Group Case Analysis

Group Case Analysis

Organizational Change

Ashford University

Chapter 5 Case

1

Group Case Analysis

Introduction

With increasing competition in India’s hyper dynamic Information

Technology (IT) sector, HCL technology struggled to stay in competition as the IT

industry shifted from hardware to software and offering infrastructure services. To

survive in this dynamic environment, HCL looked within and promoted Vineet

Nayar as President. His goal was to make sure HCL was the global leader in

transformational outsourcing. This was to be achieved by rejuvenating employees;

introducing the “Employee first, Customer second” initiative, using 360

Performance Evaluations and additional human resource initiatives. With this

strategy, Nayar made a significant change in HCL within two years.

Case Synopsis

Chapter 5 is about people alignment and this case study is based on a

transformational change within the company in order to position HCL as a global

leader in transformational outsourcing services. Vineet Nayar was promoted to

president and he immediately set new goals for the company and the strategic

renewal. He started by rejuvenating employees after three months he assumed the

president’s position with the “employee first, customer second” initiative in order to

invert the pyramid. He introduced the 360 Performance Evaluations so he can have

feedback from the employees with everything they want. The additional people

alignment initiatives consisted of renaming the HCL’s training program and the HCL

abandoned performance-based bonuses and adopted, instead what was called trust

pay. By 2007, Nayar realized that the company had made some impressive

improvements and HCL has achieved the highest level of organic growth.

2

Group Case Analysis

Analysis

Vineet Nayar recommended an alternative that included some

unconventional—even radical—management practices. At HCLT, he adopted an

“Employees First” structure in which management is accountable to employees, as

well as the other way around. Nayar believed this strategy will create “the interface

between employee and customer where genuine value is created.” (Nayar).

Employees First, Customers Second explores the steps of HCLT’s transformational

journey as the company recognized the need for change, created a culture of trust

through transparency, turned the organizational pyramid on its head, and shifted

the responsibility of change from the office of the CEO to the employees using small

catalysts, or “blue ocean droplets,” that produced big results. And since an “effective

change will also demand new behaviors from executives at the top of the

organization” (Spector), Vineet adopted the 360 feedback performance for the top

management first as a process of developing human resources for his new strategy.

The reports posted in the company’s intranet gave employees the opportunity to see

how their leaders were doing. The main goal of this unconventional and radical

strategy was a transformational change within the company in order to position

HCL as a global leader in transformational outsourcing services.

This is how the new strategy reinforces the approach to people alignment.

The key to success of this new strategy is the perfect connection between employees

and strategy. Employees will be in a better position if they meet the new goals for

the company. They needed to be willing and able to drive an innovative,

sophisticated experience for costumers. This strategy did not mean free lunch, free

3

Group Case Analysis

buses, and subsidies. It was about setting clear priorities, investing in employee

development and unleashing their potential to produce bottom-line results. They

will be more involved with their jobs thanks to the new training program. With this

program, employees will be better prepared and they will understand the work of

their operation at both the tactical and strategic level. Another backing was the

direct contact between the CEO and employees. They could interact directly with the

CEO, which is an advantage for them and for the CEO since they meet necessities and

ideas of employees. Maybe the most important backing was about salaries. One

point of the strategy was called “trust pay”. This meant payments would be fixed at

the beginning of the year instead of having variable pay account for up to 30 percent

of total compensation. For the company, it would be a higher fixed cost but they

would make sure employees would deliver products. And employees would have a

fixed salary which is always an advantage for them.

In resume, people alignment, getting the right people on the bus and the

wrong people off the bus, is the key to effective change implementation with this

strategy. Both the employees and the company benefit from this change since “right”

employees will reduce time, cost, and other revenues in later developmental

inventions; and the company will have the most qualified people for the new

strategy.

Another point is the potential problems of this new strategy. We don’t see

any potential problems within the company since the new procedures were created

in order to improve the internal system inside of the company and with the goal of

converting employees in the core of the company. With this new strategy,

4

Group Case Analysis

employees would be the most important part of the company so they should be

acquainted with this change. One of the problems they could have with the people

alignment initiatives would be the rejuvenation of the workforce. This initiative

would cause older and out of style workers to lose their jobs because they are

unable to adapt to new changes since they have been set in stone for many years

doing the same things at the same job, it would make it harder for them to adapt. His

initiative could also face a problem of trust since the reciprocal accountability would

involve sharing information between management and employees.

Where we can find some potential problems is outside of the company. Nayar

is certainly going to come across problems implementing his human resource

initiative within the country. This is due to the hierarchical culture that places

managers high above subordinates in India and makes them almost “dictators”. The

social and economic impact in India could be the most important problem. India is a

traditional and old-fashioned country where companies have a traditional

hierarchical structure, where lead executives take a dictatorial approach to

management. In fact, When Nayar took over HCL, executives at the top were doing

their best to preserve their own power – controlling knowledge and other resources

and demanding accountability from all those working below them.” (Nayar). His

initiative approach then is to “invert the pyramid”. According to his article,

“inverting the pyramid” did not literally mean upend the hierarchy. “Our real goal

was to make management, enabling functions and employees in the value zone

accountable to one another.” Nayar believed, “employees spent far too much of their

time explaining their actions and reporting their results, time which could have and

5

Group Case Analysis

should have been spent delivering on the promise of our services.” The hierarchical

structure was getting in the way of employees who worked in the value zone. One

of the goals of the new strategy was to change the idea of leaders as dictators, but

some competitors could think about that change as a threat since some workers

could demand the same conditions of freedom to interact with CEOs directly and

greater participation within companies. Also, due to new policy of fixed salaries

many workers of the competency would want to leave their current jobs in order to

apply for a new job at HCL. This could cause an economic turmoil since competitors

could lose their workers unless they decide to increase salaries for their workers.

