Business Today

'True value is created in the interface between employees and customers'

Giving employees the most preferred treatment isn't a new philosophy, but is rare. Practising it is rarer still than preaching it. Vineet Nayar, CEO, HCL Technologies, practised and demonstrated its transformational impact before preaching about it in the forthcoming book. Here, he talks of the story behind the book. Excerpts from the conversation with BT and the book.

     Print Edition: June 27, 2010

Why is it that not many service enterprises have gone down the employees-first path?
I believe that it is not true because South West Airlines was the first company to talk about this, and I think Starbucks too...I think the thought is different out here. Employee centricity has always been a common theme and people have built great businesses on employee centricity...

Let me step back a bit and look at why I actually wrote this book. When I look at my kids growing up, I get a sense that they have opinion and views about a lot of things in life, but not the resolve and determination to do something about it.

Now, when I look at them, I find the organisation structures of today fairly inadequate to welcome them. Because, on the one side, you go home, you tell them treat me as a friend...you have a collaborative culture in the family. But the moment we bring them into our organisation, we say you know you are going to compete with that person, and we are going to draw this super bell curve...top 10 per cent, bottom 15 per cent. And you know what is your manager's power? He can fire you or promote you!

The more I see them coming into our organisations, this factory model in IT services, I felt disturbed with the kind of organisation structures, the command and control, and the extensive powers CEOs and management have over the fate of these employees.

So the reason for writing this book has less to do with the CEOs wanting to change the way they work.... It's more to do with managers wanting to change the way they work... I think if the middle layer of our organisations changes, it is a much easier revolution to make than at the top management. Like the bottom of the pyramid of C.K. Prahalad...it's a concept which was adopted first in America for credit card companies, for retailers, then it was adopted for emerging markets, and now I am adopting it for employees. I think the true value is the bottom of the pyramid.

So why haven't more companies adopted it?
Most of us are, rightly or wrongly, fascinated with what we do —new ideas, new products, new look, new segments, new markets. Somewhere, the "how" we run our companies was delegated to this department called HR. But if you look at the oldest form of an institution, which is the army, there was no HR department. It was the commander who would make his people do crazy things.

When we built organisations institutionalised like the army, we adopted the hierarchy, we adopted the command and control, but we did not institutionalise the motivation of the troops.

I think somewhere we lost this whole trick that the true value is actually created in the interface between the employees and the customers, where you cross your swords.

If you were to describe some elements of what the culture of HCL Tech was before this transformation took place and now...
I think it is less to do with HCL Tech, it's to do with every company in the globe...The story is about the globe, it has less to do about India. When you take large companies, what happens is that you get trapped in what I call the rear-view mirror. In 2000-2005, we were trapped in our rear-view mirror.

At HCL, the culture has changed...The first is there is a huge amount of trust between our employees and management. No. 2, we are very clear about where the value is. It is in the employees. Therefore, there is reverse accountability... And the third is that they are hugely empowered.

The fourth is that we have slowly destroyed heirarchies... We are not there yet. What we did was, we actually inverted the pyramid and created what I called a value pyramid...where the management is accountable to employees... From a pyramid organisation you create a star organisation. Now the star organisation has to move what I call zones of influence where you can virtually collaborate with whoever you want. If it's cloud computing, it is this set of guys, if it is America, it is this set ....

It should look like a Facebook. ... The whole of a young person will come in only if he belongs to four or five different aspects of your company...

How do you manage to govern in such a structure?
It's a fantastic question and answer to this question is...who the hell has asked you to govern? Every CEO thinks that his job is to govern. What is the business you are in? It is to create value for your customers. The "govern" word doesn't come anywhere.

Have your appraisals changed? Do you get rid of your bottom people?
I think you should have performance orientation. Employee-first is not a beer and pizza party...It is a philosophy. You transfer the ownership to the employees, you make yourself accountable to employees then the performance better happen. It's not a compromise to the performance.

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