Business Model Transformation: Empowering Employees to Focus on the Customer

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1 Best Practice Guidebook Business Model Transformation: Empowering Employees to Focus on the Customer 1 HCL Technologies Limited INDUSTRY Information Technology REVENUE ( ) $4.2 billion USD (as of June 2012) Applicability to Executive Functions Challenge In 2005, HCL s revenue was still growing, but it was nonetheless losing market share to competitors. To regain its competitive edge, HCL needed to reassess its strategy and better capitalize on its strengths. Solution HCL invests in a collaborative, employee-focused, customer-centric business model by: Realigning the organization to support the value zone* Establishing a culture of transparency and collaboration Developing tools and processes to support and empower employees operating in the value zone Corporate Strategy R&D/ Innovation Sales Leadership Solution Components Marketing CEO Corporate Development Develop the Strategy» Prepare the Company for Change» Transform the Business Model» Investors/ Finance Market Research Competitive Intelligence HCL s Key Lessons Learned Ask The Thought Leader (ATL) Webinar Read a summary of the questionand-answer session with HCL LISTEN TO THE ATL NOW» Break up large-scale transformations into incremental changes, rolled out over time. Large ideas, such as a change in service model, provide a singular goal that everyone within the company can get behind. However, these ideas tend to be overwhelming and it can be difficult to understand one s role in the transformation. A series of small catalysts are easier to manage, build momentum from success stories, and provide the flexibility necessary to react to challenges and unforeseen side effects. READ MORE» * The value zone is where the essential work of the company occurs. HCL defines the value zone for the IT outsourcing industry as the interface between employees and customers.

2 2 Contents Overview Page Develop the Strategy Prepare the Company for Change HEADQUARTERS Uttar Pradesh, India GEOGRAPHIC FOOTPRINT Global OWNERSHIP Public EMPLOYEES (2012) 85,300 Transform the Business Model Business Results Key Lessons Learned Frequently Asked Questions Supporting Tools & Resources Change Management Personality Archetypes 18 Make a Difference (MAD) Jams 19 EPIC Survey: Themes and Indicators 20 Employee First Councils 20 Employees First, Customers Second 21 Business Results 444% increase in annual revenue (from June 2005 to June 2012) 176% increase in market capitalization (from June 2005 to June 2012) 40% increase in revenue per employee 26% reduction in employee attrition rates Contact the Growth Team Membership (GTM) Resources Required People: Create a team of transformers who embody and champion the change Technology: Provide portals to increase collaboration and enhance the employee experience GTMresearch@frost.com twitter.com/frost_gtm

3 3 HCL follows a three-step business model transformation process to prioritize employee empowerment Business Model Transformation Process Develop the Strategy Objective Develop a long-term strategy to focus the business model on HCL s competitive advantages. Activities Assess current business performance and environment Use a Mirror, Mirror exercise to create companywide awareness of HCL s current situation and need for change Identify the company s competitive advantages and create a long-term strategy to maximize its strengths Determine how to bridge the gaps between the current and desired state Year One Prepare the Company for Change Objective Prepare the company for change and initiate a culture shift. Tactic: Establish Trust and Transparency Activities Distribute company and project information Facilitate two-way communication between employees and senior management Reverse Accountability Empower Employees Year Two Transform the Business Model Objective Reverse accountability, empower employees, and transform the business model over time. Tactic: Support and Enable Employees Activities Employ a problem-solution ticketing platform to appraise enabling functions (e.g., HR and Finance) Implement a 360-degree development survey of managers Activities Tactic: Foster Collaboration Facilitate collaboration between the value zone and customers Encourage employees to create and execute new initiatives that benefit customers Incorporate the tactical perspective of employees in strategic planning Tactic: Engage Employees Activities Survey employees on their motivators Conduct mentoring and training programs