The last point of this paper is the possible use of this strategy around the

world. Nayar’s ideas has established a guideline for HCL since 2005, leading to the

formation of various divisions in HCL such as the “Women first” council. HCL has

believed that “delighted employees translate to delighted customers”. (Joshi).

Nayar’s ideas made improvements in HCL Technologies within two years. The

company’s attrition rate had dropped from 20.4% in 2005 to 17.2% in 2007. But in

2010, the company had seen many changes and improvements. Nayar’s ideas could

be transferable to other industries and countries since it has been a success story

for HCL Technology even though there were some lapses. What we see is Nayar

used the “make” approach to develop his employees whereas in other industries or

countries, they might have to use the “buy” approach or a combination of both.

Nayar’s ideas are perfectly able to be adapted to other industries and other

countries. The idea of employees as the core of the business is a great tool to

motivate, improve skills and abilities, increase profit, and reduce costs. Vineet was

6

Group Case Analysis

the first person who realized employees are the basis of the business. While they are

able to perform their duties and, at the same time, they are improving their

knowledge the company will be able to improve its performance what means an

increase in profits.

Therefore, these new ideas could be used around the world and for any kind

of company. Most of time, companies with an excellent workforce could do well in

the market and the economy. One of the most important factors within a company is

the human capital. Hence it is important to empower employees so that they deliver

more value to customers. These ideas can be taken by any company which is

interested in improving itself and therefore, its participation in the market.

Countries where freedom is accepted by everyone would be the perfect place to take

these new methods of management. Besides, countries with a high level of education

would be more prone to adapt easier and faster to these strategies since the level of

education of workers would be higher and the time to adapt to changes would be

shorter than other places.

Conclusion

‘Employees First, Customers Second’ should be seen as a cycle of activity, a

journey that begins over and over again. Each time it is played out it comes up with

new catalysts that continue to push the boundaries so that the company can change

further. This is essential because the world of business is changing in fundamental

ways, including rapidly evolving customer needs, greater regulation, a leveling of

the competitive playing field and the ever‐changing nature of risk and ethics. All

business leaders are navigating through the multiplicity of forces as never before.

7

Group Case Analysis

What is important is to be alert to the nature of the value zone and be aware of the

distribution of power there, as well as be conscious of how accountabilities add

value or create obstructions. Above all, be motivated to turn conventional

management wisdom upside down and have management serve the value zone.

We have concluded that when people feel passion and responsibility for what

they do, not only can they transform a company, they can also transform

themselves. Once we transfer the ownership of our collective problems from the

supposedly all-powerful CEO to the employees, people want to transform and deal

with their professional and personal lives in a very different way than they ever did

before. Suddenly, they see the company as their own enterprise. They start thinking

like entrepreneurs. Their energy quotient leaps up. And when that happens with a

critical mass of employees (usually, 5 or 10 percent is all you need) throughout the

company, it creates a kind of fusion—a coming together of the human particles in

the corporate molecule that releases a massive amount of energy.

Chapter 8 Case

Introduction

With the increased competition and notion of environmental sustainability

not fitting well with the giant oil companies, Jose Sergio de Azevedo, CEO of Brazil

based oil giant Petrobras since 2005, made up his mind to make major changes in

the oil industry. Petrobras wanted to bring a new face and better state both for the

company and its workers safety. These changes were a result of the major

explosions that caused lives to be taken in the past and all efforts were made to stop

and prevent any other oil spills and damage to the ocean. Not only are these

8

Group Case Analysis

precautions being taken for the safety of the employees and everyone involved, but

also these steps will be taken to help minimize the damage and the negative effects

that Petrobras has had on the environment. With this being said and the specific

actions being taken, it is only appropriate for this case to be named what it is and

that is “Going Green.”

Case Synopsis

Petrobras, an oil based giant, was having a compiled list of disasters,

including an oil spill and an explosion, that dumped over 300,000 gallons of oil into

the water and also ended up killing 11 employees. Gabrielli, the CEO of Petrobras,

recognized this as being a disaster for the company as well as the environment and

his plan was to fix these problems and save the company along with the

environment.

The way Gabrielli planned to fix this problem was by coming up with steps to

increase health and safety security, and by using supplies that were best for the

environment. These steps ultimately helped Petrobras move to the top of the

world’s leading oil companies and they are still doing well to this day.

