Swimming against the tide

In this age of AI, creating an employee-first culture may seem counter-intuitive. But not if you believe in the primacy of building human relationships at the workplace

I must confess when I first heard that Vineet Nayar, the chief executive officer of HCLTech, a frontline Indian software firm, was propagating the concept of an employee-first culture almost two decades ago, I was more than a tad sceptical. How did it make sense to prioritise employee well-being over the holy grail of customer delight?

At the start of the 1990s, one of the precepts that had been drilled into us in business school came from Peter Drucker, one of the wisest management philosophers of all time. “The purpose of business is to create and keep a customer,” he wrote.

Then there was yet another famous quote — this time by none other than Mahatma Gandhi — that adorned the walls of almost every other public sector bank. “A customer is the most important visitor in our premises. He is not dependent on us, we are dependent on him. He is not an interruption in our work, he is the purpose of it. He is not an outsider in our business, he is part of it”.

Two seemingly unrelated incidents in the last month forced me to revisit this old management precept. First, I was part of a team working on a case study about the amazing transformation of a relatively unknown industrial products wholesaler in Asia, which relied on a homespun employee-first approach to create breakthrough results. (For reasons of confidentiality, I’d have to keep their name out). The second stimulus was Leading from the Back, a book I’m currently reading, written by Ravi Kant, a business leader I’ve always admired, along with two other co-authors, Harry Paul and Ross Reck.

Both of these recent experiences triggered more exploration and wider research and led me to think more deeply about an alternative management philosophy that may not be common, but is worthy of study. They also raise interesting questions about our existing models of 21st-century leadership and how it helps firms succeed.

Transformation is one of the most oft-repeated words in business literature. In his popular TEDx talk, Mr Nayar says there are two schools of thought about the purpose behind transformation. A large majority of businesses are obsessed with transforming what they do, aiming to be the next Google, Facebook, or Tesla, and discovering innovative ways to make unique products and services. The other approach is to find a more humane way to transform how you run your company and how you treat your employees, by increasing the clock speed of your organisation.

The reality is that most products and services are commoditised. Even a new innovation gets copied within days. Yet, most companies continue to believe their raison-d’etre is to create unique experiences for their customers. That begs the question: Who creates these experiences? And where does it get created? In this world of sameness, the real value creation happens where customers and employees meet.

Last weekend, I was away at an annual conference hosted by a leading think tank that chose to curate the entire unique experience on its own, without involving traditional event managers. Every little detail — from the tenor of the sessions, the menu and the delegate kit bags — was carefully thought through. Every team member, young and old, pitched in to make it a special experience for speakers and delegates alike.

So, if one indeed believes that employees are the real value creators, what should the role of leadership be? Mr Nayar avers it is to enthuse, motivate, and enable employees to create those unique experiences for customers to help the firm grow faster. And he believes it was this employee-first approach that helped him generate a six-fold increase in revenues and market cap at HCL.

In the 1990s when HCL was a quintessentially hardware firm, I picked up amazing stories from alums about how Shiv Nadar, Arjun Malhotra, and  other co-founders at HCL empowered its famed frontline sales team to create value for their customers. Mr Nadar displayed classical leadership from the back. He seldom went on sales pitches. HCL hired the best young talent and then left it to them to build relationships and create and demonstrate value for their customers. By getting out of the way, providing space for employees to be innovative and take initiative helped HCL soar to the top and build an amazing frontline sales cadre. That lasted until the time they signed up for an unsuccessful joint venture with Hewlett-Packard (HP).

There are enough examples of other global firms that have embraced many aspects of this employee-first culture: Zappos, Southwest Airlines or even, Ricardo  Semler at Semco in Brazil. Mr Semler’ leadership journey is vividly documented in Maverick, his best-selling book. Mr Semler peeled off many unnecessary layers of management, built the foundations of an unprecedented democracy at the workplace, thereby challenging old ways, and charting a new pathway to success in a volatile business environment.

So the moot question: If there is evidence that employee-first cultures work, why hasn’t it become a mainstream management philosophy? The somewhat simplistic answer is that, like every other management concept, it doesn’t work in every context. However, it also points to a bigger issue: In this relentless search for business growth and success, we’ve prioritised machines over humanness and efficiency over effectiveness. We’ve ended up reducing human endeavour to an assembly-line operation. In the current hype around artificial intelligence, business managers would do well to keep in mind the limitations of a mechanistic world and continue to emphasise the value of building human relationships.

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The writer is co-founder and director of Founding Fuel