Employees First, Customers Second (Part 4)

By guest author Vineet Nayar

[The miniseries from Vineet Nayar’s book Employees First, Customers Second: Turning Conventional Management Upside Down ends with an excerpt about the fourth and final stage of the EFCS process: Recasting the Role of the CEO. Nayar is the vice chairman and CEO of HCL Technologies. His book is available from Harvard Business Press; on Amazon, Powell’s Books, and Flipkart; and in bookstores.]

Recasting the Role of the CEO: Transferring the Responsibility for Change

There has been a lot of debate about the role of leadership, particularly after so many companies got into such trouble during the recession and even as entire countries have struggled under poor leadership. Leadership is fundamental to a company, and the role of leadership is perhaps the most difficult to define in companies that compete in a knowledge economy. One of the structural flaws of traditional management systems is that the leader holds too much power. That prevents the organization from becoming democratized and the energy of the employees from being released. If your objective is to create sustainable change and to prevent your company from periodically falling out of the race, you must think carefully about the role of the office of the CEO and not just the role of the person who holds the job at the moment.

During this phase, I learned that as CEO, or as any leader or manager, you must stop thinking of yourself as the only source of change. You must avoid the urge to answer every question or provide a solution to every problem. Instead, you must start asking questions, seeing others as the source of change, and transferring ownership of the organization’s growth to the next generation of leaders who are closer to the value zone. Only in this way can you begin to create a company that is self-run and self-governed, one in which employees feel like the owners, are excited by their work, and constantly focus on change and disruptive innovation at the very heart of the value zone. Indeed, as I explain in chapter 4, the greatest impact of EFCS is that it unleashes the power of the the many and loosens the stranglehold of the few, thus increasing the speed and quality of innovation and decision making where it matters most—in the value zone—every day. […]

By midwinter of 2006, people throughout HCLT had started to believe in the enormous potential we had as a company. They saw that our commitment to transparency and our efforts to invert the pyramid were making a tangible difference. We were now regularly and successfully competing with the best global players, just as we had vowed we would at our Blueprint meeting. This was satisfying, to the leadership team, and to employees throughout the company.

Yet, as I had with each previous phase of the process, I began to look ahead and worry. Just as we had intended, we were starting to speed up our growth. We were taking on hundreds of new people. Although we were still a relatively small company, at under $1 billion in annual worldwide revenue, we were quite diversified […]

As we grew, how could we sustain our focus on EFCS? Wouldn’t individual units start to rebuild their own traditional pyramid? Wouldn’t new layers of management seek to gain power by aggregating information? How would new people coming on board to understand the importance of trust and transparency? […]

[But] this quest for transparency had served to centralize power in the office of the CEO even more than before. But, as I had learned […] much more knowledge existed outside my office than within it. It dawned on my that I had a lot of questions to ask of others […] I was struggling with a lot of issues at the time, many of which I simply could not solve by myself. Rather than hide my struggles or pretend I had the answers, why not seek help from the organization? Wouldn’t that take a chip out of the marble facade of the office of the CEO? […]

Toward Self-Direction

[…] Over the years, I have watched and studied other institutions, from philanthropic organizations to religious groups, searching for clues and models that might be applied to business. I have concluded that when people feel passion and responsibility for what they do, not only can they transform a company, they can also transform themselves.

Once we transfer the ownership of our collective problems from the supposedly all-powerful CEO to the employees, people want to transform and deal with their professional and personal lives in a very different way than they ever did before. Suddenly, they see the company as their own enterprise. They start thinking like entrepreneurs. Their energy quotient leaps up. And when that happens with a critical mass of employees (usually, 5 or 10 percent is all you need) throughout the company, it creates a kind of fusion—a coming together of the human particles in the corporate molecule that releases a massive amount of energy.

[To read more about how Vineet helped to bring about such change in HCLT and how you can apply the Employees First Customers Second model in your company, see his book Employees First, Customers Second: Turning Conventional Management Upside Down.]

This segment is part 4 in the series : Employees First, Customers Second
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