Analysis

What triggered Gabrielli’s commitment to going green at Petrobras was the

company having compiled a troubling history of disasters. The first disaster was in

January 2000 when a poorly maintained pipelined spilled oil into Guanabara Bay for

two hours before the leak was detected. After that, one of the company drilling

platforms blew up killing 11 employees and dumping 300,000 gallons of oil into the

9

Group Case Analysis

water. Gabrielli thought this was a huge problem that the company had to deal with.

He felt the need to address this environmental threat.

Gabrielli was right, as this was a huge threat to the environment. Oil spills are

extremely dangerous to organisms. When an oil spill occurs, oil rises to or sits on the

surface of the sea while gases are released into the air. Organisms that roam around

the sea surface, like seabirds for example, can suffer extreme mortality (Peterson

2012).

We believe that Petrobras’ sustainability effort has been a very successful

one and it has helped them move in the right direction. So far, their investments in

these different parts of the company have helped them go roughly eight years

without a major environmental accident. It has helped them build a good name and

reputation among all other oil companies and even the public as a whole. The way

the company has sustained itself has helped it to increase its ranking by the private

consulting firm, management and excellence, ranked Petrobras as number one

among the world’s oil and gas companies for promoting sustainability.

What Petrobras’ has done well in the transformation or in the effort to

sustainability are seven key steps that’s not just helped them to success but

prevented them for falling again. They are Gabrielli Acts. In pursuing the goal,

Gabrielli increased the budget the company had for company’s health, safety and

environment programs. This helped them increase health and safety security for all

workers so explosions stop happening which were resulting in the fatalities of some

employees. They also used an enormous and big market clout of Petrobras to

10

Group Case Analysis

demand that everything supplied by its suppliers were the best of its kind and that

they were at the best standard for environmental management.

Other actions they took that were beneficial were Gabrielli touring the sites

personally to make sure that all employees were complying with the company

standard and making sure that he was taking responsibility for all workers and their

safety. He also succeeded in moving the new refineries away from gasoline and

toward biofuels. Gabrielli endorsed and is the top board of the United Nations Global

Compact and last but not least, Gabrielli was able to personally put information

about the company and its efforts directly to the public through blogging and other

social networks like twitter.

We agree with Gabrielli’s assessment of the success of green policies at

Petrobras. In the 2010, Newsweek audit did a ranking of the top “green” companies

in the world; Petrobras scored a 48, which was 84th overall out of the top 100

companies. That may not sound too good, but on the flip side they were ranked 6th

overall on the list of oil and gas companies, when five of the bottom ten on the entire

list were oil and gas companies.

This was really a big step for Petrobras. Going green can gain a significant

competitive advantage over competing companies. “Ultimately, we will need to

bring global emissions down low enough to match nature's ability to absorb them,

which may be as low as 10 to 20 percent of today's global emissions. But if a

significant number of people change their ways and demand greener products, that

will send a big signal to the market, encouraging the supply of green energy, low-

carbon products, organic food and so on” (Pearce 2007). Petrobras is making an

11

Group Case Analysis

effort at sustaining the environment and people who buy into sustainability are

going to notice these efforts.

We think that Petrobras has improved over the years while taking into

consideration that they are an oil and gas company. Oil and gas companies will

never be ranked high on this list because they are natural pollutants. Oil companies

shouldn’t necessarily take the blame for promoting the use of oil because people are

going to drive regardless, so we would rather have drivers using gas that is less

polluting. Oil/gas is one of the main causes of pollution, however, compared to all

the oil and gas companies Petrobras is doing really well.

Conclusion

All in all, Petrobras is an organization that was known for doing a lot of harm

to our environment. They were never known as a “Green” organization and never

really made a substantial effort to go green until recently. As you can see throughout

the reading, through the analysis of Petrobras they have made leaps and bounds of

improvements to better themselves and the company as a whole to help limit the

negative impact they have on the environment. This “Going Green” effort has really

helped not only them as an organization and their reputation but also has helped all

of us without us really knowing, by putting less pollutants into the atmosphere.

They have made a huge climb in the rankings of “Green” companies in the Oil and

Gas Industries all the way from near the bottom to the top. And the credit has to

mainly go to Gabrielli for setting stricter guidelines and increasing the

environmental sustainability budget but as well as all employees for staying with

the plan to turn the company around.

12

Group Case Analysis

References

Joshi, A. (2009). Interview: HCL technologies. Retrieved from

http://www.hcltech.com/pdf/news-reports/The-TransformationJourney.pdf

Nayar, V. (2010). "Employees First, Customers Second.”. WriteForHR, Retrieved

from http://www.writeforhr.com/employees-first-customers-second/

PETERSON, C. H., ANDERSON, S. S., CHERR, G. N., AMBROSE, R. F., ANGHERA, S.,

BAY, S., & ... TAYLOR, C. M. (2012). A Tale of Two Spills: Novel Science and

Policy Implications of an Emerging New Oil Spill Model. Bioscience, 62(5),

461-460.

Pearce, F. (2007). Why bother going green?. New Scientist, 196(2630), 34-41.

Spector, B. (2010). Implementing Organizational Change. Upper Saddle River, NJ:

Prentice Hall.

13