All Hail the Employee: Why CEOs Must Bow Down to Their Workers

September 17, 2010

The idea that the customer always comes first has been the cornerstone of capitalism for as long as anyone can really remember.

So it took a true visionary, revolutionary, very innovative CEO to propose otherwise. In his recent book, “Employees First, Customers Second,” which quickly became a bestseller, Vineet Nayar, CEO of HCL Technologies (HCLT) argues that in order to kick growth into high gear, we must quite literally put employees first and customers second!

Nayar is an interesting guy. He focuses his management innovation on the “other” list – one that everyone is afraid to touch. In a recent interview with Gary Hamel of the Wall Street Journal, Nayar proclaims, “We must destroy the concept of the CEO. The notion of the ‘visionary;’ the ‘captain of the ship’ is bankrupt. We are telling the employee, ‘You are more important than your manager.’” Let’s be clear here, Nayar says this because he believes that even among employees, the CEO and the manager are not on the list of important people.

When you get up and make a bold, different statement like this, it is common for many to wonder if it is simply a morale-boosting bromide concocted for internal consumption. A big wodge of that skepticism within HCLT disappeared, though, when Nayar took the podium at a gathering of the company’s largest clients. He laid out the logic for putting employees first and argued that the new approach will ultimately pay big dividends for customers as well.

That evening HCLT’s share price went down by 8 percent, but thousands of employees who listened to the webcast went to bed knowing that “employee first, customer second” was more than a slogan. And since taking on the top job at HCLT in 2005, he’s been working to foment a genuine revolution in the company’s management practices.

What did Nayar mean when he made such an unorthodox management proclamation, and why did it work for his business?  The gem in his statement was centered on empowerment.  You see, he believes that in order to be a customer-centric organization, you must first empower your front-line employees and the rest will follow.  It is a simple theory of constraints: manage your bottleneck and the rest will subordinate. Except the bottleneck in this case isn’t more training, better process, or more people – it’s the lack of simple true power to make a difference that was lacking among the front lines – where the fusion of employees and customers creates ultimate business value.

Nayar also realized it was hard to feel empowered if a manager had a lot of data and the employee didn’t. With this in mind, HCLT’s IT team created a simple widget that gave every employee a detailed set of financial metrics for their team and other teams across the company. Suddenly, poorly performing teams had an incentive to improve and high-performing ones to stay on top. Employees now had positive proof that the company was willing to trust them with strategic information. “Need to know” had become the “right to know.”

Nayar didn’t stop there. He noticed that powerful corporate departments, like HR and finance, often seemed more interested in enforcing blanket policies than in making life easier for employees. When Nayar asked front-line employees, “What have the enabling functions done to help you create value in the value zone?” he was usually met with silence. When it came to interacting with these functions, most employees were mere supplicants—a situation that was hardly empowering. The solution: a web-based “Smart Service Desk” where any employee could open a “service ticket” if they had a complaint with an internal staff group. The ticket could only be closed by the concerned employee, once their issue had been resolved, and if that didn’t happen within 24 hours, the ticket got escalated up the management line.

The new system produced two key benefits:

  1. It has made staff departments more accountable to those in the value zone.
  2. It has leveled the playing field for employees—everyone’s concerns now get handled quickly and efficiently, regardless of rank – that was very empowering for the front line associates.

Does this kind of management innovation pay? The answer is yes. Over the last two years, HCLT’s revenues and earnings have tripled, a peer-beating accomplishment. In FY 2010, which ended in March, HCLT outgrew its major Indian competitors by 21 percentage points and employee satisfaction grew by 70 percent.  Late in 2009, the company was ranked as the best employer in India in a biannual survey done by Hewitt Associates and HCLT is now considered to be one of the most customer-centric businesses alive – fantastic proof that putting employees first ultimately helps you put your customers on an even higher pedestal.