4 Develop the Strategy 4 key takeaway: Create companywide receptivity to business model change The CEO conducts face-to-face town hall meetings with employees Mirror, Mirror exercises to describe HCL s current situation and emphasize the need for change Mirror, Mirror Exercise: Comprehending the Current State The exercise is called Mirror, Mirror because it scrutinizes the organization s current situation and communicates the need for fundamental change by highlighting the continuing loss of competitive advantage. Starting on 30 June 2005, the CEO spent two weeks conducting Mirror, Mirror exercises at more than 30 HCL offices. All local employees attended the presentations and participated in a Q&A session. Where are we? On the surface the company appears to be doing well, but it is easy to become complacent. Current Performance three-year compound annual growth rate (CAGR) of 32% and $764 million in revenue IT outsourcing market $500 billion market dominated by global companies. The first 200 of the top 1000 global companies have well established relationships with the top four global IT outsourcing providers What s happening in our industry? Fundamental industry shifts have forced us to reconsider how HCL does business. Changing role of the Chief Information Officer (CIO) the CIO is now responsible for improving the availability, cost effectiveness, and efficiency of business processes Commoditization of IT technology competitors are moving away from providing off-the-shelf technologies in favor of creating customized solutions Emergence of system integrators companies need someone who can integrate technologies from an array of vendors and make them work together seamlessly Why do we need to change? HCL is losing its competitive edge. Lagging competitors HCL is growing at a slower rate than its immediate market leader which had a 50% CAGR and is losing market share Untapped market potential top five Indian companies, including HCL, account for approximately $6 billion (1.2%) of the IT outsourcing market Changing customer preferences customers expect transparency and a collaborative relationship with their IT outsourcers HCL evaluates its current performance by evaluating: Revenue and CAGR Market share, market capitalization, and market gaps Account penetration rates Customer satisfaction scores Employee attrition rates CEO Local Office Staff

5 Develop the Strategy 5 key takeaway: Pinpoint competitive advantages to support long-term strategy development Senior management at HCL engages customers through informal channels to understand their value-drivers Identifying Customer Value-Drivers The CEO collaborates with a cross-functional team of senior managers to determine HCL s desired end-state in five years Determining the Desired End-State CEO Past Value Zone (The place where the essential work of the company occurs) Present If we become an integrated IT services provider, we can use our value-drivers our employees and meet customers need for a collaborative partnership. Product Development/ Service Offering Interaction between Employees and Customers HCL s Value Zone Has Shifted To pinpoint customer s value-drivers, HCL collects feedback and observations during customer project reviews. It discovers that: HCL s technologies have become commoditized Rather than praising the product and service offering, customers are commending the project team s ability to collaborate and provide custom projects and service integrations Consequently, HCL s value zone has moved from its product development/service offering to the interaction between frontline employees and customers as technologies are integrated and implemented. Cross-Functional Team The cross-functional team includes senior representatives from Marketing, Strategy, Sales, and Product Development. Desired End-State within Five Years Integrated IT solution provider: HCL will provide integrated services that manage the complete IT lifecycle for customers. As the top 200 global companies are primarily served by the major IT outsourcing providers, HCL will target the next 800 global companies, which are currently underserved. end-state implications To support the shift to the new value zone, HCL must modify its corporate culture and organization structure, as detailed below. 1. HCL s existing culture emphasizes product and service innovation instead of employee knowledge and skill sets 2. The organization structure is hierarchical and relies on a command and control management style that does not encourage lower-level employees to be creative or provide upward feedback

