HCL's route to success: Putting the spotlight on employees

Of course a few outsiders like us present in the audience know that this is “Directions”, the internal stock-taking meeting unique to HCL Technology where “the dirty linens are washed in public” by none other than its own employees, but few would expect to see its CEO Vineet Nayar dancing to the music and exhorting his young colleagues to compete with him on the dance floor.

Perhaps the music and the gala atmosphere is to set a cheerful tone for a meeting convened to analyse areas in which the company had made a few slip-ups, in full view of its CEO who has been spending a month and a half globe-trotting to learn from its employees, first-hand, where things have gone wrong and how they can be made better.

“The first criteria in the questions that can be asked is how dirtier it is,” Nayar tells his ecstatic audience as he explains the success story of how HCL was turned on its heel in the last five years from “the most irrelevant brand to the most likable one” amongst its customers and partners, attributing the turnaround to the fabled “Employee First Customers Second” philosophy he had propounded, which has also been the subject of a book he authored recently.

In a highly competitive business environment, it is harder to understand how Nayar’s idea of shifting the focus from the customers to the employees would improve a company’s performance. But, listening to him speak of how important it is to orientate a 30,000-strong workforce towards the direction a company wants to move, it makes sense. “The meeting is an effort towards building momentum,” Nayar told the press before the event. “It’s an attempt to align the employees towards the target. Many people called it the ‘eureka’ moment in the industry, but when you look at history this was how Gandhiji created the momentum towards achieving freedom. Before Gandhiji came, we were somewhat comfortable being slaves to the Brits. Of course there was resistance, but there was no momentum until we discovered Gandhiji.”

The momentum was built around HCL’s failure to stem the loss of mind, market and talent share in 2005, a watershed for the company that had stumbled across the recession during the turn of the century and was struggling to set a new direction for growth.

“There was nothing else for us, but to talk about the past,” Nayar recalls of that crucial moment for the company when he walked in as the new head. “We put ourselves in the mirror and realised we were more irrelevant. This gave rise to the spark to build our new vision. The idea of EFCS comes from the unhappiness about ourselves and the need to shift our attention from the past to the future. No one would like to know how good we were, but would like to know whether we can be good now”

Thus started the globe-trotting, when Nayar would visit HCL’s offices across different countries and let the employees speak in the “open house” kind of format to learn if mistakes were made at the macro-level of strategising and if that can be stopped from snowballing into a major issue for the company across its business units. Employees were asked to speak up, particularly about their fears, unhappiness about the workings of their unit or virtually anything they think of about the company and its direction.

“In the initial years, the questions asked were mostly to do with tactics. There were also a lot of disbelief and suspicion about the company’s workings and the rights and wrongs of doing things. In the following years, questions moved on to competition and about recession, when there were widespread panic and fear about their own jobs and the stability of the industry. Now, employees realise the merit in sharing their ideas - positive or negative - with everyone. They realise it’s they, as much as I, who build the vision for the company.”

The town hall format of putting the microphone in front of the employee and letting him talk not only gives them the opportunity to voice their enthusiasm or misgivings, but a subtler way of sharing the onus with them.

“The company is not merely about the CEO or how trustworthy he is, but about the employees, their idea of how to contribute to its growth. It’s breaking the halo around the CEO and bringing him/her to a dinner-table style conversation where his strategies can be challenged by his own employees. This is democratic way of letting the employees participate in the company’s progress, making them realise it’s they as much as we in the management, who script the story,” Nayar said.

And the results are not harder to see. HCL revenues have grown by 3.6 times since 2005. It was one of the few companies that emerged not only unscathed from the global recession, but continued its growth momentum. Its market cap doubled and enabled it to score high in customer satisfaction across all its businesses. It had also lured about 8000 IT professionals from its rivals in the last quarter, when giants like Infosys spoke of attrition as a major issue.

Nayar’s idea of Employees First Customers Second has also won wider acclaim in the industry and in academia, making the idea part of the curriculum in business schools. With the result so apparent, he, motivated by management experts like C K Prahllad, wanted to put the idea in black and white.

“The book is not a self-help variety,” Nayar admits. “It’s about both our failures and successes and how we had learnt from it. What we had shared in the book is not a dictum, but an idea those interested can try,” he said.

The “Directions” meetings across HCL’s offices are also experiments that had yielded more than encouraging results. This year, for instance, halls over-flowed both in the US and UK and participants ran out of food in the end, the sign that Nayar and his management team would continue the exercise for the foreseeable future.

“We have done it for six years now,” he said. “Despite all the negative questions and complaints, we go back more energised and with a greater resolve to steer the company forward. It’s no longer a CEO’s instruction to work hard, but an inner decision that happens amongst employees to give their best.”