Best practice: Putting employees first pays off for HCL

by HCA05 Aug 2009

The service industry, from fast food to business consulting, has long lived by the mantra that serving the customer is the only thing that matters. The IT service industry is no different.  The customer need is often placed above all others - often at the sacrifice of employees and managers. And when economic times grow tough, that same hapless staff member is the first to go in corporate 'right-sizing' operations.
Anecdotal evidence suggests that in sacrificing employee welfare to satisfy customer needs, the level of employee cynicism toward their employers has grown and loyalty has diminished. Some attribute this to Gen Y attitudes but one cannot doubt there has been an overall drop in the level of trust between employers and their staff. 

Employee engagement consultancies such as Hewitt and Gallop agree that this drop in trust ultimately leads to more disengaged employees and lower customer service levels.

Tackling this issue directly, HCL Technologies, a global IT services company, has embraced a new philosophy - Employee First Customer Second - that places employees before customers. This seemingly counterintuitive strategy has provoked a sea-change at the company, and, believe it or not, greater customer loyalty, better engagements and higher revenues.

Given the pace of industry growth and its dependency on headcount, attracting, retaining and motivating talent is the top challenge for the industry - even in the current economic climate. The traditional approach viewed employees as commodities and placed emphasis on a factory-like approach for project execution. There were no unique engagement strategies centered on the employee.

New automation-based technologies have emerged to challenge the need for mass labour and, as the outsourcing market has matured, both suppliers and customers are seeking ways to achieve innovative and transformational value that goes beyond simple cost savings. In many cases, outsourcing customers no longer view IT service providers as mere vendors but as business partners whose work is intimately tied to the customer's success.

That shift in working relationship requires a new kind of IT service organisation - one focused on value and innovation, not just warm bodies to fill seats. So, how does a company attract the talent necessary to meet that challenge? At HCL, the company embraced a philosophy designed to turn the traditional "customer above all else" model on its head. The Employee First strategy encompasses a variety of elements with the objective of providing a truly unique environment to employees. By treating employees as partners and participants in the company's success, every individual within the company becomes responsible for transforming, thinking and providing value to customers.

To make the Employee First concept work, HCL launched a variety of internal initiatives designed to give employees more personal responsibility for the company's service offerings and a voice with upper management. HCL's enlightened approach to employee development focussed on giving people whatever they need to succeed: be it a virtual assistant or talent transformation sabbaticals; expert guidance or fast track growth; inner peace or democratic empowerment. HCL has developed the Five Fold Path to Individual Enlightenment. This ensures that every employee is given Support, Knowledge, Recognition, Empowerment, and Transformation to help maximize their potential.

Here are some of the initiatives taken at HCL to make Employee First a success:

Smart Service Desk
HCL implemented Smart Service Desk (SSD), a ticket-based online system that decreased resolution times and provided more transparency across all enabling functions. Any employee can submit a ticket electronically, which will chart its journey on its own to the related support executive, to the manager if required, and comes back to the employee with the answer/solution.
For instance, an employee can submit a ticket to the Finance Department with regard to his/her salary payment.  Over 30,000 tickets are raised and sorted every month.

360 Degree Feedback
HCL management instituted reverse accountability — holding the management accountable to the employees as an essential for building a transparent work atmosphere.  A 360-degree feedback ensured that all managers go through the mechanism regardless of their level in the organization.  HCL is recognized globally for its 'Happy Feet' concept, which means anyone in the organization can give feedback to senior leaders at HCL, which are published on the intranet for everyone to see.  This unique way of bringing transparency and accountability has brought upon a change in attitude and created an environment of trust within the organization. Currently, over 1600 managers have made their report public on the company intranet.

As an organisation, we believe that it cannot get better for an employee than hearing directly from the CEO and the senior leadership, in a transparent manner, what the company's policies and visions are. "Directions" is one such platform to ensure that the leadership is accessible to all employees across the organization, where strategic decisions are discussed and debated. The annual company-wide event gives employees the opportunity to share their anxieties and raise questions on any issue that concerns them during the interactive sessions

U&I Initiative
Launched at end of 2006, U&I is an online forum for employees to interact directly with the CEO. The microsite on HCL's intranet empowers the employees to pose questions and raise concerns directly with the CEO. Initially, transactional issues such as compensation packages and delayed appraisals dominated the questions but now the questions have became more strategic in nature, ranging from new opportunities in the IT industry to process innovations within HCL. Over 90 percent of the questions raised are answered by the CEO himself. Now the CEO has also began the process of reverse questioning, where he poses a question or a problem and the employees responded with ideas/solutions.

Career Power

It is a comprehensive career planning and development program portal, which provides a framework where each employee is empowered to plan a desired career path/ option for him or her. All enabling processes are integrated for providing the required support to the employee in attaining his career goal, the way he wants it and not the way the company desires.

The unique Reward & Recognition portal called XtraMiles is an empowerment tool in the hands of HCLites to recognise extraordinary efforts & sterling performances and encourage the 'Thank You' culture. Uniqueness lies in the fact that it lets you applaud anyone in the organization at the click of a button, be it the team members, cross functional colleagues or even the bosses. Depending on the number of miles, one is entitled to join the different clubs like Silver, Gold, Platinum and CEOs club, and enjoy benefits the clubs offer.

In a month long innovation contest held in 2008 to recognize innovations created by various project teams, a company-wide contest was held for project managers and higher ranked staff associated with customer-delivery projects to submit entries to innovation@HCL. The line of business (LOB) heads evaluated ideas on a set of metrics that included cost savings, innovativeness, effective usage of tools, and unique differentiation from the competition. From the 235 entries that were submitted by project teams trying to showcase their abilities across the organisation, 18 of these were rewarded for implementing innovative practices in their projects.

iGen was an idea-generation portal that allowed an employee to submit an idea aimed at either improving an existing business or rolling out a completely new process. By July 2008, out of 355 ideas posted, 98 had been accepted in areas such as business development, project management, product development, tools, human resources, and finance.

While the attrition rate at HCL has been declining since eight consecutive quarters (from 15. 5 percent in December 2007 to 13.4 percent as on Dec 31, 2008), the employee/revenue ratio and employee utilization rate have increased over the same period.

In its most recent quarterly results, HCL Technologies had its biggest quarter ever in sales, recording over $1bn in revenue and acquired Axon, which is the biggest acquisition by an Indian IT company.  HCL was rated as 'Leaders' in North America Offshore Application Services in Gartner's magic quadrant and listed among 'the top 5 emerging companies globally'.

'Employee First' is now a recognised philosophy. Fortune Magazine has articulated it as "The World's Most Modern Management". The Harvard Business School (HBS) has written a case study on the transformation at HCL, which is being taught under the Strategy and Leadership curriculum at HBS.
And finally, Shiv Nadar, Chairman and Chief Strategy Officer, HCL Technologies, in commenting on the results said, "HCL's growth is founded in the trust that we have earned over years from our employees, customers, investors and other stakeholders which we are committed to uphold."

About the author

J. Kalyanaraman is head of Asia Pacific operations at HCL Technologies Ltd