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Employees First, Customers Second

Turning Conventional Management Upside Down

by Vineet Nayar

Employees First, Customers Second
Buy this book at Barnes & Noble

FLIPPING TRADITIONAL MANAGEMENT ON ITS HEAD

It doesn’t matter whether you’ve already heard of HCL Technologies (HCLT) or not. What does matter is that you don’t miss the valuable lessons that can be learned from the company’s remarkable journey toward becoming one of India’s fastest-growing global information technology services firms.

In Employees First, Customers Second, HCLT CEO Vineet Nayar describes how he helped his company grow from a middle player to a leader in its field by changing the rules of the game and implementing a short list of highly unconventional management ideas. His efforts, and those of his employees, were able to transform the company into a powerful competitor with 55,000 employees and $2.5 billion in yearly revenue. Throughout his book, Nayar describes how he flipped the company’s management structure upside down and redefined how the company does its business.

Years ago, HCLT was a leader in the technology field, attracting the best and brightest employees. But from 2000 to 2005, the company was losing ground. Although it was growing by an impressive 30 percent annually, the company’s competitors were doing better. When he became president in 2005, and then CEO in 2007, Nayar set in motion what he calls a "fascinating journey of self-discovery" to improve the company’s performance using a unique management approach. The organically driven change initiative that he helped to put in place eventually led the company to become what Fortune magazine called an organization with "the world’s most modern management."

A Global Phenomenon

When HCLT was named the No.1 Best Employer in India and Best Employer in Asia and the United Kingdom, Nayar’s leadership methods turned many heads in the company’s direction. Harvard Business School began to teach students about the company as a case study. By the time BusinessWeek named HCLT as one of the top five emerging companies to watch, Nayar’s unique management strategy had become a global phenomenon.

Nayar writes that he called his approach at HCLT "Employees First, Customers Second" because putting employees first "creates and delivers unique value" for the company’s customers and also helps to differentiate the company from its competitors. When employees are put first, he points out, they become more engaged. And when management is more accountable, the company creates more value for its customers.

Four Steps to Total Transformation

Nayar explains that there were four phases that the company passed through to reach its current success. Nayar calls the first phase of transformation "Mirror Mirror" because this is the time when a company looks at itself closely to determine where it needs to change. This is also when it decides what it wants to look like in the future.

The second phase is "Trust Through Transparency," which involves creating a culture that embraces the changes needed to transform the company into something better.

The third phase of Nayar’s approach is "Inverting the Organizational Pyramid." During this phase, he writes, leadership zeroed in on what he calls "the value zone," where value is created for customers. By making managers and bosses accountable to the employees who create the most value, he made the changes in his company more sustainable because they could now "outlast the leader who initiated the transformation."

The last stage of his approach — "Recasting the Role of the CEO" — entails transferring the responsibility for change from the top of the company to the next generation of leaders who work in the value zone. This is how a company becomes more self-governed and self-run, Nayar explains. When employees feel like owners, they are more likely to focus on creating more value.

By outlining the ways he and his company’s employees worked through each of these phases, Nayar presents a guide any company leader can use to improve business results. Nayar’s inviting writing style and personal experiences offer all leaders inspiration for their own transformation initiatives.