look in the mirror every day and, when you do, to look for the things you don't like about what you see, rather than just focusing on the pleasing things, those attributes that your marketing slogans already feature.”

Watch out! What the mirror shows can mire one in despondency. So it is urgent to create a picture of what could be, if you were to change. This future image is ‘the romance of tomorrow,' he calls. “And that's what motivates people to press the accelerator to the floor when logic tells them to step on the brake.”

Chennai is where Nayar begins his ‘mirror mirror' journey in front of about 500 members of the engineering services team, and articulates the themes that he would stress over and over again during the following weeks. “It was as if I had spoken the unspeakable and there was too much shock and hurt to allow for conversation,” he recounts. “The pride we take in our work and in our past can make it difficult to hear the truth, let alone accept it.”

Point A

A part of the pain that Nayar describes was of the missing starting point, the point A, from where one moves towards point B. When neither of these points is defined in a company, people tend to have different views on where the company is and where it is or should be headed. And that was the situation confronting the new CEO in HCLT.

In most cases, the only definition of point A was in financial statements and other such basic data that gave only a rather limited and absolute view of the situation, Nayar narrates. A company's performance in relation to its peers is just one factor that defines its point A, he notes.

“It is equally important to look at the entire landscape of the industry in which you operate and to see how it is evolving. Often, the landscape has shifted so much that the original point A has fallen off the edge of the map…”

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