A BOOK REVIEW

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About the COMPANY & AUTHOR

In 2005, after being at the head of HCL Technologies (HCLT) for just a short time,
Vineet Nayar realised that the company was in trouble. It was one of the five major
IT services companies in India with thirty thousand employees, operations in 18
countries, revenue of about $700million and a healthy annual growth rate of about
30% over the previous 5 years. However, it was growing more slowly than the market
leaders in its industry and slower than its immediate rivals, losing market share and
falling behind in mindshare too.
The book Employees First, Customers Second tells the story of how HCLT now a
company of 55 000 people and around $2,5billion in revenues made the decision
to change and how its transformation was accomplished through the unique
approach of Employees First, Customers Second (EFCS).

About the BOOK

The book offers three perspectives. First, we get a short insight of a major
transformation from Mr Vineer Nayars view point as the CEO of HCLT his doubts,
his process of discovery the validation of his ideas, and the building of consensus.
Second, we witness the migration in his thinking about management from the old to
the new-from a focus on the traditional hierarchical structure to the one that
decentralises power, responsibility and accessibility for value creation.
Third, we explore the cultural prerequisites for this approach to management, the
need for honesty, transparency, trust, and dialogue at all levels in the organization.

CHAPTERS SUMMARY
Mr Nayar writes that he called his approach at HCLT "Employees First, Customers
Second" because putting employees first "creates and delivers unique value" for the
companys customers and also helps to differentiate the company from its
competitors. When employees are put first, he points out, they become more
engaged. And when management is more accountable, the company creates more
value for its customer.
The book basically describes four phases of the Employees first, Consumers second
journey I.e.

Looking in the 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

1: Mirror mirror
In this What sets a company apart today is not the tools and technologies they
deliver, as they are all very similar to those of other companies. It is the people in the
value zone that really sets a company apart. If the staff in the value zone will walk the
extra mile on a project and get excited about sharing their knowledge even beyond
what is in the contract, and whether they engage their whole selves in their work
that is what sets companies apart today.
But most employees are not concerned about the changes in the industry landscape
or about corporate transformation and initiatives. They care about how this affects
them personally what it means to them, their careers and their families. So the
emphasis of communication with employees should always be more about what they
consider important rather than a forum to market the companies new initiatives. If

companies can engage their value zone staff around what is important to them, such
as their passions, beliefs and ethics, they would be more likely to take responsibility
for change.
One needs to analyse the fundamental changes in the industry and communicate this
knowledge to their employees to help them see the truth of the new point A for the
industry and compare your companys position with it. Companies often will choose
not to change because they have become tolerant of gradual change that did not
match the rapid change of the industry. And it is very important for employees to
participate and agree on point A in order to move to point B.
The author goes first to Chennai and there in the meeting with the employees he
broadly mentioned 3 remarks that HCLT had lost its competitive edge, the
company could crash any day and the only way to prevent a disaster was to
accelerate, move faster and transform the company and the way it operated.
He gave names to the three groups; transformers, lost souls and fence sitters.

Transformers were the people who waited for someone to say all aboard and
were aggressive and wanted to make a change from long time but were not
able to.
Lost souls were the people who were quiet negative and were expressive and
defuse energy in the meetings.
Fence sitters were the people who rarely spoke and asked questions and
observed the people in other two groups carefully.
Mr vineet noticed that employees in HCLT were confined and when were asked look
into the mirror that is the reality they started thinking about the past of the company,
about the glory they achieved. Mr Nayar stated a solution for it that is to create a
vision that his employees could look forward to, attractive than what they achieved in
past.
The CEO wanted to shift the focus from what is our offering? to how is our
offering?. For this Mr Nayar invented the inverted pyramid in the organization,
which placed the employees first and the consumers on second.
The mirror needs to be applied on a regular basis in the organisation. The HCLT
applied it in 2005 and then in 2007 and then again in 2008 to achieve the success
they had.

2: Trust Through Transparency

On the first day of the by talking about the G-1000 or G-200 companies meeting the
author encourages the companys employees. He talks about taking the role of
partners rather than suppliers for their customers. For this he broadly state three

fundamental beliefs. First that theyll offer flexibility and transparency of a kind
customers have never seen before, better than their global competitors. Second, to
sharply focus on value certainty and third and most important to set a new standard
for the value they actually deliver. To achieve all this author emphasises on that there
should be trust in their organization and to build trust transparency was important.
Author says that there are 5 main reasons to build transparency in an organisation.

