Vineet Nayar - A Transformational Leader

Leadership is a nebulous subject. The very word evokes an image of a superman who is omnipotent capable of solving every challenge that comes his way. While a whole lot of such expectations from a business leader may seem unreasonable, the anticipation that such a leader has a Vision for the company and results to show for the effectiveness of the strategy seems to be a reasonable presumption. Vineet Nayar, former CEO and Vice Chairman of HCL Technologies is one such leader who, with his Vision and passionate approach, transformed the company over a period of 7 years. Vineet is a charismatic and decisive leader with an excellent track record. He is a great communicator and an acclaimed global thinker.

This is the inspirational story of his dynamic transformational leadership.

Prologue

The year 2005 was a watershed moment in the history of HCL Technologies (HCL). A pioneer in hardware manufacturing and sales in India, it had forayed into Software Services, Infrastructure Services and BPO in the wake of Y2K boom. While it was in the top 5 IT services companies of India, and growing at a very steady rate, all was not well within the organisation. The competitors were pulling ahead. HCL was losing market share, mind share and talent share. The employees did not see a great future and the then CEO, though a technically brilliant man, was neither customer facing nor an inspirational leader. It was at this juncture that Vineet Nayar, who was the President of COMNET, the Infrastructure arm of HCL, became the President of HCL IT services and Infrastructure (BPO was not under his purview to start with). He became the CEO of HCL Technologies in 2007 and later elevated as Vice Chairman in 2011.

Vineet joined HCL as a Management Trainee after completing his MBA from XLRI in 1985. He worked across various units of the organisation and ultimately initiated a start-up called COMENT (within HCL) to cater exclusively to Infrastructure Services. COMNET, under his leadership revolutionized Infrastructure Management including the much-acclaimed Remote Infrastructure Management. While there were several other senior executives within the company with background in Software Services, Vineet was chosen to lead the Software Services in addition to the Infrastructure Services. Thus, he became the President of HCL Technologies and Head – Software Services and Infrastructure Services which was about 86% of the overall revenues of HCL. The total revenues of HCL at that time was USD 763 Million.

It was the best thing to have happened to HCL. Being an outsider to a business has its distinct advantages. Vineet was quick to see the struggle within the company to improve market share, low morale of employees, general lack of direction, outdated systems and processes etc., Within a short span of time, he started to shake up the organisation and posed some fundamental questions that would dramatically change the course and direction of HCL for years to come.

Introspection

The famous humanistic psychologist Carl Rogers said, “When I accept myself as I am, then I change.” This is true of organisations as well. Vineet used a tool, what he called “Mirror Mirror on the wall – confronting the Truth” to introspect. Senior Managers were invited to workshops called “The Blue Print” and all issues, impediments that hindered growth, employee empowerment and satisfaction, sales, delivery were all discussed threadbare. A detailed plan was devised to set right the house in order. Obviously, a 3 decade company will have may areas that needed an upgrade – some to be overhauled, some to be totally discarded etc., Sales and marketing strategies were discussed – like the Blue Ocean strategy, the need for an outside in approach to selling rather than an inside out approach, revamping the marketing collaterals etc., It was an eye opener for many of the employees! Over a period of time, this invariably led to building the organizational capabilities, which would not have happened at that pace otherwise.

Building Trust and Transparency

Distrust and defensiveness set in an organisation due to several reasons and more so where lot of young millennials work. Lack of opportunities, lack of vision and a poor work environment contribute not only to dissatisfaction but also to attrition and employee burnout. Vineet addressed this by invigorating the work environment by clearly articulating the vision, values and what he intends doing to make HCL a sought-after place to work. The work environment, he promised, would change dramatically and soon enough employees started seeing the change.

And it started with him! A 360-degree feedback was instituted to all employees who a manager might influence – and allowed anyone who gave a feedback to a manager access to the manager’s 360. This practice increased participation, empowered employees, and made 360 a developmental tool and not an evaluation tool. While 360 feedback was common, opening out the results in a transparent way was unusual. Even clients who had heard of it were quite amazed. And not all feedback was flattering!  

