Sarah Green: Welcome to the Harvard Business IdeaCast. I'm Sarah Green from Harvard Business Review and I am joined today by Vineet Nayer, CEO of HCL Technologies, and the author of Employees First, Customer Second: Turning Conventional Management Upside Down. Vineet, thank you so much for talking with us today.
Vineet Nayar: Thank you so much for inviting me.
Sarah Green: I don't think we can talk about putting employees first without addressing some of the legitimate skepticism that I think a lot of employees feel after hearing over and over again so many empty slogans like “ our people are our greatest asset.” How do you overcome that skepticism?
Vineet Nayar: I think the book is to address that skepticism. I think we have too many slogans, too many people putting them in the value statement and doing nothing about it. This book is about how employees are the real value and the company being created in the interface of the employees and the customer. And therefore, by putting employees first and making the management accountable to the employee, you can actually enhance the value in the value zone multiple times.
Sarah Green: Well then let's talk a little bit about the second part, also, the customer part, putting the customer second, because I mean the customers pay the bills. So how do you justify putting them second?
Vineet Nayar: I think it's interesting because in the interest of the customer you have to realize that it's not the management of the CEO who's creating value. It is the employees who are creating value. Go to an Indian airline, go to Singapore airline, and go to an American airline. You can know the difference between what the employees really created, the difference on the ground. So what should be the business of management or the business of managers? Should be taking care of the employees.
Sarah Green: Well tell us then a little bit about how you put this into practice at HCL.
Vineet Nayar: I think to put it in practice, the first thing is that, what I call, mirror-mirror. You honestly have to look in the mirror and seeing where you are. You have to transform. Once you take a decision that you have to transform, then you have to come with unconventional ideas of how to transform. One of the unconventional ideas is by putting employees first, because you realize that they are the true value creators. Once you take that decision then you invert the organization pyramid by making yourself and your management colleagues accountable to that value zone where the employees are, making the enabling functions, like HR, finance, administration, accountable to the employees.
So that the entire organization is focused towards that value zone there the employees located so that you can maximize the value delivered by the value zone. How do you make accountability? Not by making statement, but, for example, doing a 360-degree survey. My 360degree survey is done by 55,000 employees and is published on the web for all employees to see. So once you do reverse accountability, once you push the envelope of trust, but push the envelope of transparency and create the trust, I think you would start seeing employee first started delivering significant transformation value for your business.
Sarah Green: Let's talk a little bit more about inverting the management pyramid and reverse accountability. What is the role of the leader in this kind of organization? Do you still have what we understand of as a traditional leader?
Vineet Nayar: I think if you go back to history and look at Gandhi and Nelson Mandela and Martin Luther King, what they did was they showed you the mirror and said that this is not a good position to be in, right? They cleared the dissatisfaction within you. They cleared to the mirror for the future, which is called the romance of tomorrow. You like the vision of tomorrow. And then inside you the change happened. Because of it you caused the revolution of moving from point A to point B.
The leaders of today are right in front as if were fighting a war. I think the leaders of tomorrow have to be behind the people to bring about the transformation inside those people so that they can see the vision of tomorrow, get unhappy with their today, and make the change rather than the leader leading the way. Leaders should make that change in their heart, and that transformation is everlasting transformation, which will last beyond the tenure of the CEO.
Sarah Green: Let's talk about something else you mentioned, transparency. How important is transparency to the effort of putting employees first? And what does that mean to you when you are leading HCL?
Vineet Nayar: I think the lack of transparency you can see all over Wall Street, what happened. I think the way we treated our employees during recession, putting them in zones and uncertainty, not treating them properly, distributing pink slips without proper communication and proper human behavior, is going to come and bite us over a period of time, because it is the trust between the employees and the management which is a critical ingredient for success. How do you create the trust? You create the trust by pushing transparency in your relationship between you and your employees.
Bad decisions or good decisions, you have to be transparent. You have to be transparent about it. Only by pushing the envelope of transparency do you create the trust. And once you create the trust, then you can do anything. But if that trust quotient does not exist, as it does not exist in a business environment today, right? A lot of people do not trust what is happening with the business leaders, what is happening businesses after what has happened in last two years. I think companies which will engage their customers, their customers, their employees, with trusted partnership relationship will far outperform anybody else who's not doing it. And how do you create trust? Push the envelope of transparency with them.
Sarah Green: What is the responsibility of the employees, the front line managers, in this kind of organization?
Vineet Nayar: I think it's a very easy question to ask. We should not ask that question, because in the end, every single person in Generation Y wants to come to work. And therefore, to ask the question what is your responsibility I think is the wrong question. It is our job as leaders of today to infuse them, to encourage them, to excite them, to get them to buy into a vision. And if they are in the company, they're fully inboard in the vision, driving towards a certain direction because they believe in it. Look at any revolution across the world where people believe in a vision. Rightly or wrongly they have brought about a change where people are 50% here and 50% there, they're called job workers. You need to have responsibility and I need to have responsibility, both of them need to have responsibility so that we do nothing together.
Sarah Green: What do you think is hardest part of implementing these ideas in an organization?
Vineet Nayar: Believing that you do not have all the answers. Believing that it is OK for brighter people to exist in the world. Believing that the future answers should not come from the managers and the CEOs, but should come from the organization. Believing that the command and control way of running organizations will not work if we believe in democratic values in running our countries, and we preach a lot about that. We better bring democracy in our whole organization. And believing by opening yourself to accountability. By opening yourself to evaluation you unleash a power to transform your company which you have never seen before.
Sarah Green: But realistically, isn't there some risk and decentralizing the decision-making power in the company?
Vineet Nayar: I think good question. An organization has to decide when to transform. Most of the time the organization slow down and die without even noticing that the time for transformation has come. So if you're in the car race and you are ahead of everybody else, you don't need to do employee first. But most of us are not ahead in the car race, we are right in the middle. At that particular time, if you have a bit of an idea -- you're a Google, your're a MySpace, you're an Apple, that's fine. You don't need to go do anything else.
But for the others who are searching for ideas for transform, where products ideas and services ideas and not there, employee first is an idea where you can infuse the employees and trust from your company as we have done in HCL. So 21% growth year on year during recession. 41% increase in customer satisfaction. Number one employee satisfaction in Asia and also one of the five companies to be noticed by Business Week. All this during recession only because we're decided to transform using employee first.
Sarah Green: It's a powerful idea. Vineet, thank you so much for joining us today.
Vineet Nayar: Thank you so much.
Sarah Green: That was Vineet Nayar, CEO of HCL, and the book is Employees First, Customers Second. For more go to hbr.org.