The Employee Is Always Right

At India's HCL Technologies, workers get to grade the boss, and everybody can see the ratings

by Jena McGregor

Vineet Nayar, CEO of Indian outsourcer HCL Technologies, needs to work on his time-management skills. Last year, his team rated him 3.6 out of 5 for how well he keeps projects running on schedule. That was among Nayar's lowest scores from the 81 managers who rated him, and everybody at HCL knows it.

Nayar's grades, along with ratings for the top 20 managers at HCL, are published on the company's intranet for anyone who wants to see them. Employees also have the capability to see their own supervisors' scores. While many companies have "360-degree reviews"—which compile feedback from peers, managers, and underlings—HCL may be the only one in the world that broadcasts the results throughout the organization. That has created no shortage of workplace angst. "There was this whole picture of me that [emerged] as a heavy taskmaster," says R. Srikrishna, who runs HCL's U.S. infrastructure services division, of his early results. "It was very unsettling the first time."

The public grading of managers is just one of several unconventional steps HCL has taken over the past two years to build a more democratic workplace. While plenty of CEOs utter bromides about "servant leadership" and say their most important job is supporting employees, Nayar is more willing than most to back up his words with actions. "In our day and age, it's the employee who sucks up to the boss," says Nayar. "We are trying, as much as possible, to get the manager to suck up to the employee."

SETTING AN EXAMPLE
Nayar's ideas are starting to generate a lot of buzz. Executives from two of the world's largest tech companies, neither of which wanted to be identified, have recently made the pilgrimage to Noida, a busy, dusty town just outside New Delhi, to study HCL. Customers ranging from Swedish insurer Skandia to British publisher Pearson (PSO) have gotten an inside peek, too. And a new case study on HCL by two Harvard Business School professors is being taught in one of the school's most popular executive education courses and is being considered for a mandatory MBA class. "We're seeing more innovative methods coming from [emerging markets]...on how to structure and lead organizations," says Linda A. Hill, who wrote the case with fellow professor Tarun Khanna.

In fast-growing India, the challenge of attracting and retaining workers has prompted a pile-on of perks, from fattened paychecks to corporate campuses decked out with multiplexes and bowling alleys. Because HCL Technologies, the fifth-largest of India's info-tech outsourcers, arrived late to the software services game, it has had to work even harder to build cachet among recruits. And its growth plans are staggering: In the next year, HCL expects to add about 10,000 more employees to its workforce of 45,600.

So far, Nayar's methods appear to be having an impact. HCL's once-troubling attrition rate, which at 20.4% was among the highest in the industry when Nayar took over as president in 2005, has dropped three quarters in a row, to 17.2% (though it is still higher than that of many rivals). This progress is no small achievement in a country where young engineers, as marketing manager Krishnan Chatterjee puts it, can be like "coin-operated machines," disregarding corporate culture and jumping ship wherever there's more pay. In October, HCL posted a 42% rise in quarterly net income. It attributed part of that growth to its success in winning complex, multi-year projects—the very ones that require the most sought-after engineers. Annual revenues, at $1.5 billion, are up 42% from the year before.

PROVOCATIVE UTTERANCES
Tall and forthright, Nayar, 45, didn't arrive at the top of HCL Technologies easily. Plunged into poverty in his teens after his father's death, Nayar and his two brothers took turns working, so the brothers not working could study. After seven years as an engineer at HCL, he was tapped to run an internal startup, where he tested out some of his ideas. Nayar can be something of a management iconoclast, unafraid of making provocative statements.