A U&I portal was launched. It was a two-way dialogue between CEO and the employees. Vineet himself answered almost 90% of the questions spending over 7 hours a week. It also started a reverse blogging where Vineet posted questions and employees responded. His Vision for the company was slowly unfolding.

CEO’s musings became a regular feature where Vineet shared his vision and thoughts for the way forward.

One of the key determinants of Trust in an organisation is the compensation system. Vineet revamped the decades old paper-based appraisal system with an online system called i4excel which handled end-to-end appraisal of over 24000 employees in less than 30 days and compensation letters released electronically. What used to take months thus was reduced to days. That apart, in earlier times, while discussions were held with managers, the reviewer’s comments were never known. i4excel made that transparent. It revolutionized the appraisal and compensation process.

It is great for a CEO to articulate a vision and bring in transparency, but each employee is interested in “What is in it for me?”  Vineet introduced ESOP plan for all cadres of employees which was a morale booster besides giving a stake in the growth of the company for each employee. This was a great success and employees were thrilled.

To reward high performers, he instituted ‘O2 league of the Extraordinary’. The league constituted those employees who have been outstanding employees for the preceding two years. What was unusual in this award was, the family of the employee was also invited to the award function and a grand dinner followed the ceremony. This was an outstanding success as it not only got the buy-in from the family but enhanced the standing of employees amidst their kith and kin. The family also felt part of the organisation and its growth. This was truly an out of the box idea!

Similarly, when employees retired, they were invited to the above function, with their spouse and felicitated with a citation appreciating their services besides gifts.

“The ultimate measure of man is not where he stands in moments of comfort and convenience, but where he stands at time of challenge and controversy”, said Martin Luther King. The 2008 financial crisis was one such challenging time. Vineet boldly proclaimed the philosophy “No HCLite will be left behind”, reassuring the employees that none would be retrenched even in those difficult times. What else can you ask of a leader?

A comprehensive Employee Portal was launched which covered different areas including Employee empowerment, Employee Recognition, knowledge base, Transformation and support. Over a period of time several innovative systems were put in place through the portal.

These initiatives did not happen overnight but unfolded in a systematic way over a period of time. In hindsight, the employees understood that these were all pieces of a larger unfolding puzzle.  

Strategy

Max De Pree, CEO of Herman Miller, said in ‘Leadership is an Art’, “In the end, it is important to remember that we cannot become what we need to be by remaining what we are.” So true. Having cleaned up the organisation and built trust to a large extent, it was time to reinforce the vision and strategy for the Company consistently even though it was unfolding and had taken shape. In Vineet’s own words, he asked three fundamental questions in the context of HCL’s business and the answers are revealing.

The first question that begs an answer was “What is the core business of the organisation?” The answer to that was – to create a differentiated value for its customers. The second follow-up question was, “If it is so, where does that differentiated value get created?” And the answer to that was, “in the interface between the employees and customers.” And the final question was, “If that was so, what should be the business of managers and management be?”. The obvious answer to that question was, “to enthuse, empower and encourage employees to deliver that differentiated value!”

Thus, was born the radically different management philosophy of “Employee First Customer Second.” (EFCS). Vineet went on to articulate that the customer also wins in this paradigm as “Customers first” philosophy found it difficult to deliver that fuzzy promise or value. The initiatives embarked thus far in HCL were part of this strategy and had started paying dividends.

Vineet organised “Directions”, an annual company wide event, that takes strategic discussions out of closed-door meetings to all employees. Vineet and the local leadership team was present at these meetings and shared the vision and strategy of the company in interactive sessions. It was not all business but fun and connecting with employees as well. Vineet made a dramatic entry in one such meeting dancing along the aisle to the stage – needless to say that it was an unconventional entry. The employees loved it. Vineet prepared at least 2 weeks for the event and spent another 2 weeks travelling across the globe to attend events in various countries.

It was essential to bring on board the other important stake holder – customers. Hence Vineet organised a theme based Global customer meet where all the customers were invited to participate. Apart from showcasing HCL’s capabilities, the event also brought thought leaders from across the globe to present latest trends in technology, industry etc. The customer meet was a rousing success. In one such meet conducted in the US, the noted author Malcom Gladwell was the keynote speaker. That apart President Clinton addressed the meet in his usual charming way and enthralled the audience with his phenomenal knowledge and command over wide-ranging issues. He seamlessly connected them into a coherent message. It was truly an inspirational address.

