PERSONNEL FINANCE ASSIGNMENT

Employee Empowerment
for Retention & Its
Impact on HR ROI

2015
Submitted By:
Roll No

Name

111

Siddhesh Toraskar

113

Murali V

115

Jinkal R Vyas

Under the guidance of Prof Chhaya Sehgal

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MFM 3RD YEAR, JBIMS

Agenda
Introduction .3
Theoretical approaches of Empowerment .4
Levels of Empowerment .5
Advantages of Employee Empowerment 5
Disadvantages of Employee Empowerment .6
Empowerment Process 6
Employee empowerment and Retention 7
Impact on HR ROI 8
Case I - Rourkela Steel Plant 9
Case II - HCL Technologies ..19
Conclusion ..35
A Good Read .37
Bibliography .43

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Introduction
The importance of human capital as a source of progress and economic growth has long been
recognized in the literature of economics. Adam Smith was the first classical economist to
include human capital in his definition of capital. Donkin refer to Adam Smith that he included
in the capital stock of a nation the inhabitant's acquired and useful talents, because human
skills increase wealth for the society as well as for individuals.
The concept of human capital was largely forgotten by economists until its re-birth in the early
1960s with the writings of Becker, Shultz and Mincer. These economists recall this old concept
by repeating its links with economic growth, and by emphasizing its importance in explaining
earnings differentials. During that period, the development of neoclassical growth theory fails
to provide a framework for incorporating human capital as an engine of growth.
Human capital induces growth by stimulating
technological advancement or by enhancing labor
productivity. Empirical studies of economic growth
suggest that the skills and knowledge of nation's
population are important in determining its economic
performance . The technological changes along with
the globalization of markets, are transforming
industrial countries into knowledge-driven economies
(Fitz-enz, 2002, pp. 1-25). This shift away from
resource based toward knowledge based economies
has made human capital one of the leading public
policy themes. However, existing measures of investment do not allow policymakers to
comprehend fully the implications of human capital on economic performance and
technological advancement.
Hence it is very necessary to enhance and empower the human capital in the organization.
Employee Empowerment is giving employees a certain degree of autonomy and responsibility
for decision making regarding their specific organizational tasks.
It allows decisions to be made at the lower levels of the organization where employees have a
unique view of the issues and problems facing the organization at a certain level.

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Theoretical approaches of Empowerment

There are three theoretical approaches used to study the
Empowerment:

Socio Structural Perspective:

Focuses its attention on
developing or redesigning organizational policies, practices
and structures to give employees power, authority and
influence over their work.

Psychological Perspective: focuses on enhancing and enabling

personal effectiveness by helping employees develop their
sense of meaning, competency, self determination and
impact.

Critical Perspective: This approach challenges the notion of

employee empowerment and argues that efforts to create
empowerment may actually lead to more, although less
obvious, controls over employees.

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Levels of Empowerment

Advantages of Employee Empowerment

Increased organizational responsiveness to issues and problems.
Increase in productivity.
Leads to greater degree of employee commitment to organizational goals since
employees can take some degree of ownership in the decisions made towards goal
achievement.
Improved Employer Satisfaction.
By being shared organizational power can grow.
Employees to perform better.
Increased Trust in the organization.
Reduces turnover rates.
Empowered employees are engaged employees:

They have the tools they need to be productive leaders and contribute to the
success of the business.

They have the tools they need to learn and grow.

They have the tools they need to connect and collaborate with colleagues and
others throughout the company.
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Disadvantages of Employee Empowerment

It can lead to decreased efficiency because decisions may not be uniform and optimized
for organizational goals.
Create problems with coordination throughout the organization because decisions are
decentralized and not managed at the top.
Manager and employee relationships can become tense as the boundaries of authority
can be blurred.
According to critical perspective attempts at employee empowerment can be
counterproductive creating greater controls over employees.

Empowerment Process
Determining the skill level of the employee

Providing for employee training as needed

Coaching tasks with which the employee has
some skills but is lacking experience or
motivation
Supporting tasks where the employee knows
what to do but is still lacking confidence in their
abilities
Delegating tasks where the employee is
motivated and fully capable

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Employee empowerment and Retention

Employee retention refers to the ability of an organization to retain its employees. Employee
retention can be represented by a simple statistic (for example, a retention rate of 80% usually
indicates that an organization kept 80% of its employees in a given period). However, many
consider employee retention as relating to the efforts by which employers attempt to retain
employees in their workforce. In this sense, retention becomes the strategies rather than the
outcome.
In a business setting, the goal of employers is usually to decrease employee turnover, thereby
decreasing training costs, recruitment costs and loss of talent and organisational knowledge.
By implementing lessons learned from key organisational concepts, employers can improve
retention rates and decrease the associated costs of high turnover. However, this isn't always
the case. Employers can seek "positive turnover" whereby they aim to maintain only those
employees whom they consider to be high performers.
Among the various Employee Retention Strategies which are listed below, Employee
Empowerment is an important retention strategy organisations follow:

Work Life Balance

Growth and Development Plans

Performance Coaching and Mentoring

Companys Culture

Accountability and Empowerment

Engage their families

Employee empowerment and Retention

Usually, employees prefer to take decisions related to their work.