6 Develop the Strategy 6 key takeaway: Translate the long-term strategy into a tactical plan that drives employee empowerment The CEO and senior management team conduct a three-day strategic planning session Blue Print Meeting to generate buy-in for the new strategy and determine how to achieve the desired end-state Inaugural Blue Print Meeting Purpose: Generate buy-in for the long-term strategy and develop the tactics necessary to achieve the strategy Participants: CEO and top 100 managers including executive team and its direct reports Day One: Secure Buy-In Activities: CEO presents HCL s current state and five-year strategic plan Attendees discuss and adjust the corporate strategy Outcome: The top 100 managers reach a consensus to support the strategy. Days Two and Three: Develop the the Tactical Plan Tactical Plan: Employees First, Customers Second To empower its employees, HCL needs to: Year One Establish Trust and Transparency Provide access to information and facilitate two-way communications between employees and senior management Support and Enable Employees Make enabling functions and management accountable to and supportive of the value zone Activities: Discuss and develop the tactical plan (list of the activities necessary to support the bridging strategies and get to the end-state) Outcomes: 1. Employees First, Customers Second (EFCS): The finalized tactical plan to change HCL s business model and culture. 2. EFCS Roadblocks: The primary roadblock is the lack of trust between the divisions and uncertainty over the company s ability to execute the strategy. Consequently, year one implementation must focus on building trust and an open dialogue to facilitate change Year Two + Foster Collaboration Enable multiple teams to work together on complex business problems Engage Employees Passions Align employees workflow and motivators to match their areas of interest and expertise Note: See the Tools & Resources section for information on employee archetypes and change management.

7 Prepare the Company for Change 7 key takeaway: Build employee support for change through transparency and two-way communication Senior management creates transparency by providing open access to the company s financial information Financial Transparency and Trust and develops the U&I portal to facilitate two-way communications between senior management and employees U & I (You and I) Portal myblueprint Portal The myblueprint portal is a companywide intranet portal that provides access to support tools and information. U & I Portal My Problems (added in 2008) is a forum for the CEO and senior management to solicit employee feedback on strategies, business problems, and policy changes. Employee feedback isn t always instituted, but the forum has identified many solutions. The portal provides all employees access to company, business unit, and project financials. BENEFITS Creates trust Demonstrates that senior management trusts employees with sensitive information. Clarifies project financial performance Employees have a precise understanding of HCL s financial position and that of their projects. This context can help employees better understand decisions taken by the senior management team and appreciate the need for a change in the overall business model. Provides motivation Transparency allows for easy benchmarking of performance, which in turn creates a healthy competition and focus on improvement across all teams. Perpetuates a culture of transparency Within six months, HCL added non-financial information and balanced scorecards for each business unit. This information expands teams view on how they and the company are performing, and further underscored HCL s commitment to an open and ongoing dialogue with its employees. The portal is an online forum where employees post questions directly to senior management. All employees can see the questions and answers. BENEFITS Builds engagement Employees feel management is listening to them even when the senior management acknowledges when it doesn t have the answer. Supports a culture of open exchange Conversations aren t limited to appeals to senior management for answers. Employees are encouraged to initiate and participate in the conversations as well. Identifies roadblocks to change Conversations help senior management identify barriers to achieving the desired end state. Two prominent roadblocks emerge: 1. Ineffective processes: Time spent on tasks not relevant to employees productivity and bottlenecks created by a hierarchal management structure 2. Inadequate review policy: No formal method for evaluating managers contributions to the value zone

8 Transform the Business Model 8 key takeaway: Use employee feedback to tackle the core barriers to employee empowerment HCL uses feedback from the U&I portal to pinpoint and address two prominent roadblocks to the long-term strategy: ineffective processes and an inadequate review policy Process Improvement Solution: Employee Issue Resolution Before Frontline employees were dissatisfied with the system used to submit issues for resolution by the enabling functions (HR, IT, Finance, etc.). The ticket system was characterized by: Centralized power: Management within the enabling functions determined when the issue was resolved. Hierarchical bottlenecks: Employees unhappy with a solution had to ask their managers to act as a mediator to resolve the problem Dissatisfaction with enabling functions: The lack of transparency around issue resolution created the perception that the enabling functions did little to support frontline employees Smart Service Desk After HCL remodeled the problem management system based on its customer resolution system. The new system (Smart Service Desk) ensured management and the enabling functions were accountable to customer-facing employees. The Smart Service Desk empowers employees by: Redistributing power: Authorizes frontline employees to decide if their ticket has been resolved satisfactorily Providing Transparency: Sets expectations each ticket must include a deadline for timely resolution Analyzes the tickets to measure the performance of the enabling function and identify chronic issues for resolution by senior management Inadequate Review Policy Solution: 360-Degree Survey of Managers HCL implements a 360-degree development survey that measures each manager s influence on the value zone and encourages them to develop goals to support customer-facing employees. Key features of the survey include: Expanded Feedback The 360-degree survey is open to all employees the manager might affect or influence (approximately 3,500 people per manager in 2009). Transparency Each aggregated review is available to all HCL employees. This transparency highlights which managers contribute to the value zone, which in turn: Affects managers career advancement Creates peer pressure to improve next year s results Underscores the reverse accountability of management to employees Competency Assessment Feed Forward is an optional section in the survey, in which employees can: Identify three characteristics of the manager Indicate if the characteristics are a strength or weakness Suggest specific steps for improvement Each manager receives a consolidated report on this section, and the respondents are anonymous.

