For HCL chief executive Vineet Nayar success means employees first, customers second

Vineet Nayar is head of India’s largest IT services company, HCL, and he starts from the premise: the boss doesn’t have the answers.

By Richard Tyler, Enterprise Editor, The Telegraph
Published: 9:00PM BST 09 Oct 2010

For HCL chief executive Vineet Nayar success means employees first, customers second

Vineet Nayar said he had to get HCL’s staff to see the company’s faults while maintaing their pride in what they had achieved. Photo: AFP

Vineet Nayar is a purveyor of rare herbs and heretical management narcotics that will send the average power-crazed chief executive to an early grave. As the chief executive of HCL, India’s largest IT services company, employing 70,000 people around the world, he is also a far safer source of mind-altering ideas than your typical late-night street vendor.

And for business owners struggling to re-engage staff after the emotionally-draining nightmare of the recession, he may just have the answer. Not that Nayar would admit it. The first insight from his book, Employees First, Customers Second, is the boss doesn’t have the answers. The best are just good at forming the right questions.

The questions Nayar asked of HCL in 2005 were: why is our company looking old and tired; why are our best engineers leaving the company; and why is HCL losing market share to its rivals?

After only three months in the chief executive’s job, Nayar’s observation was that the IT industry was changing rapidly, customers wanted different things and HCL had not kept up.

“The company could crash any day and had a very limited amount of time to prevent such a disaster,” he told 500 engineers in Chennai on his first staff visit.

The audience took the implied criticism personally, but Nayar’s message that they would have to lead the change began to be digested.

There was not, as he admits in a video interview with The Sunday Telegraph, a linear process of change from position A to position B.

His current transparent approach to management and financial reporting – his 70,000 staff write his 360-degree performance review which is available on HCL’s intranet and the group publishes the financial performance of individual business units – was not present at the start.

But Nayar realised that while he had to get HCL’s staff to see the company’s faults he also wanted to maintain their pride in what they had achieved. So he switched focus to the future and the vision of what HCL could become with their help.

He also placed the employees at the heart of HCL’s organisational structure and promised management would get out of the way.

The pyramid-shaped hierarchy did not disappear, Nayar just inverted it. He reinforced this message by breaking down those easily recognisable barriers between the staff and managers, on one infamous occasion dancing to a Bollywood song in the aisles of a conference room packed with employees. “I can’t dance for nuts, right? I was dancing in the aisles with these employees and making lots of noises,” is how he puts it.

He explains this self-deprecating showmanship: “I wanted that [CEO] halo to be broken. I wanted people to understand the incompetence in me.”

Nayar continues: “My view is that CEOs in the traditional sense are fast becoming irrelevant, and the sooner they realise that, the more successful they will be. CEOs don’t have to be great talkers, but they do have to be great listeners.

“CEOs need to see their role as enabling rather than initiating ideas; the next-generation business imperatives are about CEOs’ accountability, of creating enabling functions to bring about openness and build a learning ground in the organisation.”

Influential management types seem to be listening. Fortune magazine has branded HCL as having “the world’s most modern management style”, while London Business School singles Nayar out as a “leader of organisational innovation”.

Despite the title of his book, HCL’s shareholders seem happy too. The company’s sales and operating income have tripled over four years. It now has five times the number of lucrative IT contracts with large customers than it did in 2005. The stock has outperformed its rivals.

Is this really the death of the traditional CEO, the deferential hierarchy propping him up necessarily falling away? Nayar thinks so. Yet, there is hope for those stalwarts at the top. As the book makes clear, however engaged employees are someone still has to make the strategic decisions that set the direction of travel; someone still needs to come up with the blueprint that others follow.

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One Response to For HCL chief executive Vineet Nayar success means employees first, customers second

  1. Vineet Nayar’s book is great! And its content is very accessible and commonsensical.

    Nyar provided new direction with his employees, placed emphasis on building them as people who could think and become proactive leaders in their areas of responsibility within the value zone; and then observed the positive effect of his/their approach.

    It is wonderful to learn what Nayar has achieved with such a huge workforce especially if one views how small teams of 10 or so experience grave difficulties in getting basic things right.

    Also read Leading Change and A Sense of Urgency by Prof John P. Kotter of the Harvard Business School who has views which complement those of Nayar.

    I enjoyed your post. Many thanks.

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