Help them take right decision.

Don't take decisions for them.

In high-performance organizations, employees are given the freedom, and the trust it
implies, to accomplish work in their own ways.

Organizations that offer engaging work, freedom to innovate, and trust employees to perform
capably can look forward to creative workers who are engaged in their jobs and happy to stay
with the company.

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Impact on HR ROI
The ROI measures the financial return on an investment made, or it can be applied to a
business measuring the performance of the firm by assessing the net profit compared
with the overall net worth of the company
Solid Value added approaches to assess HR ROI

HR Key Indicators

HR cost monitoring

HR Reputation

Competitive HR Benchmarking

Leading Edge approaches

HR Profit Centre

HR effectiveness Index

Human Capital Measurement

Return on Investment

Employee Empowerment leads to retention and retention will have both positive and negative
impact on the ROI. Organisations should over come the disadvantages associated with
Employee Empowerment which will facilitate retention of quality employees with defined levels
of performance. Their competency should also be mapped regularly to take up higher
responsibilities. Such employees who are retained will contribute to positive ROI. Employees
who stagnate and who do not rise up to situations and developing competencies to handle
higher responsibilities will contribute to negative ROI

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Case I
Rourkela Steel Plant (RSP)

In order to achieve empowerment of employees, managers must be sure that employees at the
lowest hierarchical levels have the right mix of information (about process, quality, customer
feedback and events), knowledge (of the work, the business and the total work system), power
(to act and make decisions about the aspects of work) and rewards (tied to business results and
growth in capability and contribution), to work autonomously or independently of management
control and direction (Lawler, 1992; 1994; Lawler et al., 1989). Thus, the competitiveness of an
organisation depends to a large extent on the presence of the above four elements:
Information-sharing/open communication, knowledge development, autonomy, and rewards.
Their presence will indicate the overall degree of empowerment prevailing within it, among
other things. The present paper examines the validity of this generalisation by analyzing the
empowerment practices prevailing in Rourkela Steel Plant (RSP), which has the distinction of
being one of the leading public sector steel producing units in the country. As empirical studies
on employee empowerment in the steel industry in India are few and far between, the present
study assumes significance. Before discussing the employee empowerment practices of RSP,
the meanings of the dimensions that are operationalised for the study are discussed. Further,
as a backdrop to the analysis, a brief profile of the RSP is given.
The competitiveness of an organisation depends to a large extent on the presence of the
above four elements: Informationsharing/ open communication, knowledge development,
autonomy and rewards.

A Brief Profile of RSP

SAIL, since its formation in 1973, is Indias largest steel-making company dominating the Indian
steel landscape. The Maharatna company is a fully integrated iron and steel maker, producing
both basic and special steels for domestic construction, engineering, power, railway,
automotive and defence industries and for sale in export markets. The company has the
distinction of being Indias second largest producer of iron ore, and of having the second largest
mining operations thus having a competitive edge over other steel-producing companies.
Today, SAIL has within its fold five integrated steel plants situated at Rourkela, Bhillai, Dugapur,
Bokaro and Burnpur. There are also three Special Steel Plants Salem, Durgapur, and
Bhadravati under its umbrella. The Chandrapur Ferro Alloy Plant of SAIL is the countrys largest
bulk producer of ferro-alloys. The SAIL Refractory Company Ltd. is a subsidiary of the company.
Apart from this, the company has also joint ventures with NTPC, SAIL Power Company Pvt.
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Limited (NSPCL), Bokaro Power Supply Company Pvt. Limited (BPSCL) etc. and has signed MOUs
with several Indian and foreign companies like RINL and L&T (India) and POSCO (Korea), KSL
(Japan) etc. At present, the Government of India has 86% ownership in SAIL.
Rourkela Steel Plant (RSP) was commissioned in the year 1959, in collaboration with leading
steel makers from Germany with an initial capacity of 1Million Ton per annum (MTPA). the
plant grew to a 2 MTPA plant today. Subsequently, enhancing its capacity of hot metal to 4.5
MTPA, while simultaneously increasing the crude steel capacity from the level of 1.9 MTPA to
4.2 MTPA and production of saleable steel from the level of 1.671 MTPA to 3.9 MTPA. The Plant
is also on the way to commission a New Plate Mill designed to produce wider plates so as to
cater to the needs of the growing demand in the domestic market. The workforce of the plant
which was more than 35,000 has been substantially reduced over the years. The present
workforce of the plant is 18,068 including 2,211 executives, 15,659 non-executives, and 198
trainees. Over the years, the plant has been earning huge net profits, which ranged from Rs.646
crores to Rs. 1340 crores during 2009-10 to 2011- 2012, through domestic sales and export to
various countries. It is expected that the ongoing modernization and expansion process of the
plant, will enable it to benchmark itself against the best in the world and attain international
competitiveness.

