Building the Capacity of Private Enterprises
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For many owners and managers of private SMEs, modernizing HR management will involve a change of mindset. Given the different nature of innovation activities from traditional production activities, more emphasis must be put on the loyalty, motivation, and morale of employees as the firm’s business becomes more knowledge based, and the emphasis on performance evaluation focusing on measurable results must be lessened. In this regard, the experience of the Indian information technology (IT) services firm HCL Technologies, which has a policy of “employees first, customers second,” is enlightening (box 3.1).
Box 3.1
“Employee First, Customer Second”: A Soft Slogan with Hard Value at HCL Technologies Founded in India in 1974 as a computer hardware manufacturer, HCL Technologies is a global IT services company and claims to be India’s fourth-largest firm specializing in outsourced software, remote infrastructure management, and other business process outsourcing. As of June 30, 2007, HCL Technologies had revenues of $1.7 billion and 52,000 employees in 17 countries.a The “Employee First, Customer Second” (EFCS) corporate strategy was first introduced to HCL employees in July 2005 by Vineet Nayar, the new president of HCL Technologies, as part of a five-year plan to rejuvenate the company. At the time, HCL was faced with grave challenges in maintaining its growth and especially in retaining talent and sustaining employee morale in the midst of India’s increasingly competitive IT industry. The seemingly soft slogan of EFCS is not about rolling out the red carpet to please employees. It is based on the hard value that effective employee interactions with customers are critical for a service business like HCL. The initiative tends to make result-oriented investment in employees by creating the mechanism and culture in which employee empowerment and development are highly valued and employees become willing and able to practice the corporate value and unleash their potential in reaching customer satisfaction with unique, innovative, and sophisticated services. Here are some elements of the EFCS strategy: • “360-degree feedback”: An annual performance review mechanism in which all employees get feedback on their performance from their managers, peers, and subordinates. This is intended to increase the accountability of managers to their subordinates. (continued)