9 Transform the Business Model key takeaway: Create account-specific portals that enable employees to collaborate with customers directly HCL develops a Customer Value Portal for each account so employees can proactively provide customers with new ideas and solutions 9 Customer Value Portal: Idea Submission and Evaluation customer value portals These customer-specific portals facilitate collaboration between customers and HCL employees. Key features of the portals include: Virtual project teams: Access is provided to all HCL employees from multiple groups and regions assigned to the account Proactive problem solving: Employees can pinpoint customer pain points and project needs Project improvement: Customers can provide feedback directly to HCL employees Employees submit business improvement ideas to the relevant customer value portal more than 12,590 ideas were submitted between The ideas encompass: Cost optimization Cycle time optimization Process optimization Ideas are only implemented if both the customer organization and HCL agree on a specified financial benefit to the customer organization. To date, more than 2,200 ideas have been implemented by customers Submit Implement Review Evaluate Ideas are assessed by a review panel consisting of: A senior executive from the customer organization Account director from HCL Each idea is evaluated on its feasibility, potential impact, and financial savings. Ideas are rated on a four-star scale Ideas earning three or four stars are actively considered for implementation The average customer ROI is 12:1. 1. Career development opportunity. The employee who submits an idea to the portal is automatically designated the project manager, allowing any employee who demonstrates creativity to be rewarded accordingly. employee motivation for collaboration 2. Companywide recognition. HCL recognizes employee contributions via Make a Difference (MAD) Jams, annual companywide contests on the best contributions made to the Customer Value Portals for the year. Note: See the Tools & Resources section for additional information on MAD Jams.

10 Transform the Business Model 10 key takeaway: Harness the knowledge of peers to refine business strategies HCL replaces its annual business strategy presentations with virtual presentations that expand the scope of feedback and encourage cross-silo, knowledge-sharing myblueprint Portal: Overcoming Silos Business Strategy Development Business Strategy Feedback HCL Business Lines Business Services Services + Custom Application Services Corporate Team Engineering and R&D Services Enterprise Transformation Services Siloed Strategies Before Managers gave in-person presentations of their annual strategies (approximately 1,000 strategies) to senior management. This practice limited input on strategies to executive management and select managers within each business line. Moreover, it did not support HCL s new culture of trust and transparency. IT Infrastructure Management Enterprise Application Services Managers responsible for strategies include: Business line s senior management Enabling functions management Engagement manager (relationship managers for key accounts) Heads of delivery (project managers for key accounts) The 300 managers (approximately 5% of HCL s employees) in charge of business and key accounts develop preliminary drafts of their annual strategies. These strategies include: Key points and goals Rationale for goals and supporting analysis Collaborative Planning myblueprint Portal After The 300 managers record a presentation of their preliminary strategies and place them on the myblueprint Portal for feedback. Managers across all the business lines have two weeks to comment on each presentation. The portal s benefits include: Breaking down silos by tapping into the experience and insights of managers throughout the company Strengthening the strategies by identifying best practices, overlaps, and synergies Enhancing transparency by exposing each business line strategy to a companywide audience