Information-sharing
In RSP, the organizations policies and strategies are translated into objectives/ targets and are
deployed throughout the plant through well structured communication processes, which serve
as the backbone of the companys internal communication system. The General Managers
Communication Meeting (GMCM) and HODs Communication Meeting (HODCM) are held every
day, where the senior officers interact with the employees regarding specific goals, problems
and targets of individual units. The HODs meet with their Shift in-Charges everyday to review
production, quality, technoeconomic norms, delays and safety measures. The Shift in-Charges
then
hold
short
informal
meetings with their employees at
the beginning of the shift to
apprise them of the previous
days performance and the
targets and tasks for their shift.
The major objectives and targets
of
any
individual
department/division
are
displayed in the boards kept in
the shop floor for information to
all the employees.
Employees involvement is ensured on a regular basis through well-structured
communication forums at all levels of the organization.

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Employees involvement is ensured on a regular basis through well-structured communication

forums at all levels of the organization. Most significant amongst them is the Mass Contact
Exercise (MCE). The MCE is a sustained communication intervention over the past 10 years in
RSP in which about 500 employees of various cross-sections interact, and have frank and free
discussions directly with the CEO, MD, Executive Directors and other top officials every
Wednesday. Suggestions given by employees are recorded, followed up for implementation,
and feedback on the same is provided in subsequent MCEs. The underlying theme for the
MCEs, which is modified from time to time, is laid down in synchronization with the priorities of
the organization.
The theme which started with Regenerating Strength with People for the Survival and Future of
RSP in 2002, transformed over the years Towards Profitability and Prosperity and reached
Our Sankalpa is to ensure Safety, enhance Quality and spread Cost consciousness in the
organization in 2011-12. Under ANTARANG the CEO reaches out directly to employees of a
particular department /area on the shopfloor through an interaction session to discuss
department-specific issues and challenges and solutions are jointly worked out with people at
the core. Other initiatives include monthly in-house magazine, Ispat Sahayog, a trilingual
(English, Hindi and Oriya) magazine, Rourkela Steel Television (RSTV), RSP Portal etc. The
suggestions generated in the communication forums are documented and followed up for
implementation. This has resulted in significant improvements in the plant and has contributed
strongly to a sense of employee participation and involvement and more so, empowerment.
Table 1 gives an overall idea about the different internal communication exercises undertaken
by the plant from 2007-08 to July 31, 2012. The External Communication System of RSP
includes issuing press releases to newspapers highlighting the achievements of the plant on
various fronts, taking collective pride in the plants achievements and sharing these moments
with the customers and stakeholders.

Knowledge Development
RSP has adopted the most modern methods of identifying competency gaps of its employees.
RSP has adopted the most modern methods of identifying competency gaps of its employees.
Once the gaps are identified, they are bridged through comprehensive technical and skill based
training programs at the Human Resource
Development Centre (HRDC) and at the Central
Power Training Institute (CPTI), both ISO 9001
certified units. If the skill and knowledge gaps
require any other external training or supplier
based foreign training, they are also arranged
through the Training Department so as to
bridge the gaps. Apart from these, Leadership
and Higher Management trainings are
arranged through external faculties or other
agencies from inside or outside the country.
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The feedback on the training is tracked to evaluate the effectiveness of such programs.
Identifying Competency Gaps: In RSP, identification of competency gaps and training needs is
carried out keeping in view:
Organizational focus;
Requirement of the job positions in the departments; and
Developmental needs of the individual employees.
Training Need Analysis: The Annual Training Need Analysis is carried out for employees with the
assistance of Training Engineers and the support of the Heads of all departments from
November to January every year. The training needs of employees are identified and indicated
in all the existing regular in-house modules. The needs of each department are compiled into
an Annual Training Calendar through a need moderation workshop with all the departmental
Training Engineers at HRDC at the beginning of the year. Any new / additional requirement is
also indicated through Competency Mapping.
Competency Mapping is a tool used for identifying specific needs of the employees of a
particular department based on their present level of competence. The broad steps followed
are:
Identification of competencies required for a job.
Identification of knowledge and skill level of employees keeping in view the job
requirement/ competency.
Identification of the gaps in competencies that can be filled through systematic training
efforts.
During the year 2010-11, Competency Mapping was carried out in 5 departments for 23 Job
positions covering 630 employees. The various training programs that are offered in RSP are:

Technical Development Training meant for enhancing technical knowledge and skill of
employees. During the year 2010-11, 553 employees attended the Enhancing
Engineering Skill (EES) Mechanical Modules and 256 employees were trained in
Electrical Modules.
Managerial Development Training imparted to enhance the managerial capabilities of
both executives and non-executives. During 2010-11, 1168 employees were trained in
various managerial development programs.
Skill Gap Training due to Retirement - The employees who are going to retire are
identified beforehand and if their skills are found to be critical, the same are transferred
to the identified successors through Skill and Knowledge Training (SKT). During 2010-11,
SKT was carried out in 35 skill-areas, as a result of which 39 employees were trained in
new skills.
Department Specific Programs In the case of procurement of any new equipment or
any change in any process, the department assesses the competencies required for the

