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Pratik Bharti
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Arrow The employee is always right - November 27th, 2007

Vineet Nayar, CEO of Indian outsourcer HCL Technologies, needs to work on his time-management skills. Last year, his team rated him 3.6 out of 5 for how well he keeps projects running on schedule. That was among Nayar's lowest scores from the 81 managers who rated him, and everybody at HCL knows it.

Nayar's grades, along with ratings for the top 20 managers at HCL, are published on the company's intranet for anyone who wants to see them. Employees also have the capability to see their own supervisors' scores. While many companies have "360-degree reviews" -- which compile feedback from peers, managers, and underlings -- HCL may be the only one in the world that broadcasts the results throughout the organization.

That has created no shortage of workplace angst. "There was this whole picture of me that [emerged] as a heavy taskmaster," says R. Srikrishna, who runs HCL's U.S. infrastructure services division, of his early results. "It was very unsettling the first time."

The public grading of managers is just one of several unconventional steps HCL has taken over the past two years to build a more democratic workplace. While plenty of CEOs utter bromides about "servant leadership" and say their most important job is supporting employees, Nayar is more willing than most to back up his words with actions.

"In our day and age, it's the employee who sucks up to the boss," says Nayar. "We are trying, as much as possible, to get the manager to suck up to the employee."

Setting An Example

Nayar's ideas are starting to generate a lot of buzz. Executives from two of the world's largest tech companies, neither of which wanted to be identified, have recently made the pilgrimage to Noida, a busy, dusty town just outside New Delhi, to study HCL. Customers ranging from Swedish insurer Skandia to British publisher Pearson have gotten an inside peek, too.

And a new case study on HCL by two Harvard Business School professors is being taught in one of the school's most popular executive education courses and is being considered for a mandatory MBA class.

"We're seeing more innovative methods coming from [emerging markets]...on how to structure and lead organizations," says Linda A. Hill, who wrote the case with fellow professor Tarun Khanna.

In fast-growing India, the challenge of attracting and retaining workers has prompted a pile-on of perks, from fattened paychecks to corporate campuses decked out with multiplexes and bowling alleys.

Because HCL Technologies, the fifth-largest of India's info-tech outsourcers, arrived late to the software services game, it has had to work even harder to build cachet among recruits. And its growth plans are staggering: In the next year, HCL expects to add about 10,000 more employees to its workforce of 45,600.

So far, Nayar's methods appear to be having an impact. HCL's once-troubling attrition rate, which at 20.4% was among the highest in the industry when Nayar took over as president in 2005, has dropped three quarters in a row, to 17.2% (though it is still higher than that of many rivals). This progress is no small achievement in a country where young engineers, as marketing manager Krishnan Chatterjee puts it, can be like "coin-operated machines," disregarding corporate culture and jumping ship wherever there's more pay.

In October, HCL posted a 42% rise in quarterly net income. It attributed part of that growth to its success in winning complex, multi-year projects -- the very ones that require the most sought-after engineers. Annual revenues, at $1.5 billion, are up 42% from the year before.

Provocative Utterances

Tall and forthright, Nayar, 45, didn't arrive at the top of HCL Technologies easily. Plunged into poverty in his teens after his father's death, Nayar and his two brothers took turns working, so the brothers not working could study. After seven years as an engineer at HCL, he was tapped to run an internal startup, where he tested out some of his ideas. Nayar can be something of a management iconoclast, unafraid of making provocative statements.

He has branded his management philosophy "Employees first, customers second" -- even when talking to customers. And lately, he has even been saying he wants to "destroy the office of the CEO." While he has no actual intention of doing that, he says it to remind employees that they should not look to him for all the answers.

In addition to the shared 360 ratings, Nayar has other tools that force the company to respond quickly to employee concerns. On HCL's intranet, Nayar publicly posts responses to every question left by HCLites, as they call themselves. He spends about seven hours answering the 50 or so questions he gets each week, often on Sunday mornings at home.

On Nayar's watch, HCL has developed a one-stop online "smart service desk," where workers file complaints (or "tickets," in IT outsourcing lingo) about any issue, whether it's the freezing air conditioning in their office or something as thorny as the size of their bonus. Everyone uses it, from the most junior programmer to senior officers who might get white-glove service elsewhere.

Shipra Gill, 23, an assistant marketing manager, says some of her colleagues opened tickets to complain after a new cafeteria vendor didn't carry popular brands of chips and beverages. And unlike the tech-help desks that most cubicle dwellers endure, Nayar added a twist that underscores his philosophy: Only workers can close the tickets, once they feel the issue has been resolved.

Even though HCL employees were the primary beneficiaries of Nayar's innovations, some were initially skeptical. "People did not really believe that this program would make a difference," says 27-year-old Anisha Khanna.

Just 10% of the engineers in her department showed up at Nayar's early speeches. Others worried how it would look if they got negative ratings by their underlings. (All employees who take time to rate managers above them can get access to their scores.)

But workers learned to trust the system, in large part because Nayar makes it clear the feedback isn't used to determine bonuses or promotions. Enough employees have gotten comfortable with the public feedback that HCL expanded it for 2007. Now workers can see results not only of their managers, but also of peers they rate.

None of the companies that have studied HCL's systems has adopted its public feedback program so far. "It's too radical for most of them," says Nayar. But that doesn't stop him from thinking his ideas will spread.

"I believe this whole concept [of making management more accountable to workers] is going to get accepted as a way of life ... Talent is only becoming scarcer and scarcer."

With Manjeet Kripalani in New Delhi.

“When you doubt your power, you give power to your doubts.”

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