11 Transform the Business Model 11 key takeaway: Invite employees to share their insights on the corporate strategy directly with the CEO The CEO and senior management team use face-to-face meetings with employees to openly discuss, debate, and refine the corporate strategy Directions Meetings: Engaging Employees Before the Meeting The CEO and senior management team conduct a two-day off-site meeting to draft the preliminary corporate strategy. Directions Meetings The CEO and senior management team spend two weeks traveling to HCL s offices, conducting Directions Meetings with all employees to ensure the strategy reflects what is truly important to those on the front line. After the Meeting The CEO and senior management team modify and finalize the new strategy and budget. CEO Senior Management and Local Employees One Hour Two to Three Hours Overview The CEO presents an overview of the proposed corporate strategy. Employee Q&A and Feedback The CEO engages employees in a Q&A/feedback session to: Foster companywide buy-in: Employees see how their actions contribute to the strategy Improve strategy s depth and focus: The CEO receives direct feedback on the appropriateness of the proposed strategy s priorities and alignment with customer needs maximizing employee participation HCL maintains more than 40 offices globally and cannot realistically conduct Directions Meetings at every office. To ensure the CEO engages the majority of HCL s employees (75%) in strategic planning, Directions Meetings are held at offices with at least 500 employees. Typically, 25 meetings are held annually.

12 Transform the Business Model 12 key takeaway: Identify and encourage employees passions to motivate performance HCL uses an Employee Passion Indicative Count (EPIC) survey to understand employee motivators and provide specific career development recommendations and opportunities epic survey The EPIC survey is an annual voluntary survey that asks employees to rate their agreement (using a five-point scale) with 90 bipolar statements. These statements measure employees alignment with three passion themes secular, self, and social and 30 indicators. Each personalized report is available within 24 hours of completing the survey and managers receive an aggregate report of their team s responses once the survey is closed. EPIC Score Top Five Passion Indicators Impact of Themes on EPIC Score EPIC Report The report classifies an employee s overall passion score as: Very high High Moderate Low Indicators suggest the top sources of inspiration for the employee and how prominent a role those indicators play in the employee s current position. Passion Indicator Welfare Collaboration Management support Attitude Connectedness to colleagues Leveraging fully Leveraging moderately Passion Theme Social Social Social Self Social Leveraging less The report includes: Contribution of top five indicators to overall passion score Which passion theme is the dominant source of motivation Strength of each theme in the overall passion score Recommendations and action plan tailored to employee s passions Benefits Employees Current role: Gauge their engagement and fit with their current roles based on their EPIC scores and top five indicators Career advancement: Set personal development goals and identify projects or roles that match motivators. Employees can also track their progress using the Post EPIC Effectiveness Tracker Employees First Councils: A series of virtual communities serve as an outlet for employees interests and social interactions Company Employee engagement: By 2010, 71% of HCL employees have participated in the EPIC survey Retention rates: The majority of HCL s frontline employees stress the importance of personal interests, passion, and a sense of purpose in their careers. Consequently, HCL s retention rate has improved by 26% Employee development: The survey results allow managers to refine mentoring, oversight, and training styles to employees passions Note: See the Tools & Resources section for more information on the passion themes and the Employees First Councils.

13 13 Since implementing EFCS, HCL has increased its annual revenue by 444% Business Results improved the average revenue generated per employee by 40% Annual Revenue ( ) Average Revenue per Employee ( ) Revenue ($billions USD) Average Revenue per Employee ($thousands USD) Year While HCL has increased its annual revenue by more than 500%, its head count has only increased by 254% Year reduced its employee attrition rate by 26% and augmented its market presence Attrition Rate Employee Attrition Rate Customers by Revenue Band Indexed % 18.3% 400 HCL has increased 2006 the number of $ % 300 million customers it serves by 500%. 10% Number of 200 Customers % $1 million $5 19 $20 49 $50 99 $100 million Year and below million million million and above Customers by Revenue customer benefits HCL s customers have derived financial benefits from their Customer Value Portals (CVP). The average ROI for customers on the 2,200 implemented ideas submitted through the CVPs is 12:1 ($12 million in savings for every $1 million invested). Additionally, the 78% improvement in HCL s customer service score since 2008 is further evidence of the EFCS initiative s positive impact on customers.