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employees and arranges for specific training programs. During 2010-11, a total of 151
employees were trained through 6 department specific modules.
Unit Training to handle specific equipments in a one to one manner. During the year
2010-11, 32 employees were trained through Unit Training.
Multi-skill Training - During 2010-11, 23 employees were trained in shopbased multi-skill
training and another 360 employees were trained through regular multi-skill training
program at HRDC.
Critical Equipment Training imparted to the existing employees availing the services of
the retired employees of RSP so as enable them to learn the skills required to handle
critical and vital equipments like Locomotives, Cranes, Coke Oven Quenching Car
operation, etc. During 2010-11, a total of 176 employees were trained through 9
equipment specific modules.
Additional Skill Training In view of expansion plans of RSP and the new equipments
that are being commissioned in existing departments, training is provided to employees
to enhance their skills.
Redeployment Training provided to employees who are transferred to other
departments.
Induction Training provided to all new entrants of the company like Management
Trainees, Junior Managers recruited for projects, finance, technical and other
disciplines, Trade Apprentices, Technician-cum Operative Trainees, Sr. Technician-cumOperative Trainees, Semi-skilled Worker Trainees and non-executives promoted to
executive cadres.
Supervisory Development Programs for non-executives.
Specific Training provided to all employees focussing on ISO awareness, Safety,
Environment Management, Energy Conservation, Quality Circle tools, etc.

Besides the above training programs, certain special initiatives have been taken by RSP to
create a culture of learning in the organization. They are:
Ankur, the Learning Forum a forum on knowledge sharing launched by the HRD
Centre where employees can learn on relevant and novel subjects such as concepts of
5S, knowledge management, economic meltdown, positive attitude etc.
jigyasahrd a part-time computer training program covering basics of indows XP,
Power Point, Word, Excel and Internet.
Experience Sharing Employees are sent in small teams to other steel plants, including
sister units of SAIL, to learn their best practices and on return to make presentations to
share their knowledge and key learning points within the organization.
Developing People through Work Experience In every department, the new entrants
are imparted onthe- job training by an experienced employee, called the Master
Trainer. This type of training is also known as Attachment Training in the shopfloor.
During 2010-11, 37 employees were trained through this route.
Skill Development Programs - These hands-on sessions are organized in the HRD Centre.
As part of these programs, the employees are also taken for a visit to the shopfloors to
observe the actual work processes.
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The effectiveness of any training programs evaluated at three levelsLevel- I (Reaction Level
to know the participants reactions to the program); Level- II (Learning Level the extent to
which the participants improved their knowledge, skills, and attitude as a result of the training);
and Level-III (Application Level the extent to which the participants apply the knowledge and
skills in their workplace).

Autonomy
In RSP, the employees at frontline levels are empowered through leadership roles as Shift-inCharges. They are empowered to take operational decisions in shifts and are entrusted with the
responsibility of managing personnel and doing lateral coordination with related agencies to
achieve set targets of the shifts. For implementation of specific improvement activities at the
shop-floor, multi-disciplinary teams are constituted which are empowered to take decisions to
meet organizational objectives. These work-teams are provided with necessary resources and
support to achieve set goals.
Besides these, formal joint committees like Safety Committees, have been constituted with
representatives from various departments, where employees discuss the safety and welfare
aspects pertaining to their areas of work and jointly chalk out action plans with the
representatives of management for remedial measures.
Quality
Circle
(QC)
groups are empowered
to take up special
improvement
measures/problemsolving
in
their
respective departments.
During the year 2011-12,
a
total
of
5762
employees participated
in 1424 Quality Circle
cases benefiting the
organization in the form
of improved safety,
housekeeping,
productivity, equipment
health and reduced cost.
Another step to encourage employee involvement and sharing of knowledge is empowering
small groups within the departments to take up small problems at their own initiative, give
suggestions for improvement, and implement the same using their own resources, innovative
ideas and expertise. The employees are then recognized and rewarded, under the Special

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Awards Scheme, for their unique jobs. Examples of a few good jobs done under this scheme
during 2011-12 that resulted in substantial cost savings are given in Table 2.
Table 2 Jobs Done & Money Saved under Special Awards Scheme in RSP during 2011-12
Sl. No.
01.

Dept
SWPP

02.

SMS-II

03.

BF

04.

ERWPP

Job Title
Modification of Rotary Flame Cutting of 72 dia. Pipes. First time
saving Rs. 5.6 crore/annum.
Design and development of tap hole filling m/c for LD converter
saving Rs. 37 crore/year.
Reduction of make-up water consumption in hot water tank of
BF#4 for slag granulation saving Rs.41 lakh/year.
In-house repair of high frequency welders inverting module
saving Rs.13 lakh.

*Source: Personnel Department, RSP.

