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strategy and business
 / Winter 2010 / Issue 61(originally published by Booz & Company)


The Thought Leader Interview: Vineet Nayar

We also looked for symbolic ways to be a model of openness. One thing I did was publicly dance in front of all my employees. This was to remove the halo that a CEO has around his head. Meaningful conversation happens after you have set the stage in this way, after you make clear that you are as open as anyone else — crazy but effective.

I started writing a blog called “You and I,” in which I encouraged employees to ask me questions in the open. The only rule I made was that when you ask the question, it must have your name attached. All 60,000 employees should see your question and my answer. At first, I was depressed by the result, because I mostly received negative questions that made HCL look bad. People said things like, “Vineet, I don’t accept what you’re saying.” Or, “You lack vision; you haven’t articulated what the company’s size and scale will be in 2010.”

So I held an open house with a group of employees. “I’m feeling pretty bad,” I said. “Nobody is saying what is positive about our company. Do you think I’ve unlocked a genie that is spreading demotivation?”

Their answer was interesting. They said it is good to wash dirty linen in public, in this case on the blog, because it builds trust. There are no rumors. We discuss everything openly and honestly. We don’t always have solutions to problems, but at least we expose them. Out of that, I began to share the financial numbers and give my perspectives, and the tenor of the blog comments began to change.

S+B: When you started publishing and sharing the financial numbers internally, how did people react?
I characterize the responses in three zones. In Zone 1, we had transformers and go-getters. The people in Zone 2 were lost souls, taking energy away from the organization. They tended to project the idea that things would not work or that I was just trying to get rid of people. Zone 3 had fence sitters, who took no risks or positions. In any transformation journey, you have to first convince the transformers to follow you and ignore the lost souls. Then you have to get more fence sitters to become transformers. That is easier said than done. But one way to achieve this is pushing the envelope of transparency by sharing the financials so people can figure out for themselves whether they are contributing to the growth of the company or not.

When we started publishing detailed business unit financial performance data for employees, it accomplished three things. Employees started asking a lot of questions of their managers, and the managers had to respond. It initiated a lot of action. And there was now only one version of the truth, without multiple interpretations. We used the balanced scorecard approach to lay this version out and relate it to what people did every day.

S+B: What kind of difference do you think this openness will make in the wake of the recession?
Whatever trust is left in command-and-control management structures has been deeply tested during the recession. I am told that in business in general, employee trust in management is at its lowest point ever. We have deliberately tried to prepare for coming out the other end as a winner, which requires a huge amount of energy from employees. There are no guarantees, but we tried to study companies that had transformed their employee–management policies in earlier hard times to win back the trust of their employees.

S+B: That takes a real leap of faith on the part of senior management, though, because every instinct says retrench, keep your top performers, and let everybody else go.
I’m not against retrenchment, layoffs, or any management action that is required. About 3 percent of our employees, the lowest performers, were laid off. The questions are, How do you do it? What is the amount of transparency you exhibit? What is the extra effort you put into communicating the reasons? When the chips are down, how do the leaders act in front of the employees?

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