14 14 Key Lessons Learned Profiled Company Perspective Break up large-scale transformations into incremental changes, rolled out over time. Large ideas, such as a change in service model, provide a singular goal that everyone within the company can get behind. However, these ideas tend to be overwhelming and it can be difficult to understand one s role in the transformation. A series of small catalysts are easier to manage, build momentum from success stories, and provide the flexibility necessary to react to challenges and unforeseen side effects. Don t underestimate the impact that engaged, passionate employees have on your business. A passionate employee is more likely to go beyond what is required, take on difficult tasks, and provide exemplary service to customers. Change management efforts are most successful if leadership commits to selling the change to all employees; in particular, leaders should: --Nominate champions for change who are willing to take on big tasks during the transformation and act as advocates for the process. --Focus persuasive efforts at the majority of employees who are undecided on the merits of change. --Keep pessimists engaged, as their skepticism is a helpful balance to the enthusiasm of the champions and provides an important perspective on new ideas. Don t become discouraged. There is an omnipresent belief that only start-ups and small businesses can leverage a collaborative and transparent culture. At the time of this endeavor HCL did not fit either of these categories; it was a well-established global business with more than 24,000 employees. However, by appreciating the impact of culture and applying small incremental changes, it successfully embedded transparency and collaboration across its business.

15 15 Frequently Asked Questions The following is a summary of the question-and-answer session with Prithvi Shergill, Chief Human Resource Officer, during the Ask the Thought Leader Webcast conducted on 20 February To view the archived version webcast, please click here QWhat would you advise someone building a business case for a similar endeavor? It s important to capture the attention of leadership by emphasizing the desired outcome and explaining how the initiative will lead to the desired results. More importantly, this type of endeavor requires perseverance and multiple conversations. The follow-up conversations should include examples of how others have succeeded with similar initiatives. QHow important is the company s culture in this type of endeavor? How do you ensure the company s culture supports these goals? The whole initiative was about culture changing to a culture of transparency, empowering individuals and teams to make decisions on their own, and enabling frontline employees to take actions for the benefit of customers. The key element and hardest part of the change is the realization that everything is not fine. To get buy-in, HCL first had to communicate what the problem was, what was not working, and that a radical change was required if HCL was going to remain relevant to its customers, employees, and stakeholders. QHow did HCL communicate and get buy-in with its customers on the new strategy and business model? The initiative was a natural extension of things customers had asked for already and what they appreciated in their current relationship with HCL. When Vineet took over the company in 2005, he learned that customers most valued their interaction with HCL employees. In other words, customers already understood what HCL was trying to accomplish and saw the benefits. Customers also valued HCL s transparency and flexibility, which are also key components of the initiative. Finally, if you put employees first, the customer will never feel second. QIs there a dedicated team that continues to manage this strategy? The initiative is no longer in the rollout stage and no longer requires a dedicated team to manage it. Specific components of the initiative, such as the myblue Print portal and the Directions Meetings, are now part and parcel of how HCL works. Oversight and management of these components remain the responsibility of the CEO and his direct reports. QHow long did it take to start seeing the first wave of results? Early indicators showed that the initiative was working, but the financial results became apparent after 18 months. Internally, the positive impact of the change became apparent even earlier. A general positive sentiment within the company indicated that the initiative was making a difference. QHow applicable is this business model to other industries? The model is based on the concept that employees and customers want to be involved, engaged, recognized, and empowered to succeed. HCL feels this is a common trait across countries, industries, and cultures.