Note - SWPP: Spirally Welded Pipe Plant; SMS: Steel Melting Shop; BF: Blast Furnaces; ERWPP: Electrically Resistant Welded Pipe Plant

Rewards
In RSP, the employees are
appreciated,
rewarded
and
recognized for their valuable
contributions towards fulfillment of
organizational objectives. A wide
gamut of schemes ranging from
monetary
and
non-monetary
incentives, reward schemes to public
recognition is in place in the
organization.
The major schemes include the
following:

Srujani, the Creativity Award Scheme is a suggestion scheme that harnesses the creative
potential of employees for improvement of the plant as well as motivates and engages
them through formal recognition, and monetary or non-monetary awards. In this
employee friendly suggestion scheme, employees are encouraged to give their
innovative ideas for process improvement preferably pertaining to their areas of work in
a prescribed form. A Departmental Committee chaired by the HOD assesses the
suggestions received. The employees whose suggestions are accepted are encouraged
and provided all support for implementation of their ideas for the benefit of the
organization. Employees whose ideas are implemented or found suitable for
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implementation are recognized in a SRUJANI function specially organized for the

purpose and they are awarded certificates of merit and given cash awards.
Every year a Srujani Mela is organized in each department. All employees of the
concerned departments are encouraged to submit their innovative/creative ideas in the
prescribed format and they are handed over instant token gifts. During the year 201112, 24 such Srujani Melas were conducted and 12017 Srujani suggestions were received,
out of which 4163 suggestions were implemented. Table 3 shows the status of the
scheme.
Table 3 Status of Suggestion Scheme in RSP, 2009-12 (up to July 31)
Year
No. of Suggestions
Received
Implemented
2009-10
13021
3768
2010-11
13282
4310
2011-12
12017
4163
2012-13
14212
8763
(up to July)
*Source: Personnel Department, RSP.

Quality Circle Scheme: Competitions are organized at plant level (1st week of July); zonal
level (2nd week of September); and national level (4th week of December). The quality
circle teams that win at the national level are sent abroad to participate in the
international level quality circle competitions. Besides the above, the quality circles are
given wide publicity in the in-house magazine and in the Rourkela Steel TV for the
contribution they make to the organization, and for their achievements at the national
and international level quality circle competitions.
Nehru Vishista Karmachari Puraskar is given every year to the best employees - cash
awards of Rs. 2000/- each and citations on the Independence Day.
Awards to the Best Shift in Charges of the plant units.
Two Rolling Shields in each zone for Fire Safety Consciousness.
Summer Attendance Award Scheme.
Special Award for higher attendance - 305 or more days in a year.
Zero Accident Recognition Scheme
Managing Directors/Executive Directors (Works) visits to shopfloors to felicitate
employees on the spot for best daily/monthly/quarterly production.
Community lunch for best monthly production, record despatches and zero accident.
Giving wide publicity, through inhouse TV channel - Rourkela Steel Television, to the
noteworthy performances and achievements of employees.
Publishing the achievements of winners of various awards in the companys magazine,
Ispat Sahayog, and SAIL News.

Sample Respondents Perceptions: A questionnaire covering a total of 17 statements four

each relating to information-sharing, knowledge development and rewards, 5 statements
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relating to autonomy was used. The responses of the sample respondents were recorded in a
4-point scale.The score values given to the responses ranged from 1 to 4 (strongly agree: 4,
agree: 3, partially agree: 2, and disagree:
1). Analysis of the responses revealed that the respondents in general have a positive
perception about all the four dimensions of employee empowerment (the mean values of the
average scores given by the sample respondents to the four dimensions ranged from 2.89 to
3.12; Table 4). The knowledge development and autonomy dimensions have been given
relatively lower scores. However, these scores are not much different from those of the other
two dimensions information sharing and rewards.

Analysis of the responses revealed that the respondents in general have a positive perception
about all the four dimensions of employee empowerment.
As the mean values of the average scores given by the sample respondents were around 3, it
may be concluded that the non-executives of RSP, in general, have a positive perception about
the employee empowerment practices of the organization.
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Conclusion
The descriptive analysis and the analysis of the perceptions of the sample respondents relating
to employee empowerment practices in RSP indicate that the organization uses employee
empowerment as a strategy to facilitate the process of enhancing organizations performance.
Using Bowen and Lawlers (1992:35) model of the three levels of employee empowerment,
from suggestion involvement (essentially using suggestion schemes or quality circles), through
job involvement (job redesign and team working) to high involvement (involvement in all
aspects of the organizations performance), we may conclude that the RSPs employee
empowerment practices fall in many respects under the job involvement level, with the
possibility of touching the high involvement zone, in the course of time, provided the
organization continues to pursue the empowerment- related activities with the same spirit as it
does now.
The RSPs approach to employee empowerment practices suggests that, in many respects the
organization endeavors to promote a spiritual culture at the workplace workplace
spirituality, which means the recognition that people have an inner life that nourishes and is
nourished by meaningful work that takes place in the context of the community. Typically, a
spiritual organization has five cultural characteristics: strong sense of purpose; focus on
individual development; trust and respect; humanistic work practices; and toleration of
employee expression (Ashmos & Duchon, 2000:139; Giacalone & Jurkiewiez, 2003:6-13;
Robbins & Sanghi, 2007:475-77). Thus, we may take a sanguine view of the RSPs efforts
towards increasing the degree of employee empowerment for enhancing the organizations
performance.

