Employees First, Customers Second (Part 1)

By guest author Vineet Nayar

[Vineet Nayar, vice chairman and CEO of India-based HCL Technologies (HCLT), had no illusions about the fact that by the spring of 2005, the company was slipping: “HCLT was like [a] childhood friend who suddenly looked old. Once one of India’s corporate stars, HCLT was growing more slowly than the market leader in its industry […] and slower than its immediate rivals, losing market share and falling behind in mindshare, too.” One day, says Nayar, HCLT decided to change. He discusses how the company went about its transformation in his book, Employees First, Customers Second, which was published in 2010 by Harvard Business Press and available from the press; on Amazon, Powell’s Books, and Flipkart; and in bookstores.

On this Employees First, Customers Second approach, Nayar writes, “The conventional wisdom, of course, says that companies must always put the customer first. In any services business, however, the true value is created in the interface between the employee and the customer. So, by putting employees first, you can bring about fundamental change in the way a company creates and delivers unique value for its customers and differentiates itself from its competitors.”

The EFCS approach has four parts:

• Mirror Mirror: Creating the Need for Change
• Trust Through Transparency: Creating a Culture of Change
• Inverting the Organizational Pyramid: Building a Structure for Change
• Recasting the Role of the CEO: Transferring the Responsibility for Change

Over the next two weekends, we’ll present excerpts from each of the four steps.]

Employees First, Customers Second – Mirror Mirror: Creating the Need for Change

The process we followed to get employees to see our situation at point A is one that eventually came to be called Mirror Mirror.

Mirror Mirror is a communications exercise that involves talking with employees throughout the organization about the truth as they see it and getting them to acknowledge the reality, the elephant in the room, that everyone knows about but which has never been publicly acknowledged. It is a matter of getting the members of the organizations to look at themselves in the mirror and describe carefully and truthfully what they see.

You cannot do this by sending out a memo and telling people to face up to reality. The process must be pursued, in  person, face-t0-face, together. So, the day I assumed my new role as president of HCLT, I got on a plane and spent the next two weeks visiting our facilities and talking with as many people at all levels of the company as I could. […]

When I saw our employees looking into the mirror, a strange thing happened. I found that many of them were actually staring into the past, as if they were looking into a rearview mirror at the landscape we had already traveled through.

At first, I didn’t understand. […] It took me a while to realize that far too many people at HCLT were focused on the past. They were seeing twenty-seven years of achievement. Exciting leaps of growth. National recognition and pride. No wonder the company was steeped in nostalgia for the landscape of yesterday. That may have been the only view that provided much pleasure and comfort. The present was too frustrating. The future was too unknown.

Isn’t this true of many companies today? Perhaps your own?

We at HCLT had to stop looking into the past.

But how would I stop it? Should I be brutal and yank away the mirror? Should I say, “You look in the mirror and think that HCLT is still the leader. But, in reality, HCLT is no longer the front-runner it once was”?

No. That would simply be behaving like a traditional, authoritarian CEO. Besides, that approach would only depress people, hurt them, shock them into inaction rather than action.

I had to strike a delicate balance. […] The only solution I could think of was to create a vision that our people could look forward to, an image much more attractive than what they saw when looking backward, and so appealing they would get excited about what was to come.

But what would that image be? What should our future look like?

This segment is part 1 in the series : Employees First, Customers Second
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