The 2010/11/30 at 13:48
Alexandre T. Analis
Amongst the numerous interpretations inspired by the publication of The Prince, one of the boldest has led to the conclusion that deep down Nicolas Machiavelli was a humanist, a philanthropist who deliberately delivered the keys to manipulation and political propaganda to the people so that they could defend themselves and ultimately overturn the Prince. This hypothesis, while daring, is not incoherent: God has always needed the Devil. French philosopher Rousseau also made this observation in his Social Contract: “He professed to teach kings; but it was the people he really taught. His Prince is the book of Republicans.” While this type of remark has long fuelled – and continues to fuel! – debate, a large majority of readers of Machiavelli over the centuries acknowledge his immense intelligence and extraordinary faculty not only to analyse political systems to the smallest detail, but also to offer concrete time-resistant solutions for ruling, an incontestable gauge of their quality. Whether pro or anti-Machiavelli, many are those who have tried their hand at taking control, continuing to spawn a wide variety of interpretations...
To illustrate this point, a little voyage in time is necessary: exit the Florentine Renaissance; the scene is now the meeting room of the Leela Kempinski hotel in Gurgaon, in the suburbs of New Delhi, India. On this 25 October, the administrative capital of India, barely recovered from its organisation of the 19th Commonwealth Games, is preparing to welcome US President Barack Obama on a much-publicised visit. It is in this prestigious location that the number three Indian IT services company, HCL Technologies is organising “Directions 2011”, its yearly conference on the company’s future prospects. Nothing out of the ordinary up to this point. Until the light dims and we witness – in the midst of the some 1,200 employees gathered for the occasion – a surreal scene. Imagine a boss wearing a shirt, with a thick moustache, a prominent nose and a rounded paunch, crossing a room bathed in lights worthy of a discotheque, to the beat of deafening techno music, finally arriving on stage where he proceeds to boogie – more or less gracefully – accompanied by dozens of employees who come to join him.
This man is no other than Vineet Nayar, 48 years old, Chief Executive Officer of HCL Technologies… In this festive atmosphere that has more in common with scenes from films such as Lagaan, Devdas and other Bollywood successes in the last ten years, than with a cold straitlaced corporate meeting, Vineet Nayar spends over two hours describing his vision of the company and its prospects for development, as well as freely answering all questions asked by his employees. Perhaps a little smooth in his declarations while also carefully avoiding jargon, the man harangues the crowd like a rock singer, uttering wisecrack after wisecrack, using a dash of demagogy, and above all, listening to each speaker very attentively. Vineet Nayar is capable of publicly apologising to an employee who finds himself in a tricky professional situation, just as he is able to put into place another employee who complains of being laid off for months, urging him to find the means to make his career advance. When a young woman raises the issue of salary rises, he manages to dodge the question skilfully… Dialogue with numerous employees present or not at “Directions 2011” brings one overriding feeling comes to the fore: Vineet Nayar has been, for five years now, the man of the moment, and his revolutionary management technique has won him the respect of all.
How the EFCS method works
In vogue amongst a few big multinationals such as Google or Starbucks for a few years now, the “Employees First, Customers Second” (EFCS) method is increasingly successful. In his book of the same name, Vineet Nayar firstly goes over the reasons convincing him of the pertinence of this model, before describing the successive stages for applying it in a company. Four stages are involved. The first stage consists in placing the business before a mirror to look objectively at its strengths and weaknesses, thus creating a need for change. The second stage insists on transparency as an absolute condition for establishing a trust relationship with employees, clients and partners.
The third stage offers to overturn the traditional business hierarchy by placing the work of employees at the core. More personal, the fourth stage demonstrates that the role of the CEO should be rethought and that real change occurs through a need to delegate work. The fifth and final chapter of the book is dedicated to the most common objections made to the EFCS method, objections that Vineet Nayar affectionately refers to as “yes, but”. And yet, when he was appointed head of HCL Technologies in 2005 by Shiv Nadar, founder of the group, Vineet Nayar himself admits that he had no pre-defined plan to change the pre-existing managerial culture, nor did he have any solutions for re-energising growth.
At first glance, in 2005, HCL Technologies was a flourishing business with 30,000 employees, present in eighteen countries, with net income of around 700 million dollars (499 million euros) and annual growth upwards of 30% – not to be sneezed at for a former SME created thirty years previously. The thing was, in a country where growth rates are exponential, 30% in growth is far from exceptional. Added to this, while HCL Technologies was increasing its turnover and profits every year, it was losing market shares by focusing overly on the Indian market in which it had developed, and even worse, was regularly losing its best managers and engineers to direct competitors considered to be higher-performance and more innovative. In short, in 2005, HCL Technologies was without a doubt a giant, but it was a giant with clay feet. Two men were aware of this: Shiv Nadar and Vineet Nayar, who until then had headed up the company Comnet, a start-up that he had established in 1993.