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Case II
HCL Technologies
HCL Technologies since the Global 2008-09 Crisis: Creating Value through Employee
Empowerment
Nayar, stepped down from his position and was replaced by Anant Gupta, age 48, who had
been promoted to the position of Chief Operating Officer a few months before (in July 2012).
Though this change signals a new direction for HCL, Vineet leaves behind a strong legacy driven
by his radical management philosophy Employees First, Customers Second or EFCS. The
employee culture at HCL is a key catalyst for its healthy performance. Managements focus on
employee culture as a competitive differentiator has led to a remarkable turnaround in HCLs
market share and mind share, over a period starting from 2005 till date. Since the turnaround
initiated in 2005 by Vineet Nayar, the numbers have been impressive: 514% increase in annual
revenue (from June 2005 to June 2013), 440% increase in net income (from June 2005 to June
2013), 244 % increase in market capitalization (from June 2005 to June 2013), 56% increase in
revenue per employee, and 15% reduction in employee attrition rate (Sep 2005 to June 2013).
Culture at HCL helped the company sustain and survive the 2008 crisis which hit most
businesses around the world. In fact during this time HCL emerged as one of the fastest
growing and profitable companies in the industry. The 2009 results demonstrated the power of
employee empowerment, since HCL was one of the few companies in the IT sector that grew
while most other players, big and small, declined. Vineet Nayar explains:
"and there was one factor that came externally, it was the recession in 2008The customers
woke up to the fact that their relationships with the vendors were one-sided: only profit
maximizing The customer-vendor relationship came under huge strain during that period.
Trust, transparency, flexibility, and experience was at the lowest. So, whatever value we tried to
profess in the market as unique differentiator, we had years to build it. So combination of
recession, behavior of our competitors, the unique experience, organizational structure and
culture..we had built a combination that led to a huge growth during the recession... we were
one of the few companies, if not the only one, in the world that never experienced a negative
growth"
The success of employee empowerment is evident in many of the global recognitions that HCL
has received over the years for example, being the only IT services company to feature in
Fortunes first ever Executive Dream Team and making it to the Forbes Asias Fab50 companies
4 years in a row. For the companys contributions in developing and nurturing Employees
First, Customers Second (EFCS), the ground-breaking management philosophy, it has also
received a number of management awards including the prestigious Prix Olivier Lecerf 2012, a
prestigious French management award.

Page 19 of 43

EFCS was only the first stage. In the years since, it has evolved to become an integral part of
HCLs culture. It was initially driven by management and embraced by employees. Over the
years, however, the concept has taken on new meaning by becoming employee-driven,
management-embraced in the form of programs and initiatives driven by employees. This new
manifestation of EFCS is captured in the phrase ideapreneurship, the second stage of the
revolutionary management philosophy. ideapreneurship represents HCLs environment of
grassroots, customer-focused innovation that encourages individual employees to come up
with innovative solutions to customer challenges.
Today HCL is at a turning point with the nomination of a new CEO, increasing domestic and
international competition, and the challenge to keep up the momentum of the
"ideapreneurship" model in an organization that has more than doubled its workforce since
June 2007 increasing from 42,017 to 87, 196 as on 30th September, 2013.
The evolving HCL business model (2008-2013)
How did this journey evolve? What were the drivers and challenges? Lets take a closer look.

The 2008-2009 financial and economic crisis

In April 2005, HCLs vision was to move the whole company up the value chainand to start
going after larger, more complex engagements.7 The results obtained during the first years
(2005-2007) of the HCL transformation process have largely confirmed this initial visionbeginning with a $50 million contract with Autodesk, won in November 2005, followed by a
series of successful (over $100 million) contracts negotiated at the expense of other major
players in the industry.
2008-2009 became a real stress test for HCL that could, for the first time, assess its resilience
amidst the turmoil brought on by the global financial and economic crisis. The company
experienced a solid growth in revenues between 2007 and 2009 as shown in Exhibit 1 (20072008: + 34%; 2008-2009: + 17% in US $) and Exhibit 2 for the EBIT (2007-2008: + 29%; 20082009: + 18% in US $). According to Krishnan Chatterjee, SVP & Head, Strategic Marketing, HCL
Technologies, this remarkable growth was a result of the three key values that HCL believes in
Trust, transparency & flexibility; value centricity and Employees First.

Page 20 of 43

During the turbulent times, HCL took the right steps to boost employee morale and protect
jobs. A campaign was also launched that urged employees to save costs wherever possible.
This also included a freeze, and in some cases a decrease, in the top managements
compensation packages. Beyond these efforts, employees brought new ideas to clients,
generating new revenue sources. All these actions, both on the cost and the revenue sides,
helped HCL face the bad economic weather with surprisingly strong results compared to the IT
industry in India and globally.

