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Change at HCL

After reading the case study answer the following questions

1.What were the external and internal forces for change at HCL?
2.To what extent did Vineet Nayar follow the change models proposed by Lewin and Kotter? Explain.
3.Which of the target elements of change within the systems model of change were affected by the changes at HCL?
4.What did Vineet Nayar do to overcome resistance to change? Could he have done anything differently? Explain.
5.What did this case teach you about organizational change? Discuss.

Case Study
Vineet Nayar, CEO of HCL Technologies, a Delhi-based IT services provider, was interviewed by The Harvard Business Review regarding the company's transformation. His interview is summarized in this case.

Although the company's revenues were growing by about 30% a year, it was losing market shares and mind-share. Competitors were growing at the rate of 40% of 50% a year, and the IT services industry was changing rapidly. Customers didn't want to work with an undifferentiated service provider that offered discrete services; they wanted long-term partners that would provide end-to-end services. Could HCL become such a company?

History will tell you it did. By 2009 HCL had changed its business model, nearly tripled its annual revenues, doublet its market capitalization, been ranked India's best employer by Hewitt - and pioneered a unique management culture that I call Employees First, Customers Second (EFCS).

How did I do this? I didn't. One hundred senior managers and 55,000 employees, the people of our company, accomplished the transformation.

I realized that no one would jump into the future until the organization acknowledged that we needed to do so. So I spent the first few weeks of my tenure visiting HCL' offices around the world, meeting senior managers in small groups and at larger gatherings. I discussed the company's current situation - Point A, I call it.

I also met with customers during my travels, and it was from them that a potential Point B - where we should land - began to take shape. What struck me was the customers didn't talk much about our products, services, or technologies; they spoke mostly about HCL's employees. The value the company offered lay in the interface between customers and frontline employees - that was our value zone.

However, we weren't organized as if that was the case. HCL was a traditional pyramid, in which frontline people were accountable to a hierarchy of managers. The hierarchy usually made it more difficult for employees to add value.

I had told everyone that we would set up a strategy collaboratively - and I meant it. In July 2005 I convened a meeting of our top 100 managers and proposed that HCL transform itself from an IT services vendor into an end-to-end global IT services partner that could compete against the likes of IBM, Accenture, and EDS.

The "Yes, buts ..." took three forms. Some managers feared that by taking on the major global players, we would forsake the position we had built over the past decade and would lose everything. Others raised issues I hadn't thought of, asking, for example, "The IT analyst favor the established players - how can we get them to recommend HCL?" A third group supported the proposed strategy and was exasperated with the status quo. These managers wanted us to act boldly, and often ignore other's objections.

I said very little during these discussions ... Three days of debate later, we agreed to adopt the strategy I had proposed. Everybody was on board - at least in theory.

During this period, I also held informal meetings with frontline employees, engaging them in discussions about the kind of company they wanted to work for and how they saw their jobs. These meetings became more formal in 2006; with a series of companywide meeting we called Directions (we still hold them). They involve thousands of employees and take place in large venues around the world.

Transformation requires action, not just words, but I don't believe in large-scale technology initiatives or massive reorganizations. We triggered change at HCL through small-scale catalysts.

Sharing financial data. At the time, employees had access to the financial information that pertained to their projects but didn't know how either their business unit or the organization was doing. Nor could they compare the performance of their team to that of others. We decided to share financial data extensively, within and across groups.

The smart service desk. I set up an online system that allows anyone in the organization to lodge a complaint or make a suggestion by opening a ticket. We have a defined process for handling tickets, and the employee who opened the ticket determines whether its resolution is satisfactory. Not only does the system help resolve issues, but it effectively puts managers in the service of frontline employees.

The comprehensive 360-degree. Although HCL had a 360-degree performance review system in place, employees rare reviewed managers because they didn't know what they stood to gain by doing so. I decided to allow anyone who provided feedback to a manager to see the results. I knew I couldn't force managers to make their reviews public, I could only encourage them to do so. The best way to do that was to lead by example. In 2006 I posted the results of my 360 appraisal on the intranet for all the company to see. Most managers followed suit.

The online planning process. Rather than reviewing the business plans of my 100 managers, as had been the case earlier, I asked managers to make video recordings summarizing their plans and post them on an online portal, where other managers could review them, share feedback and discuss changes. This made a difference in how managers formulated and communicated ides. Consequently, plans became more specific and executable.

I wanted passion. We developed a new survey, the Employee Passion Indicative Count, to identify the drivers of the passion in the workplace. This led to the creation of Employees First Councils, groups that focus on specific passions, from art and music to philanthropy and social responsibility. The councils help employees break down barriers between their personal and professional lives and bring more meaning to their work. These groups had one unexpected benefit: some sprang up around business issues, such as cloud computing, which channeled personal passion into company innovations.

The most difficult decision to make about transformation is when to start. We began when HCL was till growing at a healthy clip. We may appear to have been early, but I'm convinced that if we hadn't made our move, HCL wouldn't be so successful today.

Solution Preview

I have used the questions to outline the response. If you have any questions or need any clarifications, let me know. Kotter's 8-step plan in Mindtools is very good as an outlined explanation. I have attached the reference.

HCL case study
1.What were the external and internal forces for change at HCL?
Growth was only in monetary figures and not in market share. When there is limited growth in market share, then companies cannot depend on profits except by raising prices. Also, consumers wanted more end to end access and help. The demand was one that others in the industry were providing. Competitive advantage already showed the frontline interaction as a good place to start, but the company had to move to a more broad based technical base position.
The frontline employees, internally needed more flexibility and help from managers. The frontline employees also needed the authority to do their jobs to the best of their abilities, not depend on management for all decisions.

2.To what ...

Solution Summary

A review of how change worked at HCL as presented in the assignment request.