To bring a remedy, Vineet Nayar relied on his own experience and compared the evolution of management with that of the family unit, believing that he and his wife Anupama could not raise their two children, Varun and Sophiyaa, according to ancestral Indian traditions where offspring are expected to obey without arguing. “I prefer that my daughter has the freedom to go out, and the day when she has a boyfriend, that she’ll tell me face to face!” he says with a big smile. “Management according to the EFCS method rests on the same basis: employees who are at ease in their company will always work better. Dialogue must be put in place with our employees, with no topic being taboo.” In spite of this avant-garde discourse, there was much internal reticence when Vineet Nayar arrived at the head of HCL Technologies: why change modes of functioning that had proved their effectiveness until then? And why ask employees their opinions that necessarily threaten to highlight what doesn’t work rather than what works? An anecdote related by a professional racing car driver encountered during a flight between New York and Frankfurt provided the key for Vineet Nayar: when brakes stop working right in the middle of a race, rather than trying to make them work or to slow down, you need to accelerate to avoid crashing.
The employee at the core of the value zone
Beyond attractive-sounding clichés, the EFCS method relies on concrete actions. Very quickly, Vineet Nayar set up the U&I web site, a free dialogue platform accessible to all employees for asking questions or indicating problems. He updated the employee assessment system carried out by managers not always au fait with the work of those under them. Then he launched the Smart Service Desk (SSD) enabling all clients to point out problems: an automated query resolution system where “trouble tickets” must be dealt with by the appropriate department within a certain deadline. An internal SSD was also opened up for employees, who also began taking part in a satisfaction survey based on the Employee Passion Indicative Count, a system allowing employees to identify the factors determining their passion for their company and their role within it. Employees furthermore take part in “Directions”, the company’s yearly rendezvous where all and sundry can publicly ask questions to the CEO and his managers.
Ultimately, the aim is to place employees at the core of the value zone, a strategy for which Vineet Nayar drew inspiration from clients who informed him that they signed large-scale service supply contracts more for the quality of teams in place than for the range of products offered, as innovative as they may be… Despite the positive nature of the EFCS approach, it obviously does not protect Vineet Nayar from controversy, for this is a man not used to biting his tongue… at the risk of shocking those who hear him. A flagrant example of this character trait is the day, in June 2009 in New York, when before a panel of IT decision-makers, he declared that most US tech graduates are “unemployable”.
To justify himself, he denounced the shortcomings of the US education system which in his opinion, does not prepare graduates for the real world by focusing far too much on enrichment through the development of new products and services, and by not insisting enough on methodology-related work that is no doubt less exciting, but essential, such as ITIL (Information Technology Infrastructure Library, a methodology scanning good practices for IT services management) or Six Sigma (a structured management method aiming at improvement in quality and procedural efficiency). He also claimed that Indian or Chinese tech students are far more disciplined than their US counterparts. As over 50% of HCLT’s income originates from contracts with clients based in the USA, these comments did not go unnoticed and roused acerbic reactions in the american media. Vineet Nayar has never again made any allusion to the matter. And the only significant effect of his words was to boost – as if he need-ed it – the visitor rates of his two blogs (vineetnayar.com and discussionleader.harvardbusiness.org/nayar).
A shower of awards
Apart from this, controversy, it is clear that in the space of five years, Vineet Nayar and the EFCS method have won over a number of specialised institutions: titles include “the world’s most modern management” for Fortune magazine, the “leader of organisational innovation” for London Business School, “the most cohesive and articulate vision in the IT services sector” for IDC… This prestige has not tarried to have an effect on HCL, winner of countless awards in recent years: amongst the top 100 IT Companies in 2007 (Business Week), Workforce Management Optimas Award 2008 for human resources in the United States, amongst the top five “most influential emerging companies” in 2008 (Business Week), Britain’s “best employer” in 2009 (CRF Foundation) for the fourth year in a row, “best employer” in Asia in 2009 (Hewitt), “leader of human capital development” in 2009 (Global Services 100 survey), one of the “most democratic workplaces” in 2010 (Worldblu)… Beyond this battery of awards, the EFCS method seems to have one beneficial effect acknowledged by all: unlike the situation five years ago, it is now HCLT that “steals” top employees from rival companies and thus benefits from a greater capacity to innovate…
What is most surprising about Vineet Nayar when one reads his book, is no doubt his capacity to analyse. Since taking up his position in 2005, he has identified four major trends in the IT world: 1) The growing importance of business strategy and, as a result, the IT manager; 2) Innovative technologies necessitate the installation of increasingly complex machines and application solutions; 3) The growing complexity of client needs and the solutions offered urges greater focus on the execution and implementation of these solutions; 4) Under pressure from clients, system integrators are developing higher performance standards and increasingly personalised solutions, but the multiplicity of teams tends to blur organisational hierarchies and ultimately to delay the putting in place of profit-generating projects. Vineet Nayar pinpoints the advantage of HCLT as its positioning as an IT service company focused on solution alignment and business strategy, which – thanks to its use of innovative tools and technologies – enables clients to cut down time cycles in key business procedures. In other words, the company concentrates less on selling products and services than improving client performance.
