Reference no: EM133433632

Case Study: HCL Technologies has revenues of $4.3 billion and employs over 80,000 in 31 countries. It brings IT and engineering services expertise under one roof to solve complex business problems for its clients. The company provides holistic, multi-service delivery in such industries as financial services, manufacturing, consumer services, public services, and healthcare. It was founded as a computer hardware company in a garage in 1976 and went on to become India's first transnational company. HCL America was established in 1989 although this move to penetrate the US market was initially unsuccessful. Today HCL America accounts for just over half of HCL's worldwide consulting and IT services revenues. The company prospered in the 1990s but lost competitive advantage during the period 2000 to 2005. During these five years, employee turnover was high, falling to fifth place in the rankings behind Tata Consultancy Services (TCS), Infosys Technologies, Wipro Technologies, and Satyam Computer Services. Consequently, it was recognized that the company needed to change the way it worked. The change would involve developing a new strategy and business model as well as cultivating a strong internal culture. The strategic choices facing HCL at this time were twofold: to try and compete with the top three on a global level or to concentrate on more specialized services. The company decided to opt for the latter and to move away from a low-cost, high-volume business and instead build relationships with customers to meet their individual needs. This strategy has been underpinned by the 'Employee First, Customer Second' policy which initially was intended to shock employees so that senior management could get their attention. It was introduced to make the company more transparent and accountable and, in turn, engage employees more effectively. It was felt that engaged employees would enhance customer service and customer relations. The policy, or philosophy as it is referred to on the company website, is aimed at placing every employee at the forefront of transformation, empowering them with knowledge, resources and infrastructure in a workplace that nurtures innovation. Practices under the policy include employees being encouraged to submit electronic 'tickets' on what needs to be changed within the company. These are posted on a 'U and I' website. Employees have commented on a wide range of issues, from bonuses to management competence. The 'U and I' website asks employees for honest feedback and nothing is censored by the company - even the most virulent comments. While some managers bemoaned the fact that the company's soiled laundry was being aired online, employees lauded the forum as a symbol of HCLT's commitment to transparency and as a mechanism for holding top management accountable. Beyond that, the U&I portal had another value: it was an early warning system for critical issues facing the company (Hamel, 2012, p. 237). Functions, such as HR and Finance, must respond to 'tickets' posted on the website within 24 hours or else it is escalated up the management line structure. This has made functions much more accountable. Employees were also offered the chance to participate in a weekly online opinion poll on key management decisions. This not only included decisions already taken by management but those yet to be made. While the votes were unlikely to halt or reverse decisions, employees were being provided with an opportunity to air their views. A 360-degree feedback programme for the company's top 1,500 managers was introduced with employees being given the option of evaluating not only their own line manager but also any manager who has an impact on their role. This 360-degree feedback, including ratings, is posted on the company's intranet and can be viewed by anyone who has submitted a review. The aim is to challenge managers to be more responsive to employee needs and to exercise their authority judiciously. To move away from a hierarchical structure Employee First Councils have been created. These are supported by a web platform. The CEO has also made it a personal goal to shake the hand of every employee every year. One of the interesting features of the 'Employee First, Customer Second' is to move away from bonuses (a common practice in this sector) and instead to pay employees their full salary. Referred to as 'trust pay' the company felt this would encourage reciprocity from employees. Extensive investments in employee training and development have been made to support the policy. Arguably, the 'Employee First, Customer Second' approach to doing business reflects a strong belief in the power of both systems and an underlying purpose beyond making money. However, the CEO has acknowledged that formal processes have made a limited contribution to the company's success. Instead what mattered is what the company refers to as the value zone: the interface between employees and customers, where problems are solved. Has this strategy been successful? In 2009 the company was awarded the Financial Times Arcelor-Mittal Boldness in Business Award and the Hewitt Best Employers in Asia Award. By 2012 margins were still below those of TCS and Infosys Technologies although revenues continued to climb, especially in the US and European markets.

Your approach to all three questions should be critically evaluated considering trends and challenges HCL Technologies are facing in today's global environment. If you think that some information has not been provided so that you can successfully answer questions, please make assumptions, and clearly identify them when providing explanations.

Questions: In your introduction provide an overview of the organization and the purpose of your paper. You are also required to Provide a summary and concluding remarks about your recommendations for HCL Technologies. Justify your findings.

• To develop a new strategy, cultivate a business model and generate a strong internal culture should HCL Technologies continue to promote its "Employee First, Customer Second" policy. Explain your position including any changes you are suggesting and timelines.
• Out of several models explained in your textbook, use the Baron and Kreps (1999) model, and apply to the case.
• The world is changing. HCL Technologies will need to address the global HR trends and consider how these trends will impact their HR strategies. Therefore, provide explanations of what the company should do related to the following.
• Explain how and why they can change the existing performance method of 360-degree feedback and introduce a new and different method of performance evaluation.
• Explain how and why to eliminate bonuses and pay employees their full salary.
• Provide any other policy or additional recommendations that you would like to see implemented to enhance HR strategies at HCL Technologies