First, transparency ensures that their shareholders knows the companys

vision and understands how his/her contribution will lead to achievement of
goals.
Second, it heals to ensure that every stakeholder has a deep personal
commitment to the aims of the org.
Third, for Gem Y members, transparency is a given.
Fourth, costumers want be transparent with them by sharing their problems
and stating the solutions for their core problems and their visions for future.
Fifth, the laterally hired people, for them to be get up to speed is through
sharing of information and complete transparency.

Then Mr Nayar allows everyone to see the information of the company basically the
financial statements, by this move many of the managers and employees were very
happy, and then to make the system more transparent Mr Nayar invented a new way
and called it U&I. This site helped the employees to overcome their problems and to
have discussions about anything online and was addressed by the CEO or his team.
This strategy started the companys turnaround in midJanuary 2006 when it won
the largest IT services outsourcing deal ever for any Indian company. The deal was a
cosourcing partnership that enhanced the capabilities, innovation and agility of the
client and demonstrated the true value that HCLT people could deliver to customers.
Other customers soon began to select HCLT on the basis of its new partnership
approach and the transparency of its engagement models.

3: Inverting the organizational pyramid

The senior managers, sitting at the top, removed from the real action, are the ones
who can exercise the most power and often risk everything that is happening in the
value zone. Bosses genuinely believe that by virtue of their position, they have a
better view of the landscape and are best situated to make decisions that will benefit
the entire organization. This is conventional wisdom and will not lead to a new
strategy to provoke fundamental change.
HCLT found that employees in the value zone were as accountable to enabling
services such as finance, HR, training and development quality and administration,
as they were to their immediate managers. While these functions were supposed to
be supporting the employees in the value zone, the reality was somewhat different.

Employees had virtually no power over the enabling functions, and if they had any
problems they would have to go to their managers for help. Managers served as go
betweens and arbitrators who sorted out problems between employees and support
staff herein lay their power, not in value creation, but in relieving bottlenecks.
a) The Smart Service Desk
In response to these internal problems, and as a way to try and introduce some form
of inverted accountability, HCLT introduced the Smart Service Desk (SSD). It was
based on a problem management system like the one in place at many organisations
for dealing with customer complains, but was designed to deal with the problems,
queries or requests for information from employees. An employee could open a ticket
in the system which would then be directed to any one of the enabling functions,
such as HR, finance, administration, training and development, transport or for
senior management including the CEO. Then the system automatically assigns it to a
support executive in the appropriate department who will investigate the issue and
take action to resolve it.
b) The 360 Degree survey
Despite the positive change brought about by the SSD, HCLT recognised that the
traditional organisational pyramid needed to be shaken up a bit more, especially
around the area of management control. The company already employed a 360
degree performance review process, but each manager was reviewed by a relatively
small number of people in his/her immediate zone of control, and there was nothing
in the review about contributing to the value zone.
HCLT decided to open up the peer review process to allow anyone who had given
feedback to a manager to see the results of that managers review. Managers were
encouraged to make the results of their review public, starting with the CEO, which
brought about a willingness in managers to use the feedback to bring about a change
in their management style. HCLT also opened up the peer review process by allowing
all employees whom a manager might affect or influence to participate in the review,
even if they were not part of the managers direct control circle. There was no
restriction on who could give feedback to any manager, thereby weakening the
boundaries between the parts of the pyramid and the traditional hierarchy was
weakened. People who worked outside the boundaries of the pyramid were
recognised, encouraged and rewarded.
The final modification HCLT made to the 360 degree survey was to redefine it as a
developmental tool rather than one of evaluation. It would be a way for the manager
to gain useful feedback about his or her performance that could be used by that
person to help them change. The survey was disconnected from the HR department
and its activities were driven by the talent transformation and intrapremiership
development team, which aimed to help managers discuss their own set of

professional development goals. This shift to thinking about honest feedback as a

method of development rather than of judgement or evaluation proved critical to the
companys ability to move away from the command and control environment
towards one of trust, alignment and a
focus on the qualities and actions that could help people in the value zone.
Again, these tools identified by HCLT, and used to create some inversion of the
traditional hierarchy in business, were nothing more than catalysts. They had little
effect on the organisation in and of themselves, but the messages they sent out, and
the secondary effects they had, mattered much more. Overall the SSD communicated
that accountabilities are not determined by ones position in the traditional hierarchy.
The 360 degree survey communicated that a managers value is measured by his or
her span of influence and not by the zone of hierarchical control they have.
The results included that peoples fear of change began to dissipate, and they no
longer looked at management or the CEO with trepidation and concern. People
began to stretch themselves more and attempted more. Failure became acceptable.
The responsibility for actions and results was not the CEOs alone but everyone was
accountable together.

