Human Resources: Invert the Management Pyramid and Transfer Responsibility for Change to Employees

NEW YORK, NY--(Marketwire - May 13, 2010) - In a world where many products and services have become commodities, companies often can distinguish themselves not by the "what" of their offering but by the "how" of their delivery. However, this fundamental shift in the nature of competition has not yet induced any significant change in the way most companies are structured and managed. While they compete in the 21st century, the majority of today's companies are still driven by outdated management ideas that have their roots in the manufacturing industries of the early 20th century.

This has to change, says Vineet Nayar, CEO of HCL Technologies, a global IT services company based in India. In a new commentary on the need for corporate transformation in many industries, he recommends some unconventional -- even radical -- management practices. (Mr. Nayar is the author of the forthcoming Employees First, Customers Second, Harvard Business Press, June 2010.)

Mr. Nayar advocates an approach to management that empowers those people who work in the "value zone" -- his term for the place where customers and employees directly interact. "The top-down pyramid structure, where the CEO sits at the top of multiple layers of management, no longer works because it constrains the people who are closest to customers and know best how to create real value for them," says Mr. Nayar.

At HCL Technologies (HCLT), Mr. Nayar pioneered this approach to management, which has become known as "Employees First, Customers Second." It comprises many specific and distinctive initiatives and activities, all created to make management more accountable to employees, and not just the other way around. For example, the 360-degree performance reviews that all managers (including Mr. Nayar himself) undergo are posted online for all to see. Such methods, Mr. Nayar says, are particularly suited to workplaces with many Gen Y employees, because they expect and value transparency.

This management approach fueled a five-year growth spurt for HCLT, which continued during the recession, as the company's competitors struggled.

Mr. Nayar's ideas have already attracted attention from media and thought leaders alike. Fortune magazine characterized HCLT as having the "world's most modern management." BusinessWeek listed HCLT as one of the world's five most influential up-and-coming companies, along with Craigslist and Facebook.

Mr. Nayar is available to discuss the messages in his commentary, as well as some of the themes of his upcoming book. In a conversation, he can address:

The new accountability imperative - Why management, especially those at the top of the hierarchy, must be held accountable to the real creators of value: the employees in the value zone.
The handful of "employees first" cultures out there - How a few of today's leading companies -- including Google, SAS Business Analytics and T-Mobile -- have adopted more employee-centric practices, which have contributed to their success.
The transformation of HCL Technologies - Why and how Mr. Nayar and his management team made employees in the value zone -- not customers -- the company's first priority, and why this ultimately brings benefits to all of the organization's constituents, including customers and shareholders.
The most effective way to get a company out of a rut and break with the past - How a transformation process that involves four phases can bring about fundamental change. The process begins with an exercise called "Mirror Mirror" that forces everyone to clearly see the company's current condition, including problems and potentialities, and helps them to realize that change is necessary.
The open approach to effective change - How to create a culture of change by bringing greater transparency into processes and structures throughout the organization, often starting with the sharing of vital information and involving employees in decision-making.
The reason management and senior-level functions must be held accountable to employees - How ideas, change and growth come when management is recast to be responsible for enabling and supporting employees in the value zone, rather than commanding them.
Leveraging the realities of the workforce - How social media, a new openness and other Gen-Y phenomena play a critical role in driving both the need for and the success of employee-centered approaches.

The proof is in the pudding - How HCL Technologies' implementation of the Employees First approach enabled the company to thrive and grow during the years leading up to and through the recession. From 2005 through the end of 2009:
- 70% of the deals HCLT won were against the Big Four international IT companies.
- Revenues tripled.
- The number of customers increased five-fold.
- Employee attrition fell by almost 50%.
- Employee satisfaction increased by 70%.

To receive a copy of the commentary ("Restructuring the Management Hierarchy for 21st Century Companies"), or to schedule a conversation with Vineet Nayar, please contact Katarina Wenk-Bodenmiller of Sommerfield Communications, Inc. at 212-255-8386 or katarina[at]sommerfield.com.

About the Author
VINEET NAYAR is chief executive officer of HCL Technologies (HCLT), one of India's fastest-growing global information technology services company. Mr. Nayar joined HCL in 1985 after earning his MBA from XLRI. In 1993, he created the start-up company, Comnet, where he developed and put into practice many of the ideas that are described in this book. In 2005, he became president and then, in 2007, the CEO of HCL Technologies, where over the next five years, he led a remarkable turnaround. HCLT has become one of the Indian IT stars, recognized around the world for its business performance and its innovative and transformative management practices. In 2009, HCLT was named the Number One Best Employer in India and one of the top 25 Best Employers in Asia by Hewitt Associates, and BusinessWeek listed HCLT as one of the five emerging companies in the world to watch.

About HCL Technologies
HCL Technologies is a leading global IT services company, working with clients in the areas that impact and redefine the core of their businesses. HCL focuses on 'transformational outsourcing', underlined by innovation and value creation, and offers an integrated portfolio of services, including software-led IT solutions, remote infrastructure management, engineering and R&D services and BPO. For more information, please visit www.hcltech.com.