Putting Employees Before Customers

In his HCL Comnet days, Vineet Nayyar used to run a boot camp for his new recruits in a far-off place. For a week, the cadets went through hell, doing team tasks in high pressure situations, mostly in a sleepless zombie-like state. It was Nayyar's way of stretching their limits and making them value teamwork. Remind him of the bootcamp and he reminisces, "I was in search of my team's inner strength".

You have to hand it to Nayyar: he has always been a CEO who is not shy of experimenting. When he joined HCL Technologies five years ago, his mandate was to challenge the status quo, and bring the brio back to the organisation. The software company then needed someone to shake it out of a self induced stupor. Peers like Infosys and Wipro had stolen its thunder and the zing seemed to have left. Nayyar came, saw and set about fixing the firm. The turnaround effort morped into a breakthrough idea 'employees first, customers second' that's now captured in his eponymous book.

Simply put, the idea propogated empowering customer facing employees, making the workplace more trusting and transparent, and reversing the accountability paradigm by making management accountable to employees. Quiz Nayyar about the novelty of idea, after all employee centricity has been practised, written about and much discussed before.

So what's new? "There is nothing new other than prioritisation change," he explains. "Southwest Airlines, Starbucks, Google have all gained from employee centricity. All I am saying is that instead of making a statement of intent for the fact that you care for the employees, you think in a new way."

It's not that simple. Further questioning on the concept leads to a deep dive into the new idiom that Nayyar is extolling. And it's a Socratic debate that Nayyar gets into with himself to put his logic across. The parley goes thus: the CEO should ask himself — what business is he in? The answer is, to create value for his customers. If that's true, who creates value for the company? The answer is — in a service industry, employees. Then, what business should the management of the company be in? The answer is, to create value for his customers. If that's true, who creates value for the company? The answer is — in a service industry, employees. Then, what business should the management of the company be in? Encouraging, enthusing, and creating value by employees, obviously. How can the CEO make that happen? By inverting the pyramid of the organisation and making management accountable to employees. What happens then? Growth and profits, profits, and profits. "Employee first is not a socialistic, idealistic statement. It's a strategy which will help you grow," says Nayyar.

The success of any new management idea or strategy depends on the context of its application. And it's in explaining the context that Nayyar presents a scary scenario for leaders. According to the 48 year old, the CEOs have to act now and re-engage with their employees because status quo is not a choice anymore. "Most management teams are standing at the ledge of the building and the building is on fire," Nayyar says.

The HCL veteran puts forward three arguments for his alarmist cry. Firstly, the employees trust in management is at its lowest because of the way they typically behave in recessions, which is neither transparent nor trusting. Secondly, emerging markets will require significant innovation because products and services of MNCs could be irrelevant due to higher costs and value delivered. Thirdly, Gen-Y, which is 50% of any company's population, thinks differently.

In a scenario where change is constant, the CEO's role too needs to be recast. Nayyar cites the example of John Chambers, who, in a recent NYT interview, said that he used to be a command and control guy but had changed his style to more collaboration. "When a hugely successful guy like Chambers makes such a statement that means he is reading the tea leaves. He is changing his management style to leverage the opportunities and the kind of talent that's coming in," he says. "When we preach democracy for companies?"

Democracy may be good for nations and companies but has its pitfalls. So why preach democracy in an organisation when leaders have to make all the decisions anyway? Nayyar brings in a Barack Obama analogy to explain his view.

"President Obama fascinated the American public on what he potentially could do by saying we will do it. By increasing the belief in self," he says. "In your organisation the ownership of change has to transfer to employees. It's painful but once you reach, it's a wonderful moment."

According to Nayyar, the concepts that went into 'employees first, customers second'(EFCS) weren't his alone. The solutions came from colleagues, they were just applied in different contexts. "I have trust in my incompetence. I am clear in my mind that I am surrounded with smarter people than me. The smart thing to do is let the smart people do the smart things rather than not let them do it," he says grinning. For the record EFCS paid off handsomely, HCL's revenues have grown 3.6 times since 2005, EBIDTA by 3.4%, and during the slowdown it outstripped its peers in revenue growth.

Much like other management ideas, 'employees first, customers second' cannot be blindly followed. Each leader will have to create his or her own set of ideas, though they can certainly take some tips from tested concepts that Nayyar proffers in his book. The author offers a historical template. All successful revolutionaries — Mahatma Gandhi, Nelson Mandela, Martin Luther King — did three things well. They first created dissatisfaction with tomorrow. They created a vision which was compelling, and finally, drew up strategies to get there. And that's what CEOs should be doing. Most CEOs come with strategy first, not creating the context of today and tomorrow and it will never work, says Nayyar. In short, create your own credo.