HCLs Total IT Outsourcing Strategy: competing with the giants

The lessons learned from the crisis period reinforced HCLs initial vision to offer a unique
experience to its customers that would differentiate the company from the competition. The
evolution of HCLs business strategy during 2010-2013 is therefore characterized by even more
customer centricity with focus on flexibility of service offering and higher value creation for the
customer. Exhibit 3 clearly shows that the distribution of revenues has progressively shifted
towards more sophisticated value-adding activities since 2008. For example, infrastructure
services represents nearly one third of revenues in FY13 while it contributed to 15% of
revenues in FY08! In a similar vein, the BPO services business of the company has turned
profitable owing to the focus to move away from voice-based services to non-voice services.
Another indicator of HCLs move up the value chain was the gradual shift in balance between
the revenues by contract type; in 2008, nearly 2/3 (65%) of the contracts were under the Time
and Material category whereas this figure was down to 47.8% in 2013, clearly indicating that
other contract types adding more value (fixed price projects and managed services) now
constitute the majority of deals with clients.

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Moreover, Krishnan Chatterjee noted that the number of large deals has dramatically increased
since the fiscal year 2010. The SVP Strategic Marketing emphasizes that HCL won over large
clients with its total IT outsourcing strategy, having competed with the major players in the
industry - global non-Indian players (IBM, HP, Accenture, Cap Gemini) and Indian players (TCS,
Infosys, Cognizant, Wipro). As he puts it, "In the period of only two quarterslate 2011to
early 2012HCL has been able to sign major contracts valued more than 2.5 billion US$."8 This
statement is reflected in the number of large clients reported in Exhibit 4; for example, in the
fiscal year ending on June 30, 2013 HCL had 5 major clients (100 million US $ +) versus only one
major client in the previous year ending on June 30, 2011. Similar figures illustrate the total IT
strategy with smaller clients (over 10 million US$) with an increase from 58 clients for the fiscal
year ending on June, 30 2010 to 102 clients for the fiscal year ending on June 30, 2013.
Page 22 of 43

Employee empowerment the freedom, and the responsibility, of front-line employees to

come up with innovative solutions to customer challenges lies underneath all such strategies
that were implemented in tough periods like these.

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From EFCS to ideapreneurship: How empowered human capital creates unique

competitive advantage
The "Employees First, Customers Second"(EFCS) philosophy
HCLs transformation journey in 2005 began with identifying the core fundamentals of the
business, and re-thinking roles, including that of the leadership and management. This led HCL
to uncover the following, and take the first step in defining the EFCS philosophy:
In the business of IT services, it was evident that value no longer lay in the technology
itself and certainly not in any particular hardware or software.
HCL observed that maximum value was created at the employee-customer interface,
called the value zone, where frontline employees brought both business and
technology together to create customized solutions for customers.
In order to maximize value creation for customers, the role of managers needed to be
redefined - which would be to encourage, enthuse and empower employees.
Since 2005, the EFCS model has proved to be quite successful with the HCL revenue per
employee constantly above the industry average and even above the figures of the three Indian
leaders (TCS, Infosys and Cognizant). In 2013, the revenue per employee industry average was
47925 US $ and the revenue per employee average of the three leaders was 46,479 US $9.
During the same period, HCL revenue per employee reached the level of 57,801 US $10
representing 21% more than the industry average and 24% more than the results obtained by
the three leaders. This remarkable achievement is largely due to HCLs gradual shift towards
higher value-adding activities that has been made possible by the implementation of the
Employees First model. HCL core values and the 4 key tenets of the Employees First
philosophy are outlined briefly below:
Mirror Mirror (Creating the need for change): this is a process of introspection,
selfdiscovery by looking 'inside out' instead of 'outside in'. It is about embracing the
reality that transformation can begin only by identifying the problem and creating a
need for change to occur.
Trust through transparency (Creating the culture for change): there is a need to bridge
the gap between the intent to change and the actual act of bringing about change. This
is done by establishing trust and creating transparent processes with open
communication.
Inverting the organization pyramid (Building the structures for change): it is also
important to democratize teams and build the right structures within the environment,
which makes change a sustained process.
Recasting the role of the CEO (Transferring the responsibility of change): Once these
structures have been put in place, the transformation then demands creating new,
selfdriven owners for change and decentralized decision making that will take the
process further.

