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Leadership Implication for Strategy at HCL

HCL takes pride in its philosophy of Employee First, which empowers its 62,000 plus
employees to create real value for their customers. Employee First Leadership style is
true Hallmark of an HCL leader.
It describes how HCLT successfully left behind outdated 20th century management
practices and embraced the management of the future.
Employees First, Customers Second explores the steps of HCLTs transformational
journey as the company recognized the need for change, created a culture of trust through
transparency, turned the organizational pyramid on its head, and shifted the responsibility
of change from the office of the CEO to the employees using small catalysts, or blue
ocean droplets, that produced big results.

1.1 Employees First Philosophy

HCLT defied conventional wisdom when it turned the management structure upside
down. By putting employees first and customers second, HCL was able to activate the
value zone - the place where frontline employees interact with customers and create real
value for them.
By doing so, it fired the imagination of both employees and customers and set HCLT on a
journey of transformation that has made it one of the fastest growing and profitable
global IT services companies.
According to BusinessWeek, HCLT is one of the worlds most influential companies.
1.2 Evolution of Leadership Strategy in last 10 years
In 2000, HCL Technologies through the largest IPO of a domestic IT company at the
time. Still, HCL was lagging. Its revenue was growing but it was losing market share to
An employee noted, HCL was no longer the place to be. When people thought of Indian
companies, they thought of places like Wipro, Infosys and TCS, not us. HCLs growth
was attributable to its past success and its attrition rate rose to 30%, much higher than the
industry average.
By 2004, Shiv Nadar was thinking seriously about appointing a new leader for HCL
Technologies. On April 5, 2005, Vineet began his tenure as President of HCL
Vineet made it clear that HCL, order to survive, needed to change the way it approached
customers. Rather than do small, project-based work, it needed to go after big deals. To
do so, it needed to differentiate ourselves and offer multi-service, unique propositions
that transform customers businesses. In order to be able to do this, it needed to remove
the silos and encourage collaboration across the company
In the first phase, which would be two years, they planned to get their house in order
by rejuvenating employees and improving operating efficiency. In the second phase,

they would form strategic partnerships with other companies so they could jointly
offer more value and end-to-end services for customers.
The third phase, which they planned to complete by 2010, would be a radical shift in
the HCL business model.

1.3 Making Employee First, Customer Second (EFCS) Real

By the end of July 2005, ,HCL had launched a campaign that introduced HCLites, as
they decided to call HCL employees, to Employee First, Customer Second (EFCS). It
had four strategic objectives:

To provide a unique employee environment.

To drive an inverted organizational structure.

To create transparency and accountability in the organization.

To encourage a value-driven culture.

The idea behind Employee First was that as a services business, the employee interface
with the customer was critical. HCL had disengaged employees. The value-centric
leadership goal could only be achieved with an engaged employee. It wanted to create an
environment where employee development and empowerment was the most important
thing because ultimately, it wanted value-focused employees that were willing and able to
drive an innovative, sophisticated experience for customers.

1.4 The EFCS Transformation

Employees First Customers Second (EFCS) from then onwards has become the
determining philosophy for HCLites. By putting employees first, HCL Technologies has
been able to activate the value zone. Thats the place where frontline employees, exist
or perform. Thats where we interact with the customers creating real value for them.
And by putting employees first, the company gives them the onus of responsibility to
seek, initiate and grow new ways to create more value for customers, businesses and
The Core Fundamental of its Business is to create value through employees.
And Role of Management is to enthuse, encourage and empower employees to create

1.5 How it works.

It all starts with the belief in the core value systems enabled by the Employees First
philosophy. There are four tenets to 'EFCS'.
1. Mirror, Mirror, Confronting the Truth. Thats the shakeup call that Vineet
Nayar gave the employees. If employees did know something was wrong and that
they have to get some-where, they had to take that leap to get there.
2. Using Transparency to Build Trust. By pushing the envelope of transparency from open financial information, to the smart service desk of complaints, to 360
degree feedback to open and online planning processes, employees began to
believe in the management. And once they trusted them, they were ready to jump.
3. Invert the Organization Pyramid. By making support functions and executives
accountable to employees, rather than the other way round, they were taking
ownership of change in their own hands. With power comes responsibility. Not
only did this enhance the value, but also brought meaning and clarity to the
4. Recasting the Office of the CEO. This was the power-shift. The responsibility of
change was now on employees - they would ask and answer questions like the
CEO. This increased the speed and quality of innovation and decision making at
the value-zone.
As employees internalized these values, gradually, we realized, that more often than not,
change or value that is brought in had shifted its direction, from Management driven,
Employee embraced to Employee driven. Management embraced ideas and initiatives.
It was employees who were now steering the ship. Brought it out. Made it into a
behavior type, enabling Behavioral Patterns:

Need to Seed, Employees are Anxious. Curious, independently seeking

alternatives to the norm, generating and fostering ideas, that show incremental,
progressive shift from the status quo

Desire to Mentor, Employees are Ambitious. Aspiring to grow enthusing,

encouraging and guiding to up-skill talent, evolving ideas in scope towards
implementation and garnering scale

Commitment to Harvest, Employees are Real. Generating ideas to renew

enterprise shift, bringing in measurable achievement orientation that recognizes
and rewards entrepreneurial spirit

These behaviors employees deliver, both at an individual and organizational level.

Employees have developed programs to support these behaviors at an institutional and
decentralized level. Institutional level programs has five layers and are driven
organizationally, while others through support, or at customer level. Let us showcase two

of these main programs, run at the grassroots, and illustrate how they are innovating
innovation through a bottom-up approach at HCL Technologies.
The institutional pyramid framework of ideapreneurship thus creates an ideas ecosystem
across the organization, working on FIVE multiple layers: at the base in the Value
Creation Initiative, which functions as the interface between front line employees and
customer stakeholders, followed by the Make a Difference Jamboree (MAD JAM)
program which celebrates exemplary ideas implemented in the last calendar year.
Heres a snapshot of how the innovation continuum works at HCL.

All this leading to outcomes outperforming competition, determining sustainable growth

for HCL Technologies and enhanced value for customers.

1.6 Impact of EFCS

EFCS has a very positive impact on the overall performance of the company.

HCLT grew at a CAGR of 24 % and increased itsmarket capitalization by 186%

Doubled the number of $10 Mn, $20 Mn & $50 Mn customers and tripled the
number of $100 Mn customers

HCLTs revenue per employee is amongst the highest in the Indian IT industry
HCLT was also featured as one of the most innovative and disruptive companies
globally - Included in the first ever Executive Dream Team published by Fortune
Emerged as the top ranking IT Services company in APAC, in Forbes Asias Fab
50 List
Ranked by TPI in the Top 6 Global Service Providers by TCV across all 3
geographies(Americas, EMEA, APAC)
444% increase in annual revenue(from june 2005 to june 2012)
26% reduction in employee attrition rate.
90% increase in market capitalization.

1.7 Business Model Transformation Process

1.7 Other Leadership Development strategies by HCL

Various other programs have also been conceptualized at HCL with a vision of building
world-class leaders and to build effective bench strength.
Some of them are:
Top- Gun