Employees First, Customers Second: Turning Conventional Management Upside Down

Citation

Long, K.E. (2011), "Employees First, Customers Second: Turning Conventional Management Upside Down", Journal of Organizational Change Management, Vol. 24 No. 4, pp. 559-562. https://doi.org/10.1108/09534811111144665

Turning management upside down, one worker at a time

Writing during the romantic, baroque era of chess in the early 1900s, the eloquent chess commentator William E. Napier once described the style of a fellow master as “the chess of a businessman: simple, saying and fearless”. Nayar's (2010) clear and direct style in Employees First, Customers Second has those same qualities as he tells us the story of the bottoms‐up transformation of his company, HCL Technologies (HCLT) between 2005 and 2008 from the perspective of the CEO in the center of a quiet storm. This is a straightforward narrative, told at a rapid pace, rich with insights gathered along the way and which offers refreshing practical ideas that should be of interest to both scholars and practitioners alike. Readers will be left wanting to know more details about how to apply these insights more generally or where the employee driven initiatives came up short or the extent to which a business of 55,000 employees can realistically adopt a family value structure. The strength of the book is in its grand vision, its inspirational energy and the evidence that it offers in support of transformational change achieved by the accumulated virtuous actions of empowered people providing value to their customers. HCLT calls their process “Employees First, Customers Second” or EFCS.

After a brief but sufficient review of his background with HCLT as an entrepreneurial executive, Nayar begins his tale with his accepting the position as CEO, inheriting a business with an excellent historical track record of performance in a growth industry undergoing subtle transformations that were leading his company to underperform their competitors (p. 28).

In Chapter 1, “Mirror mirror”, he describes a series of management – employee meetings around the world in which he awakens HCLT employees to the very real challenges ahead (pp. 22‐4). He also relates some stories told at his own expense as he learned from his customers of the potential power residing in the quality of his own employees when he heard firsthand the details of both failures and successes in various projects. The importance of the ability to be a reflective learner as the CEO is reinforced throughout the book. Even more important is Nayar's willingness to show his vulnerability and learning in public, which went far in helping to establish the climate of transparency that made this a widespread value. It was during this process of self‐discovery that the emotional intelligence and collaborative learning styles of generation Y employees emerged, and which gave him the insight to consider turning the organizational structure upside down in order to support his value creators (pp. 35‐7). HCLT went on to discover that their most precious asset was not their technology but in the tacit and explicit knowledge of their workforce who were much harder to develop and replace than any single piece of technology.

In Chapter 2, “Trust through transparency”, we see the development of a culture of trust within HCLT that began with a willingness to share information between all levels of the organization without recrimination. Nayar describes the initial blueprint meeting and subsequent social dynamics involving three different groups of employees, described as transformers, lost souls and fence sitters. Each group had to find their own way to adopting the new trusting culture. HCLT relied on insights about credibility, reliability, intimacy and self‐orientation from David Maister's work (p. 62). Openly sharing of information proved to be the key component in this phase, with the rewards of transparency far outweighing the risks in HCLT's corporate judgment.

In Chapter 3, “Inverting the organizational pyramid” we see how HCLT adapted their organizational structure to reflect their new orientation on employees, and the importance of customer validation improves performance (pp. 96‐7). Adopting a family metaphor enabled the entire organization to visualize an improved structure (pp. 64‐5). Establishing the Smart Service Desk to manage service tickets throughout the organization to improved internal support dramatically, in reinforced the new organizational vision in practice (pp. 105‐7). Adapting the 360° to reinforce the new organizational values got needed support from Nayar posting his own review publicly as an example to other managers. These surveys added to the culture of transparency but also showed where the important centers of influence and effectiveness were inside the organizational network. HCLT went further by using the reviews as the basis for developing internal talent, a crucial insight for organization's competitive advantage consists of knowledgeable and effective employees.

In Chapter 4, “Recasting the role of the CEO”, Nayar recounts his transformation from a command and control, hierarchically‐oriented CEO to one whose role was as resource provider, and condition setter for empowering and engaging all employees in defining and adapting business strategies. The innovative use of social media and distributed networks unleashed the power of multiple parallel processing units, namely the brains of engaged and committed employees, synchronized through shred values in an information rich environment (pp. 129‐32).

