Book Excerpt: Employees First, Customers Second

In early July 2005, my A team, the hundred best and brightest brains at HCL Technologies, flew in to Delhi from around the world for a three-day strategy conference. On the second day we talked about the importance of building transparency and trust throughout the company.

Could transparency really be the catalyst to drive trust? I believed so, for several good reasons. Before I describe them, however, it's necessary to understand a bit about the culture at HCLT—a legacy business that had grown rapidly and changed quickly in its early years. As it grew bigger, it gradually slowed down. Change became more difficult and took longer to implement. Too many bright ideas got left on the table.

But I saw that the culture at HCLT was not all about legacy. We had strong leaders who wanted to break free of the old ways. As is true in so many large companies, it was the HCLT organization—the archaic pyramid—that was shackling people and keeping them from contributing all they could.

I believed that one of the ways we could release this talent was to make our culture participative. To get our people to participate more, we had to create a culture of trust and to do that we needed much more transparency. There are five main ways in which transparency builds trust.

First, transparency ensures that every stakeholder knows the company's vision and understands exactly how his or her contribution assists the organization in achieving its goals. Working in an environment without transparency is like trying to solve a jigsaw puzzle without knowing what the finished picture is supposed to look like.

Second, transparency helps to ensure that every stakeholder has a deep, personal commitment to the aims of the organization.

Third, for the Gen Y members of our workforce transparency is a given. They post their life stories in public domains; they expect nothing less in their workplaces.

Fourth, in a knowledge economy, we want customers to be transparent with us, to share their ideas, their visions for the future, and their strategies for solving core problems. Without such transparency, how can we create the technology solutions that will accelerate their growth and strengthen their businesses?

Finally, knowledge companies like HCLT often do lateral hires—people brought in from outside the company—to work on specific projects or initiatives. The only way these outsiders can get up to speed quickly and be as effective as possible is through sharing of information and complete transparency about the strengths and weaknesses of the assignment. The more transparent the process, the more trust that the outsiders felt in the organization.

Getting started, I knew that we must not deal in half measures. We had to do more than crack open a small window of transparency. We had to throw it wide open—do things we had never done before and attempt things that other companies had not tried.

Looking back, the solutions we came up with seem quite obvious. But at the time, I had no easy answers. I appealed to our bright sparks for ideas and asked my managers to reach out and listen, as well. We got a lot of responses. Many of the ideas, although provocative, were too far out, too difficult to implement. One idea, however, made a great deal of sense.

The idea was to open the window of financial information.

At the time, our people had access to the financial information that pertained to their own projects, but they had no way of knowing how their business unit and the whole organization were doing. Nor could they compare the performance of their team to that of others in the company. What if we allowed everybody to see all the business units' and the company's financial data? Wouldn't that be an important step toward greater transparency? Wouldn't it help build a culture of trust—showing that we had nothing to hide and were willing to share both the good and the bad?

I floated the idea. Immediately came the "yes, buts." There were two major objections.

First, the "yes, buts" asked, wouldn't people get demotivated when they discovered that they were not doing as well as their managers had been telling them? I heard this many times, from many people.

Second came another objection: What would happen if the information leaked out to the press? What if our competition got hold of it?

These were fair points, I had to admit. However, I argued, the instant we opened the information window, people would see that some business units were rolling downhill or were underperforming compared with other units. They would also have a true picture of the overall performance of the company. "How can they know how steep the hill is without seeing the road? Are there risks involved? Yes, but it is all part of trusting our employees. Putting their needs first. These are risks we must take."

I turned to our internal IT team. I believed that using our IT system was core to the successful execution of new ideas. I had faith that this team could roll out virtually any bold idea and make it work for employees around the world. I asked the team to create a system that would show the financial performance of each employee's team and be available on his or her desktop.

In just a few weeks, the new system was up and running.

The employees loved it immediately. They used the information to instill new energy and direction into their teams. Because all their team members shared the same version of the financial data, they could focus better on what actions to take. With each passing day, the information analysis improved. As people could see the benchmarks and compare their performance with that of others, they worked harder to improve their own performance. Soon, we added nonfinancial information and implemented the balanced scorecard for all our businesses through this process and made it visible for everyone to see on their desktops.

Increased transparency led to quicker action at the grassroots level. It also motivated the teams that were doing well. They felt that their success was being recognized, and they worked even harder to remain in the top performer club. A new sense of purpose and direction was quite visible in the teams. Now that they had the information they needed, they could spend more time on execution and less time trying to understand the reality of their performance.

I should say, however, that two "yes, buts" proved to be valid. Some employees were, indeed, demotivated by the information they saw. And, yes, some information did leak out in ways that caused embarrassment and complication.

On balance, however, the positives far outweighed the negatives. When you open the window, you must expect that a fly or two will buzz in to annoy you or that a vase could fall out onto the street and shatter.

Reprinted by permission of Harvard Business Press. Excerpted from Employees First, Customers Second: Turning Conventional Management Upside Down. Copyright 2010 Vineet Nayar. All rights reserved.