book review 3
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Book Review
Course Coordinator: Dr. Kanika T. Bhal
Chandan SinghDebjit NaskarSaurabh SinghUttam Kumar
2010SMN68942010SMN69202010SMN69242010SMN6927
“When a company puts its
employees first, the customer
actually does ultimately comes first
and gains the greatest benefit..”
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Book Overview Employees First, Customers Second: Turning conventional management
upside down
Published on June 08, 2010 by Harvard Business Press Vineet Nayar’s, CEO of HCL Technologies, firsthand account on
transformation of HCL from slow decline to vitality & growth Foreword by C. K. Prahlad: University Professor, Ross School of Business,
University of Michigan
Content Organization1. Introduction2. Mirror Mirror: Creating the need for change3. Trust Through Transparency: Creating a Culture of
Change4. Inverting the Organizational Pyramid: Building a
Structure for Change5. Recasting the role of the CEO: Transferring the
Responsibility for Change6. Find Understanding in Misunderstanding: Renew the
Cycle of Change
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Introduction Between 2000-2005, it started losing market
share and started falling behind in mindshare, after remaining #1 for many years
Compound annual growth rate (CAGR) of ~30% over previous 5 years compared to Market leader was achieving 50% CAGR
In 2005, Shiv Nadar, chairman & founder, appointed Vineet Nayar as CEO of HCLT
Vineet told Shiv: “I want to be free to adopt an unconventional approach” and Shiv agreed.
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Mirror MirrorCreating the need for change
In new role, Vineet spent the next 2 weeks visiting facilities and talking with as many people at all levels as he could
He shared current situation with employee as: HCLT had lost its
competitive edge Company could crash any
day and have limited time to prevent disaster
Only way to prevent disaster is to accelerate, move faster and transform the company
Identified 3 types of employees during conversation: Transformers:
Frustrated because unable to make changes they thought necessary
Wanted change immediately & fast
Lost Souls: Convinced that that
absolutely nothing we could do or change anything
Fence Sitters (largest of three): Speak less in the meetings;
When eyes meet, they would smile. Mainly in “Wait and Watch” mode
Vineet decided to focus on the transformers so that once they are aboard they would bring a lot of fence-sitters.
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Trust Through TransparencyCreating a Culture of Change
Employees started talking about future vision but still there were plenty of uncertainty
As next move, he called a meeting of hundred most senior managers to discuss with them future plan
Shared following data: Fact #1: Market worth is of $500B
(Big players were: IBM, Accenture, EDS)
Fact #2: Top 5 Indian companies accounted for just $6B
Fact #3: Indian players seems to be satisfied with the 1%
Fact #4: IT outsourcing customers are seeking higher transparency, greater flexibility and more attention
Fact #5: Customers wanted to regain control by collaborating with their outsourcers
Plan of action based on 3 fundamental beliefs: Flexibility and Transparency:
Offering it of a kind customers have never seen before (even from the big players)
Centricity: Put energy into increasing the value for the customers rather than trying to build volume of business HCL do with them
New Standards for value delivered: Major differentiator, Employees First Customers Second, will enable HCL to unleash positive energy and passion of employees, to create “wow” in the value zone for customers.
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David Maister: The trusted advisor Creating a Culture of Change
Post-discussion top hundred reached to consensus that they need to make a bold move
Realized that first job should be of building trust
There are 4 dimensions of trust: Credibility: If the person has deep
knowledge and follows good practice. How can I ensure credibility in terms of long
term strategy? Reliability: Revealed through actions over
time Did my managers think of me as reliable in
July of 2005? Intimacy: Its about emotions.
There was many meetings with all levels of employees but people had seen the result of sharing and soul searching. I might yet betray them
Self-Orientation: Its about motives and the things you care about What did my managers think about my
motives? People may make all kind of assumptions about a leader’s motives.
Trust through Transparency: 5 main reasons1. It ensures that every stakeholder
knows company’s vision and knows how his/her contribution assists
2. It ensures that every stakeholder has a deep, personal commitment for the organization
3. Gen Y expect nothing less in their ways
4. Customers wants us to be transparent with them
5. New hires can be effective as easily as possible through sharing issues & concerns and complete transparency about strength and weaknesses
Amsterdam Window: Why do you have such large windows
in Amsterdam? Bigger your windows the more glass you
have in your house, the more visible the dirt will be to you and everyone who visits or passes by
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Opening up the office of the CEOCreating a Culture of Change
• Employees have access to financial information to their projects but not of their business units or whole organizations• People would be able to see if they are rolling downhill or moving
up. • Financial info of each Employee’s team was available on his/her
desktop• This led to actions at grassroots level:
• Motivated the teams that were doing well (recognition of effort) • New sense of purpose and direction was quite visible in the
teams
Open the window of financial information
• Answers would be given by Vineet along with his leadership team if it remain unanswered
• Everyone was able to see the question, the questioner and the answer
• Employees felt that they have leadership team that did not claim to know the answers and they are willing to acknowledge dirt
• Employees on their own started working on the problem reported by other since they believed they have answers
• Simply by allowing questions to be asked, they improved likelihood that answer would emerge from someone, somewhere
U&I Portal: an Online forum for employee’s queries
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Inverting the Org PyramidBuilding a structure for change
Reverse Accountability: What if we made the boss as accountable to the value zone as the value zone was accountable to the boss That is, certain elements of
hierarchy: enabling functions, managerial chain of command, influencers; to be more accountable to the value zone
Few
Many
Most: Value Zone
Employees
Customers
Management
On completion of critical project CIO briefly said hello to Vineet
and then focused his attention on the HCLT team, “I want to thank all of you for the excellent work.. You have gone far beyond our expectations. Vineet, you don’t know how lucky you are to have such wonderful people working for you.”