16 16 Frequently Asked Questions (Continued) QDo the ideas submitted for specific customers via the value portal get rolled out to the market at large? If so, how does HCL determine which ideas have broader appeal and how do you manage this process? HCL uses two processes to evaluate the broad applicability of ideas submitted through value portal: 1. Good Processes Conference. This is a biannual conference for all of HCL s business lines to crowdsource new ideas. Employees who have submitted beneficial ideas through the value portal are encouraged to present a study on the idea at the conference for further consideration. The management attending the conference then assesses these ideas based on the feasibility of making them part of the broader offering. 2. Make a Difference (MAD) JAM Competition. During this annual competition, all ideas submitted through the value portal. The ideas go through a three-stage voting process: evaluation by a panel of senior business leaders, companywide voting on a film created by each of the finalists, and a second evaluation by a special panel of senior business leaders. The winners receive funding to scale their ideas into a larger offering for the market. The MAD JAM process is outlined in more detail in the guidebook. QHow did HCL initially get employees to provide proactive ideas through the customer value portal? HCL learned to start with an atmosphere of small improvements not just to look for the big transformational ideas. For example, an analyst suggested a simple analysis tool (as opposed to a systems overhaul), which had a big impact with the customers in his geography. HCL also ensures sure the person who raises a new idea interacts with the customer directly during the presentation of the idea (it helps create buy-in and raises the awareness of the employee with customers and within the company). QWhat percent of the Directions Meeting is dedicated to a two-way discussion on the strategy? What kind of feedback do employees provide during these meetings? Two-thirds of the Directions Meeting is dedicated to an open dialogue between senior management and the employees at large. The Directions Meeting is a transparent and open dialogue and includes a variety of feedback, ranging from information on past ideas that haven t worked to new ideas that haven t gained traction within the organization. The beauty of the meeting is twofold: (a) all of the senior leaders are there and (b) its primary purpose is to facilitate new ideas. If a topic resonates with most of the participants, a member of senior management is asked to champion the idea. The champion then includes the idea in the strategy or goes back to the employee who initiated the discussion and explains why it won t work. QHow does HCL keep its employees motivated? HCL uses several recognition programs to keep its employees passionate about their jobs. One of these programs is the MAD JAM contest, mentioned earlier. A second motivation tactic is also related to the value portal. If an idea submitted to the value portal is approved for implementation, the individual or team who proposed the idea is responsible for implementing the idea. This motivates employees and leads to accelerated career progression. A third program is also related to the customer value portal. Ideas submitted through the value portal are rated on a five-star system (5 stars=high value; 1=low value) by a panel consisting of a senior leader from the customer and the account director from HCL. Total stars accumulated from their submitted ideas over the year can be redeemed for items from the HCL store (e.g., a bike, i-phone, laptop).

17 17 Frequently Asked Questions (Continued) QHow does HCL measure the success of the EPIC survey and its ability to improve employee engagement? The EPIC survey success is measured on participation, employee satisfaction, and how employee satisfaction links to customer satisfaction. Over the last few years, HCL s customer satisfaction (C-SAT) scores have improved every year and are now among the highest in its market. Moreover, during a time of recession when customer expectations were high, HCL continued to improve its C-SAT scores. QRequiring managers to place their strategies on a portal for peer review sounds time consuming. How did HCL get managers to see the value of this process? Managers find value in the peer review process because the knowledge of many on a topic, particularly from an experienced peer group, leads to a better outcome. Managers see the value in this cross-pollination of ideas and the creativity it engenders. Additionally, the ability to receive real-time information from employees who interact with the customers can greatly improve the strategy. QIs feedback on the managers strategic plans submitted through the myblue Print portal? Are managers required to incorporate the feedback they receive on their plans? The feedback is submitted through the myblue Print portal. Each manager uses his or her discretion when determining whether to incorporate feedback. Additionally, the manager is free to include any ideas inspired by the plans of other managers. This practice encourages collaboration, the cross-pollination of best practices, and the creation of more value for customers. QAre the 360-degree surveys for management linked to their performance reviews? How does HCL keep managers 360-degree reviews from becoming a popularity contest? The 360-degree surveys are a developmental feedback survey rather than part of the review process. However, if someone on the leadership team receives consistently low scores over a period of time, a coaching program is initiated. HCL avoids ratings becoming a popularity contest by making the 360-degree survey open to all employees in the company. This ensures that no one person has control over who fills out the review. For additional information on business models and strategy implementation, please download the samples of GTM s Best Practice Guidebooks From Vision to Implementation Integrated Strategic Planning and Building a Customer-Centric Business Model. For more information on customer strategies, please download the sample of GTM s Growth Process Toolkit Customer Strategy Accelerating Growth through Ongoing Customer Listening, Immediate Response, and Meaningful Dialogue. questions? If you have any questions regarding this webcast or the Growth Team Membership (GTM), us at GTMResearch@frost.com. To learn more about GTM visit us at or on

