Here are some notes on my meeting yesterday with Vineet Nayar, CEO of HCL Technologies and author of ‘Employees First Customers Second’:
How vs What
I thought I knew this from his book, but wanted to be sure, so asked Vineet what has led to HCL Technologies’ success – what is its source of competitive advantage – is it competitive positioning, core competencies or is it simply EFCS?
Vineet explained that in 2005, HCL Technologies started an innovation in what they were doing, developing new products and services and the rest of the 4Ps to outserve their customers.
But there’s a commoditisation taking place in the industry – you’re either good enough or you’re not. It’s OK if you’re Apple etc, but service companies are finding that they’re less and less differentiated.
At around this time, the book Blue Ocean Strategy came out so HCL asked themselves can they could apply this to how they run their company.
The resulting differentiation from their competitors works at three levels:
- what is our business – providing value to customers
- where do we create this – in the interface between customers and employees
- who creates it – employees (which means that HCL’s management needs to enthuse and encourage employees).
That’s HCL Technologies’ competitive advantage - how they run the company. EFCS isn’t about being employee friendly – it’s about using employees as a way to grow faster that your competitors. Employees are your strategy and differentiation.
The family model
An important part of EFCS is the family model which is about building a trust based environment based upon the family unit.
Vineet wants to avoid the separation that occurs when people say good-bye to their families, go to work, hang their costs on a hook and leave their emotions, subjectivity, personality and connections to family life behind.
This leads to the following unwritten rules of the workplace:
- Do not trust your manager
- Don’t get too emotional about anything
- Remember it’s not personal, it’s only business.
Vineet believes these are outdated thoughts left over from the industrial age. So he’s led HCLT to become more transparent, sharing plans and financial information with everyone in the organisation.
I wanted to ask about this because it goes so clearly against much conventional wisdom. In particular, Vineet talks frequently about the need to provide an appealing environment for Gen Y, but there is a view (yes, I’m thinking about you Laurie) that Gen Y desire an even more transactional and less close relationship with their employer.
Vineet responded to my question with three of his own:
- Where is growth going to come from: – emerging markets and new products
- Who will provide this growth? - employees
- So what to do about it? – you need to develop relationships with your employees – what will you be doing to bring them closer to you over the next 2 years than they were over the last 2 years?
Vineet described an organisation where someone said it felt like Russian Roulette, there had been so many redundancies. His advice was that you’ve got to care, not for people who go, but for the people you leave behind. Don’t let go of them – or let them go but care for them.
In any case, things have changed, outside the workplace at least. Our generation want to be friends with their kids, who are generally more collaborative.
So CEOs have no choice in this - if they want to grow, the only way to do so is to innovate through their teams. So they need to go back to their ‘family members’ and say let’s reset the whole thing.
Reward and Engagement
Vineet doesn’t mention rewards in his book, but it was an obvious area to ask about. If everyone is accountable to, and supporting everybody else, and if the traditional pyramid’s inverted, then to me, this means that there needs to be more equal sharing of rewards.
And to me, it’s a critical enabler for building trust. So in his book, Vineet suggests self-orientation is one barrier to trust – people need to know that those they’re interacting with are thinking beyond their own self-interest. And surely focus on high personal compensation is a major part of this.
However I think that in Vineet’s view the question was missing the point and we soon moved onto HCLT’s ‘engaging the whole person’ approach:
Everyone needs to be rewarded appropriately. The definition of this varies individual to individual and country to country. Think of the Head of BP getting them out of the current crisis – any compensation is less that they deserve because they are the man in charge.
Trust is the key. And lack of trust is the reason these questions are being asked. Do you ask your father how much do we spend?
Everyone has work to do and the market determines their compensation (he’s not talking about obnoxious compensation).
In any case, there’s a lot more to me as an employee than my compensation. And just because I’m being paid I won’t jump up and down for you.
You go to church on Sundays. You pay to go to church and make a donation and provide your time and maybe do some social work and the church doesn’t pay you but you still have passion – why?
So why do we assume that just because we pay you you’ll feel good.
People have multiple interests - social activities, sports, technology etc - and the only way to engage them is in multiple directions.
HCLT gains a lot of motivation by involving people in giving - for example by teaching for 2 hours per week.
This leads towards thinking about concentric circles - like a Facebook. If you’re interested in a community, you can belong to it, if not, don’t belong.
But if you’re a member of 6 or 7 communities, it provides a higher possibility of creating passion in you.
I really appreciated the chance to have a conversation with Vineet, and highly recommend his book. I’ve also moved HCL Technologies experience up towards the top of my list of great HCM case studies.
Why? Well look at these aspects of Vineet’s story from an HCM point of view:
- HCLT’s competitive advantage comes from its organisation, not its business (Julian Birkinshaw would describe this as from HCLT’s management rather than its leadership)
- It has a clear focus or mojo which describes how the organisation is going to work: EFCS
- It has understood the journey it has needed to undertake in terms of organisational outcomes, moving from Point A - being tolerant of gradual change - to Point B – the v’iew on the other side of the mountains’
- It has used innovative and unique activities like the provision of financial information of each employee’s team on his or her desktop to support these outcomes
- The company uses the resulting organisational capability (or human capital) to create vs simply add value (red ocean is about adding value, blue ocean is about creating new value)
- This has helped drive performance in HCLT’s ‘value zone’ and has contributed to new business ideas through unstructured innovation.
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