For project which was complete disaster CIO told Vineet, “The problem
was that your organization didn’t support them properly. If it had, I’m sure they would have been able to meet our objectives”
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Reverse AccountabilityExplaining the Customers why they come Second
Employees were accountable to Finance, HR, Training & Development, Quality and Administration Supposed to be supportive but
reality was different
Smart Service Desk: Transparent process for resolving issues between enabling function and employees Soon 30,000 tickets were being
opened per month: It was victory for honesty, transparency and openness
Later by looking at the pattern of issues, they tried to fix root causes of most problems
Few years after SSD, HCL ranked #1 in employees satisfaction survey
In February 2006: 300 Customer representatives journeyed to Delhi
Explaining EFCS: By putting our employees first –
doing everything we can enable those people who bring real value to you – we will server you far better than ever before
It doesn’t mean we take customers for granted. Never. We want to unleash the power of our bright minds.
We want them to align themselves with your challenges and become your enablers or facilitators
To realize EFCS potential, we need your approval & understanding and also active involvement
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Happy FeetBuilding a structure for change
Opening up the 360-deg review Decided to allow anyone who had given feedback to a manager to see
the results of that manager’s 360 Earlier, manager’s superior often disregard the 360 because of his/her
own concerns and perception, but now it was just one voice among many
Optional for managers to open their 360: Vineet led it by opening his 360 to every employee
Happy Feet: a new instrument Any employee could choose to do a 360-degree evaluation of any of
the managers they believed they had an influence – positive or negative
To avoid popular managers get highest rating and more disciplined but effective get lower marks, questions were carefully designed Does this manager help you enhance the value you deliver to the customer? After discovering that you have a problem, does this manager help you define
the problem and identify its solution? People began to reach out to others with helping hands
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Recasting the role of the CEOTransferring the responsibility for Change
Huge emails: The employees were sending
many questions of “What do you recommend?” or “What should we do?”
There were two reasons: Simply a habit: In a typical
command-and-control organization
They didn’t want to take complete responsibility of the outcome
My Problems: new section under U&I portal Vineet started posting question
received to him on this portal This created a shift in
responsibility of actions from CEOs office to the other people in organizations
CEO office was now able to focus more on other important tasks
Responsibility for managing the company should be shifted to employees from CEO office for 3 reasons: CEO office is far away from
the value zone Impossible to possess all
kind of knowledge by CEO office
CEO is one who asks more questions than answers
The role of CEO is to enable people to excel, help them discover their own wisdom, engage themselves entirely in their work and accept responsibility for making change
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Find Understanding in MisunderstandingRenewing the cycle of change
• During mid 2008 and end of 2009, there was economic crisis.
• Through Smart Response program leadership asked employees: How should we respond to this challenge?
• Response was massive and immediate. 15 of them were implemented which resulted into huge cost savings for the company without any lay-offs.
• Employees felt included and assured about their future and started to focus on creating more values for customers
1st misunderstanding: It won’t work when times get tough: • It’s the way for you to keep growing even if
times are good• Company may exceed expectations
2nd misunderstanding: Don’t need it because times are good:
• Customer sees the value very clearly before the leadership of organization sees it
3rd misunderstanding: Customers will never see the value
• HCL relied on small-scale catalyst in form of U&I portal, SSD, lots of communication
4th misunderstanding: Implementation requires large scale initiatives
• 70% of major deals by HCL was against 4 big players
• Number of customers five-folded• Employee attrition fall by almost 50%• 70% increase in employee satisfaction
survey• Revenue tripled• Operating income also tripled
5th misunderstanding: This has nothing to do with performance
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Overall Approach Looked into the mirror and recognized that they had
changed for the worse Stepped on the accelerator and surged forward:
achieved 3X revenue growth in 4 years Changed from a workplace of high attrition and low
attraction to being the #1 best employer in India, Best employer in Asia and the UK
Became a thought leader and innovator: emerged as top 5 emerging companies to watch
EFCS was a cycle of activity, a journey that begins over and over again
A simple route to success: a catalyst that sets the process in motion
Gained attention and praise with coverage in major business publication: For ex. Case study at Harvard Business School
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Thanks
I cannot be sure that the process will work the same in all companies
& situations. When we will run up against them again, we will look into
the mirror, make a correction and start walking again. – Vineet Nayar