Down To Business: Should Your People Come Before Your Customers?


One school of thought is that if you treat your people right, they'll be far more motivated and equipped to engage with (and maximize returns from) your customers.

By Rob Preston
InformationWeek
September 27, 2008 12:00 AM (From the September 29, 2008 issue)



The customer comes first. It's considered a business management truism. The way to boost profits and market caps is to focus on the people who buy your products. "Delight" them, as former GE chief Jack Welch would say. Create relationships that foster brand loyalty and return business. Management experts C.K. Prahalad and M.S. Krishnan go a step further, exhorting companies to "co-create value" with their customers, one customer at a time.

There's really no arguing with this approach, but there's another school of thought: The way to get customers to beat down your door is to put your employees first. The rationale: If you treat your people right, they'll be far more motivated and equipped to engage with (and maximize returns from) your customers.


More CIO InsightsWhite PapersAvoiding the 10 Most Common Mistakes in Selecting and Implementing e-Procurement Solutions Managing the RFP Process ReportsNext In Line How CIOs Are Dealing With A Tough Economy Vineet Nayar, CEO of HCL Technologies, coined Employee First several years ago as he set out to transform HCL from an Indian hardware supplier to a global provider of high-end technology services. Taken at its face value, HCL's Employee First, Customer Second (EFCS) philosophy is still something of a heresy in business management circles, with its implied emphasis on internal matters.

But you need to understand the ultimate goal of employee-centricity, at least the variety that Vineet and others are preaching. If it were just a return to the dot-com era's pinball-machines-in-the-office-lounge, bring-your-pet-to-work kind of environment, it wouldn't be worth a second thought. At its core, however, there's far more to putting employees first than showering employees with perks.

"From the start, I was clear: Employee First was not about free lunch, free buses, and subsidies," Vineet is quoted as saying in an August 2007 Harvard Business Review article. "It was about setting clear priorities, investing in employees' development, and unleashing their potential to produce bottom-line results."

It also was about changing the internal culture. One feature of an intranet that sits at the center of EFCS is the Smart Services Desk, a sort of trouble ticket system whereby employees log in questions and critiques, posted for all 55,000 worldwide employees to view. Company policy says those employees who open a ticket must get a response within 24 hours, and only the employee initiating the ticket can close it. Vineet himself answers a hundred questions a week under a related program.

All HCL managers receive 360-degree reviews that include 1 to 5 ratings on their effectiveness, communications skills, and other areas, from direct reports and others. Vineet posts his review on the intranet, though one wonders how critical the underlings dare to be. Open communications at HCL also includes lots of videoconferencing, online collaboration, and town hall-style face-to-face talks. The goal, at least, is to create an environment where talking the truth is prized more than making excuses and covering your butt.

An employee-first mentality remains especially important in HCL's industry--India-based IT services--where annual employee attrition rates can exceed 15% but where the players are only as strong as their consultants, project managers, and other experienced front-line employees. But the idea has just as much relevance for any IT organization. CIOs who complain they can't find and retain good people are some of the same ones who treat their employees as expendable. How is an IT organization ever going to delight its external and internal customers if there's little incentive to innovate, take chances, think differently, or otherwise do anything that might get you into trouble?

If employee first is just another touchy-feely HR initiative, then it's time to move on. And if it's a ruse for weeding out dissatisfied or ill-prepared employees, it's far worse. Employees first? Maybe not. But if companies and their IT organizations are truly serious about creating an environment for problem-solving, teamwork, and creativity, their employees must fall somewhere high on the priority list.

Rob Preston,
VP and Editor in Chief
rpreston@techweb.com

To find out more about Rob Preston, please visit his page.







Discuss This
6 message(s). Last at: Sep 30, 2008 10:45:43 AM
Carol
commented on Sep 30, 2008 10:45:43 AM
My observation as an employee, a manager and a customer is that organizations treat their customers and their employees in comparable ways. If the corporate culture is based on squeezing the most from their employees, they attempt to do the same with their customers. If the organization treats their customers with respect and focuses on providing products or services that meet customer needs, the company is much more likely to do the same for their employees. It's not a dicotomy; it is a sane, consistent approach that pays off. It is hard to accomplish and requires a deeper understanding of the business than most leaders are willing or able to achieve.
Guest
commented on Sep 30, 2008 10:36:57 AM
There is a reason one method is "tried and true" and the other not. One is practical, the other assumes all people (employees) are altruistic. In the imaginary world putting employees 1st will work. In the real world it doesn't have a shot.
TayzGpa
commented on Sep 30, 2008 9:49:19 AM
Wheather or not the employee or the customer is first or second really depends on how fast or slow you want to grow.
If you make the job a joy for your people, they in turn will make your company a joy to work with as a customer.
For years I have treated my employees as though they were the most important asset that my company has. These people have families, personal goals, etc. I try and never forget that my company is not the most important thing in thier lives. Employee retention for us is high, turn over is low and the quality of work life for the people who work with me is good. Business is also good. Having said that, I have never been obsessed with being the "best in the world" at what we do or be able to do everything that the customer wants. What I care about is that we do what we promise, and never make promises my people cant keep. If I tell a customer that we can do this or that, then we do it. If the customer wants something that is outside what we offer, then I talk to my people. If my people think we can do it then we give it our best shot. If we dont think we can do it or dont have the knowledge to do then I tell the customer that also. So far that has worked pretty well for us. Folks generally know that if we say we can do something then they can count on it being done.
pink panther
commented on Sep 30, 2008 9:46:25 AM
As someone who has read P and K's book on R=G and N=1, I think it has some good ideas, but ... seems totally unrealistic in the real world because it would require a company to sacrifice the short-term for a long-term restructuring of how they do business. It would also require buy-in from all levels. Their examples of new companies are also very pedestrian, and I don't see these companies doing all that much of N=1 and R=G. I also think there's some contradiction between R=G (outsource everything you can to people who don't care about your company) and N=1 (care about customers). Basically, N=1 and T=G says the only successful companies will be intermediaries who don't do anything but match buyers and sellers. Most examples (amazon, ebay, etc) corroborate that. The others are implausible (customers allowing tire manufacturers to monitor their driving?). So I don't know how big this will be in the long term.
Brian
commented on Sep 29, 2008 3:10:34 PM
A very interesting idea indeed.

I laud the concept, but I also see it breaking down under pressure. It probably won't work under the following conditions:

1). When the organization gets above a certain size. Don't ask the size because I think it varies. However large organizations typically form subcultures and internal disconnects. This is not conducive to wide open communications;

2). When the organization is under major threat from outside. This could be market competitors, shrinking market segments, regulation/legal forces, and so on;

3). Spoiler personnel. Anyone who views themselves as an oppositional (or arrogant, or at least a WIIFM type) force to the rest of the organization. These are proportionately a greater threat to open communications the higher they rank in the organization. And, don't be naive, WIIFM types are commonplace in many senior positions, worldwide.
Mike
commented on Sep 29, 2008 4:07:22 AM
Creating culture of problem solving has always been a challenge in organzations . The reason is that the processes which force employees to think in one direction . Innovation will just not happen by saying employee first , However an organization need to exhibit a culture wherein it is willing to take a risk on employees and employees are empowered to take challenges . There are already discussions on this topic happening on a site which calls itself unstructure .

Check it out at http://www.unstructure.org