The following remark by a customer bears testimony to the resounding success of the Global Customer Meet. He said “I look forward to coming to HCL meet, as it is the only IT meet in IT and Tech, where I learn and enjoy without inhibition and where the content helps me broaden my thinking. It is not only about technology but also about the passionate culture of HCL that has made me a big fan of HCL for the past 6 years and I wouldn’t miss it for anything!”

Vineet published this philosophy as his best-selling book “Employee First Customer Second – turning conventional management upside down”. This was a best seller with over 100,000 copies sold and translated into 7 languages. Vineet, fondly referred as a “Maverick” by media, was acclaimed for his transformation of HCL over a period of 5-6 years. Encomiums followed and some of the key ones include:

§  Fortune magazine recognised HCL as “the world’s most modern    management”

§       Business Week named HCL as “one of world’s most influential companies”

§  These innovative business practices were taught as a case study in Harvard Business School and London Business School

§ Vineet was chosen by Fortune magazine in their first ever global  Executive Dream Team

§      Vineet found a place in the elite Thinkers 50 list

§  Vineet’s philosophy received wholesome praise from global leaders like late C K Prahalad, Tom Peters, Gary Hamel and Ram Charan

Results

Defining a sound and distinctive strategy is a necessary condition for success of any business. But winning the games takes a lot more. Translating vision into action with alacrity and consistency is an unenvious and onerous task. HCL, under the dynamic leadership of Vineet, not only performed well but outdid all expectations. His tenure from 2005-2013 saw phenomenal growth of business. HCL was a force to reckon with. The results were there for all to see.

§  The employee revenue per annum grew by over 36% with an increased utilization rate

§  Employee attrition rate dropped significantly over 9 consecutive quarters. Employees were proud to be part of the company

§  Employee strength grew from about 24,000 to 85,000

§ Revenues grew from 0.7 Billion in 2005 to 4.7 Billion in 2013 with operations in 32 countries

§  Customers tripled

§  Customer satisfaction doubled 

At the end of his term, the key question that many had was “How would HCL’s performance be after Vineet?” The true hallmark of a leader is that the systems and processes should have been institutionalised and the individual should become insignificant. Vineet, even before end of his term announced, “Dismantling the office of the CEO”, which confused many. All he did was to recast the office of the CEO and transfer the responsibility from senior management to the company as a whole. New initiatives like Value Portal, Smart Service Desk to resolve the outstanding issues between frontline employees and functions were launched making the management accountable to employees. Like all other initiatives Value Portal was a great success as HCL employees demonstrated, in dollar terms, the value they brought to the client.  

The fact that HCL is doing extremely well and has outperformed Vineet is a tribute to his strategy and the high-performance culture that he built in HCL. And as we write this, HCL is in the top 10 most valued companies in India by market capitalization!  

Prologue  

After an illustrious career in HCL, Vineet co-founded Sampark Foundation with his wife Anupama Nayar, to catalyse ‘large-scale transformation in primary education through frugal innovation.’ Today Sampark Foundation is improving learning outcomes among 7 Million children studying in 76000 rural schools across 6 states in India – Chhattisgarh, Uttarakhand, Jharkhand, Haryana, Himachal Pradesh and Uttar Pradesh at less than $1 per child per annum. This large-scale transformation is now a case study at Harvard Business School.  

Vineet has been cited by Forbes in its “Heroes of Philanthropy List 2016’ and also as a ‘Global Thinker 2016’, along with his wife, by Foreign Policy magazine for ‘Unplugging technology so kids can learn.’  

Vineet currently serves as a Senior Advisor to ChrysCapital, McKinsey Leadership Institute and many Fortune 1000 companies. He is on the Advisory board of ‘Millions Learning’ project led by the Ex-Prime Minister of Australia, Ms. Julia Gillard, and has served as Governor of ICT, member of the Global Advisory board of Women Leaders and Gender parity program at the World Economic Forum. And as a mentor to multiple technology start-ups, he continues to follow his passion of turning conventional management wisdom upside down.