4: Recasting The Role Of The CEO

The author thought of implementing the business-aligned IT and discusses it with
the employees in few months, he came across a team who already learned BAIT and
implemented it in a CIOs company and it paid out well. This urged him to recast the
role of CEO and responsibilities of everyone in the organization. The company
recanted the U&I forum and added a new sections in which the CEO placed his
questions and anyone in the org could make his/her suggestions about it and called
this section as my problems and your answers.
What set a company apart today are not the tools and technologies they deliver, as
they are all very similar to those of other companies. It is the people in the value zone
that really sets a company apart. If the staff in the value zone will walk the extra mile
on a project and get excited about sharing their knowledge even beyond what is in
the contract, and whether they engage their whole selves in their work that is what
sets companies apart today.
But most employees are not concerned about the changes in the industry landscape
or about corporate transformation and initiatives. They care about how this affects
them personally what it means to them, their careers and their families. So the
emphasis of communication with employees should always be more about what they
consider important rather than a forum to market the companies new initiatives. If

companies can engage their value zone staff around what is important to them, such
as their passions, beliefs and ethics, they would be more likely to take responsibility
for change.
Then Mr Nayar and his team introduced value portals where employees could
generate their and post new value generating ideas and customers could rate it and
soon this portal generated many ideas and saved millions of dollars for our
customers. Then they introduced myblueprint portal where the 300 managers will
prepare and record their plans and post them on this portal where itll be open to all
the other 8000 managers, this was another step towards transparency.

BOOK REVIEW

Any book with a foreword by the great C K Pralhad is bound to attract

one's attention. More so when its published by Harvard Business Press and
is written by the CEO of a USD2.5b technology services organization in
India. You look at the cover and the intrigue intensifies. While the world
raves about how they put customers first, the title says something that
makes one read again to make sure one's reading right - "Employees First,
Customers Second" it says, the latter two words being in smaller print.
Now thats much more than a hint, isnt it. Plus, the lower half of the cover
has a mirror image of the title and now one's sure that there something
inside thats counter intuitive and in contrast with the thought currents.
But then again, one needn't have concluded this oneself - its written on a
bold red strip - "turning conventional management upside down".

Years ago, HCLT was a leader in the technology field, attracting the best
and brightest employees. But from 2000 to 2005, the company was losing
ground. Although it was growing by an impressive 30 present annually,
the companys competitors were doing better. When he became president
in 2005, and then CEO in 2007, Nayar set in motion what he calls a
"fascinating journey of self-discovery" to improve the companys
performance using a unique management approach. The organically
driven change initiative that he helped to put in place eventually led the
company to become what Fortune magazine called an organization with
"the worlds most modern management."
Mr Nayar writes that he called his approach at HCLT "Employees First,
Customers Second" because putting employees first "creates and delivers
unique value" for the companys customers and also helps to differentiate
the company from its competitors. When employees are put first, he
points out, they become more engaged. And when management is more
accountable, the company creates more value for its customers.
MR Vineet Nayars Employees First, Customers Second (EFCS) is a first
person CEOs account of the transformation of their enterprise. The book
is a refreshing and frank look at the challenges facing leaders looking to
transform their company, culture and employees. Nayar discusses his
experience leading HCLT and its transformation from a $700 million dollar
company that was losing market share to a $2 billion dollar company at
the front of their market.
Mr Nayar provides a clear, well-written and frank discussion of the issues
he faced and his personal thought process and learning journey during the
transformation. It is rare that a sitting CEO provides such a frank and
honest discussion of the company and personal journey. At 185 pages in a
small format, the book is an excellent size and length for executives to
read, reflect on and consider how it fits into their strategies and plans.
Recommended reading for executives who are frustrated with the current
structure and culture of the modern organization.
Individuals will see an example of the actions and evolution involved in
realizing a new way of working. Just about everyone wants to work this
way and this book provides an example that can help crystallize your
thoughts and how you communicate with your peers and management.
This is a concise book and Mr Vineet Nayar's revelations start right from
the introduction. "Through a combination of engaged employees and
accountable management, a company can create extraordinary value for