18 18 Supporting Tools & Resources Change Management Personality Archetypes During the Mirror Mirror Exercise, the CEO realized that he could categorize employees into three categories: transformers, fence sitters, and lost souls based on their receptivity to change. Transformers Definition: Transformers support change but feel frustrated with their inability to create change on their own. Due to their enthusiasm, transformers serve as champions for change. Role in Change: Transformers are responsible for directly supporting business transformation efforts. Senior management then uses transformers success stories to convert fence sitters. Fence Sitters Definition: Fence sitters prefer to wait and see; they rarely speak up but observe the conversations between transformers and lost souls. Role in Change: For a change effort to be successful, fence sitters must be converted to transformers. Importantly, the majority of employees classify as fence sitters, so the majority of communication efforts must be directed at this group. The more fence sitters who buy in to the change, the more momentum the initiative will gain, and the greater its chances for success. Lost Souls Definition: Lost souls see no value in change and often react vocally and negatively. Lost souls see themselves as realists and are unlikely to be swayed by arguments by their more optimistic transformer colleagues. Role in Change: Lost souls help balance transformers enthusiasm and their objections are valid and should be addressed. The better leadership can address lost souls objections, the more likely it is that they can be converted into fence sitters.

19 19 Supporting Tools & Resources Make a Difference (MAD) Jams HCL used a companywide voting process to create recognition for innovation ideas in the Customer Value Portal and strengthen its culture of innovation. HCL believes that celebrating success will encourage more individuals and teams to contribute MAD Jam 647 Implemented Innovation Solutions The ideas developed and implemented for customers via the Customer Value Portal (for all seven business lines) are submitted to the MAD Jam process. Round Description Panel Review Business cases are judged by a panel of senior business leaders using a score card that measures possible revenue, uniqueness, and collaborative teamwork. HCL highlights collaborative teamwork because it places a premium on collaboration between technologyspecific and geographically dispersed teams. 37 Ideas Popular Vote The team/individual responsible for the idea creates a short film that showcases the idea. The videos are loaded onto a portal where all employees can vote for their favorite. The 15 ideas with the most votes qualify for round three; the CEO also picks a 16th wild card idea for round three. 16 Finalists Combined Review The 16 finalists are evaluated by: A senior management review panel using the same scorecard from round one Employee voting The winner for 2012 was an idea on cloud orchestration from the infrastructure services business line. The winners take the idea to market expanding beyond the initial implementation with a single customer.

20 20 Supporting Tools & Resources EPIC Survey: Themes and Indicators Employee First Councils Self Definition: Look for motivation within; reasons and strength to achieve goals without external influence. Indicators: Creativity, knowledge, attitude, commitment, interest, skill, personality, work-life balance, diversity, planning & organization To embed employees passions into the organizational structure, HCL creates Employee First Councils. The councils are virtual employee communities that provide an outlet for employees passions. Employee First Councils Secular Definition: Require support, recognition, and growth opportunities from the organization to influence overall performance. Indicators: Meaningful work, credibility, autonomy, trust & transparency, rewards & recognition, career development, physical working conditions, job satisfaction, job stress, people practices and policies, learning, salary, organization culture Art Business- Related Health Business-related groups discuss topics of interest in a particular vertical (e.g., cloud computing). Social Responsibility Sports Social Definition: Look to peers (friends, colleagues, and superiors) for encouragement and motivation. Indicators: Collaboration, connection to leadership, connection to colleagues, management support, family support, customer support, welfare

21 21 Supporting Tools & Resources Employees First, Customers Second HCL Technologies CEO Vineet Nayar, describes how HCL rejected conventional management practices and put employees first in his book Employees First, Customers Second: turning conventional management upside down. Employees First, Customer Second Web Site