Extremely positive results
Whether for or against such a vision, what is certain is that the latest results to date plead in favour of Vineet Nayar: HCL Technologies recently announced notching up a quarterly income of 804 million dollars (around 564 million euros) for the first quarter of 2011 (ending in September 2010), in other words 27.6% growth, as well as a rise for Europe of 17.5%. Over this period, HCL has notably signed a number of contracts with a large Irish financial institution, as well as with Pohjola Insurance Ltd., a general insurance company in northern Europe for which HCL will supply the development, implementation, support and maintenance of the claims management system.
The company is positioned in the Gartner’s Magic Quadrant categories “Desktop Outsourcing, Europe” and “Helpdesk Outsourcing for Europe”, and rated positive by Gartner’s MarketScope for managed security services in Europe. Meanwhile, IDC has identified HCL as a “rising player” in IT services in Nordic countries: according to IDC, HCL offers strong proposals in key vertical markets such as manufacturing, customer services, financial services, health, energy and public services. Naturally, this success has much to do with the phenomenal economic growth of India: +10.5% in 2010 and +9.6% in 2011 (in GDP growth) according to the forecasts of the Confederation of Indian Industry (CII).
According to Bidisha Ganguly, Economic Research Manager at the CII, the growing importance of India in global trade can be explained by the following factors: “In the last five years, the country has become increasingly integrated in the global economy. Investments are growing because the demand of middle classes has not ceased rising, exports are developing enormously, inflation has been controlled, labour costs remain low, the country benefits from dynamic demographics with a young population (over 50% of Indians are under 25 years), the 500 largest businesses are increasingly effective…” Added to all this is the deep transition of India to a service economy: in 1991, services represented 41% of the Indian GDP compared with 32% for agriculture and 27% for industry. In 2009, the rapport de force had evolved: 57% for services, 28% for industry, and only 15% for agriculture (source: India’s national account statistics). In the same year, India took out fourth place worldwide in terms of GDP and fifth place for GDP per inhabitant.
What about unions?
In a tidy room in the HCL headquarters, on the day after Directions 2011, Vineet Nayar is sitting comfortably in an armchair, a cup of coffee in hand. With half closed eyes, he raises queries as much as he answers questions. As “philanthropic” as his book may be, there is one word that is missing from it: “union”. Would HCL be such a perfect employer that it can do without this type of go-between? With a hint of a smile, the CEO replies: “It’s true that I don’t talk about unions. But we are in a knowledge economy. There is no union, but this does not prevent employees from making claims and above all, from speaking freely.” If we admit that the EFCS method is the best management approach, why, in this case, publish a book where direct competitors may find a source of inspiration? Perhaps because Vineet Nayar, belying appearances, is a sort of anti-Machiavelli, a modern-day employer who does not so much address company heads and other managers as any employee concerned with working in optimal daily conditions. This apparent generosity does not preclude a certain mistrust or at least a form of prudence regarding a method whose author himself admits is not necessarily transposable to every business. But then again, there’s no harm in trying it out…
The Shiv Nadar Foundation
While Vineet Nayar comes across as a dynamic and expansive CEO, Shiv Nadar, 65 years old, founder of HCL, seems, on the other hand, to be more reserved and discreet, a man who withholds words. This, incidentally, seems to be the only things he withholds: in September, he officially announced that he would give 10% of his fortune to various philanthropic works, following in the footsteps of multibillionaires Bill Gates and Warren Buffet. These charitable works are implemented under the headship of the Shiv Nadar Foundation which for example, builds schools with free tuition, owns its own university as well as the Kiran Nadar Museum of Art exhibiting over 300 paintings from the personal collection of Shiv Nadar. This collection provides a superb overview of a generation of particularly gifted Indian artists: F.N. Souza, M.F. Husain, S.H. Raza, V.S. Gaitonde, Tyeb Mehta, Ram Kumar, Akbar Padamsee, A. Ramachandran, Rameshwar Broota, Gulammohammed Sheikh, J. Swaminathan, Bhupen Khakhar, Arpita Singh, Jogen Chowdhury, Navjot Altaf, Subodh Gupta, Surendran Nair, Atul Dodiya, Jagannath Panda, G.R. Iranna, T.V. Santhosh…
Kiran Nadar Museum of Art
HCL Technologies Ltd
Plot No-3A, Sector 126
Noida – 201301
Uttar Pradesh, India
Open from Tuesday to Sunday 10.30 am to 6 pm
Founded in 1976
2010 turnover: approx. 5 billion dollars (3.56 billion euros)
Net profits at 31 March 2010: 2.6 billion dollars (1.85 billion euros)
Source: HCL Technologies – November 2010