In Chapter 5, “Find understanding in misunderstanding” Nayar relates how a deeper understanding of the transformative power of HCLT's EFCS orientation arises from exploring five common objections to their experience. This chapter will only whet the appetite of readers eager to explore the implications and generalizability of the HCLT story in much greater detail. I believe this would be a very worthwhile research endeavor given the many connections to theory available to the scholar. I will discuss just a few in the next section.

Nayar will remind some readers of Andy Grove, CEO of Intel, with his respect for the need to integrate the insights of scholarship and theory as the company develops new best practices and his relentless search for making sense of the deep meaning found within his business metrics. Other readers will be reminded of Jack Welch and his commitment to core values and principles in defining his businesses identity. Nayar speaks in the same clear and courageous voice of both of these icons.

Readers familiar with the literature of organizational development, transformation and leadership will be struck with the many connections between theory and practice they will find in the pages of this all too short book.

Best‐selling authors and award‐winning scholars of leadership Kouzes and Posner (2010), summarize the ten enduring principles of leadership they have found in 30 years of scholarship in The Truth about Leadership. Nayar's story, as told, could illustrate most of them, particularly leading by example, focusing on the future (p. 9), value‐centered commitment, leading from the heart, and leadership as learning.

Scholars of organizational transformation will also hear many echoes of all of Peter Senge's five disciplines of learning organization in the way HCLT facilitated empowered individual and small group discovery learning through creating value with their customers. HCLT's structural transformation can be seen as a network‐centric learning structure seeking to create value by improving the quality of the connections between their people and their potential customers. Linking these value creation nodes together with the artful use of social media and a shared commitment to learning by doing seems like a natural fit for a company in the IT services business.

Nayar is quick to point out that the bottoms up process that resulted in this kind of the structure appropriate for their people, mission and industry is probably more important than the specific content and structure they came up with. By focusing on what made most sense to the people directly involved in the value creation zone, and examining opportunities, challenges and risks from multiple perspectives inappropriate structure and set of processes seemed to emerge naturally from the team. Nayar contends that this is the important part of their process. This tension and trade‐off between process and content has long been a central theme of organizational development theory and practice, outlined in Worley et al. (1996) work Integrated Strategic Change: How OD Builds Competitive Advantage.

Students of the literature on high reliability organizations will recognize the shift in HCLT's orientation from prediction to preparation and the respect for mindful process knowledge by workers where the action is taking place. Furthermore, they will see the importance of valuing a relentless commitment to improvement, the empowerment to make changes at every level, and the need to be our own harshest critic but without the negative emotional baggage.

Critics of Nayar's tale could say correctly that the book represents the dominant narrative told solely from the CEO's perspective and might conclude that it is simply reifying a single static corporate‐serving narrative. We do not hear enough other voices or perspectives from the fringes or fragments of incomplete or failed initiatives. Power dynamics are given little detailed treatment. Initial phases of the transformation sound more like top‐driven mandatory participation schemes under the banner of empowerment, and the challenges of winning over skeptics and cynics seem understated. The short discussions of a wider applicability beyond the HCLT experience will not convince the skeptic to abandon practical experience and the lessons from literature on the challenges of implementing strategic transformation. The possibility that the EFCS strategy found a perfect storm of circumstances in HCLT waiting to be exploited is not considered. But, to Nayar's credit, he is not making extravagant claims for EFCS beyond a challenge to managers and scholars to approach the HCLT experience with an open mind and an inquiring attitude and engage with the process. His story leaves you hungry for more, and the resulting improvements in performance are there for the examination.

On balance this book is a worthwhile addition to the library of scholars and practitioners and offers fresh evidence of the possibilities of emergent transformation through value‐centric action by engaged and committed employees with a shared vision. It is written in a clear and compelling style. That is a lot to accomplish in less than 200 pages, and the spirit of transparency and trust that comes through in each page is commendable and refreshing.