itself, its customer, and the individuals involved in both companies. Thus
when a company puts its employees first, the customer actually does
ultimately come first and gains the greatest benefit, and this he explains
well in the last chapter of his book.
All improvement journeys start with identifying the problem. HCLT journey
in the book is no different. The phase of reflection is called Mirror Mirror.
What is perhaps different is the way it is articulated and communicated.
Also the way in which consensus is built. Quite refreshing are the focus on
integrity of a professional, in the way he would think about his family as
well as his business, and the deep thought about transparency and the
culture of trust. What I found unique to this book is Mr Nayar's way of
taking everyone on this journey of trust, not just employees but
CUSTOMERS too. He says "Catalysts are simple actions ... that help
transform", he says, and urges the reader to "find your own and push
them hard, and then find new ones, and push them even harder still", I
found it really very motivating for the readers.
The book covers a number of tools and ideas that are particularly helpful
for understanding what you can do to change your enterprise. Many of
these ideas are based on existing thoughts, but Mr Nayar presents them in
a fresh view integrated around the idea of putting employees first. Some
of the tools discussed in the book are;
Mirror morror - a process where the company and individuals confront the
truth of their situation, strengths and weaknesses, and what they need to
do about it. This is a direct descendent of confronting reality in the Total
Quality Management (TQM) movement. For this exercise he divided them
in 3 groups;
o Transformers who wanted the change in the organisation.
o Lost souls who didnt have any interest in whats happening.
o Fence sitters who just used to observe other people and stayed
quiet and rarely spoke.
Transparency - the role and change created by making traditional
management information, plans, evaluations etc available to all. The
author also tells us the importance to hold transparency in the
organisation which youll read in the second chapter of the book.

Zero Tickets the notion that enabling functions not only work to resolve
issues but need to be dedicated to eliminating them. This again builds on
TQM principles.
Value Zone the place in the organization where the company creates
value with the customer. This zone is at the bottom of the enterprise not
the top and that reality shapes much of the thinking in the book. You may
recognize this in other words as the moment of value.
True 360 evaluation and feedback, which can be easily thought of as old
hat but which Mr Nayar gives a fresh perspective and experience.
Every organization has hierarchical command and control rooted in it,
there are good reasons why it is so, and when and while it works, it works
wonderfully well. The problems start when the employees lose their utility,
and they aggravate, as this hard fact finds it harder still to be
acknowledged. Mr Nayar describes this as disconnect of the 'Control Zone'
from the 'Value Zone'. Techniques like the 360 degree survey, and not the
'usual' one but the 'open' one where the reviews are published to peers
and subordinates, can be powerful transformative instruments towards
'Spans of Influence'. 'Collective wisdom outshines individual judgement'
he notes.
One cannot help but be amazed at Mr Nayar's courage, even has he
subjects himself and the office of the CEO to evaluation, equivalent to the
rest of his leadership team. He is honest about the CEO not having all the
answers all the time, and quite fresh about his approach of getting best
possible answers by asking for ideas across the organization. One feels
happy on reading the success stories that finally confirm the inversion of
the pyramid.
Even as he recasts the role of the CEO (his role) and really engages with
employees (the 'whole' person) for things like 'strategy' and
'responsibility', one is sure to be astonished when the principles one's
read so far are applied to, of all things, acquired organizations ! 'And as
CEO, I gained bandwidth to do more and more, or perhaps, less and less.
Much of the responsibility that would typically have transferred to the
office of the CEO, went in the opposite direction', he writes.
'Blasphemous!' one can hear barks from the authoritative types. Nothing,
however, succeeds like success, and hence one reads 'We saw that the
EFCS concept could generate such powerful results that we completed
four more successful acquisitions in that year'. 'The role of the CEO is to
enable people to excel, help them discover their own wisdom, engage

themselves entirely in their work, and accept responsibility for making

change', as he said.
For the doubts, misunderstandings are addressed in the last chapter, and I
found that last part amazing and never found this kind of doubt addressed
in any of the books I read before.
Overall I felt that it is a good book and one that will help every executive
think about how their company works and what it does to create value. It
is important to note that while Mr Nayars company is based in India, his
business is global and these techniques are working in multiple
geographies, cultures and workforces. This means that his experience is
readily transferable to other organizations and situations.
When I end up reading this book my reaction was WOW that how one
man can make such a difference in an organisation, Mr vineet just
reshaped not only HCLT but the whole conventional management upside
down.