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Do the 4 tenets of the Employees First philosophy represent the actual experience of HCL
employees?
The answer is positive when listening to the views expressed by a newcomer to HCL, Prithvi
Shergill - Chief Human Resources Officer (CHRO), who joined the company mid-2012 after a 20year HRM career in a number of large organizations in India and abroad. He points out,
Companies struggle everywhere to retain the sense of ownership. Entrepreneurship
unfortunately disappears as they become bigger. What is critical for employees is to try to
maintain the feeling that they are responsible for success, that they can execute their ideas. But,
large organizations tend to create bureaucracies, create systems and processes that stifle some
of that. What HCL has done extremely well is to retain the DNA of a small, entrepreneurial
company: being able to retain the freedom to elevate, the freedom to make decisions, and the
freedom to act What is remarkable with HCL has been the ability to retain that kind of culture
in a fast growing company with more than 30,000 employees who have been added to the
workforce in the past few years all these achievements have been made possible by the
'Employees First, Customers Second' model that proved to work extremely wellwe recognize
that it is the employees who bring the value to the customers.
Systems and processes are secondary, what is critical is to use them intelligently

The original EFCS philosophy in practice: Management-Driven, EmployeeEmbraced

In order to make the Employees First approach more than just a philosophy, a number of
systems and processes have been implementedmost of them since 2005. These systems and
processes include Smart Service Desk, U&I, 360-Degree Feedback, Directions, Employee Passion
Indicative Count (EPIC), and MEME.
Smart Service Desk (SSD)
The company website describes SSD as "a unique step in bringing Reverse Accountability in the
organization. SSD makes the whole organization especially the enabling functions such as HR,
Finance, Admin and Training, accountable towards employees where employees can raise a
ticket towards any department or internal service provider. Each ticket is bound with a service
level agreement and only the employee who raised the ticket can close it."
As underlined in a Darden case study about HCL: "the company wanted to create a uniform
experience for employees of all ranksthe egalitarian approach had worked in some high-tech
starts-up in Silicon Valley and elsewhere, but it was hard to achieve in a large multinational
company."
After a few years in operations, SSD is still very active with an average of 52,000 tickets raised
every month.

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U&I
This initiative was launched late 2006 in order to provide an online forum for employees to
interact directly with the CEO. As described on the company website: "U&I is an interactive and
open platform for the CEO and employees to engage in a two-way dialog. The CEO is
accountable to address employees concerns and personally answers all queries to employees.
Recently reverse blogging has also started, where in the CEO posts questions to the employees
and initiates discussion around the same. These conversations are a platform to pose questions
and provide the opportunity to benefit from collective wisdom."
When U&I was started, Vineet Nayar committed himself to respond to most of the questions
that were asked by employees. However his goal was to reduce the number of direct
interactions since his vision was to recast the role of the CEO (the 4th tenet of Employees First
philosophy) with less dependence on him but more on the senior management team. Since the
development of the EFCS 2.0 initiatives (newer internal social networks), U&I has also become a
conversation tool between employees to reinforce the trust, transparency and sharing culture
prevailing at HCL.
360 Degree Feedback
The 360 degree feedback is not an innovation for most multinational companies that have been
using this managerial tool for a number of years. But its implementation is what makes the HCL
version so unique. The website says: "It is a unique step to bring transparency and
accountability in the organization. It allows all employees to rate their managers, their
managers managers, and other senior managers in the company including the CEO. While the
name of the employee giving feedback was kept anonymous, the results are available for all to
see on the intranet. HCLs CEO is among the first few managers to make their feedback public."
Since its launch in late 2005, several thousands of managers have followed the example of the
CEO by posting their own 360 degree feedback results on the intranet15 The main goal of the
feedback is to help the development of managers who measure their influence on the value
zone through the support provided to customer-facing employees.
Directions Meetings
Shifting away from the traditional business strategy formulation process in which only top
management is involved, HCL has decided to engage as many employees as possible. Through a
series of meetings, the CEO and the senior executive team discuss the companys strategic
goals with employees in various locations in India and abroad. It is an annual employee event
where the CEO and the leadership team share the vision and strategy of HCL with all employees.
Directions meetings usually last half a day with a one-hour presentation of the proposed
strategy by the CEO and about two-three hours of employee Q&A and feedback. According to
Page 26 of 43

the company website, Directions 2012 was organized for the first time at a global level with
25,000+ employees interacting with the CEO directly on topics relating to the overall vision,
strategy and specific goals for the forthcoming year. To ensure that the CEO engages with the
majority of HCL employees in strategic planning, Directions meetings are held at offices with at
least 500 employees. Typically, 25 meetings are held annually.
Employee Passion Indicative Count (EPIC)
As another tactic to differentiate itself from its competitors, HCL has developed a passion
measurement tool with which employees can assess the factors that drive them to excel in their
role. The EPIC survey is an annual voluntary survey that asks employees to rate their agreement
(using a five point scale) with 90 bipolar statements. These statements measure employees'
alignment with three passion themessecular, self, and social (see Exhibit 5 for a more
detailed description of the three passion themes). Each personalized report is available within
24 hours of completing the survey and managers receive an aggregate report of the team's
responses once the survey is closed.

*Source :Frost & Sullivan : Business Model Transformation : Empowering Employees to Focus on the Customer, Best Practice Guidebook., 2012 ,
p.17

MEME
An internal social network, MEME was created by a group of young employees and launched in
April 2011. Within a few weeks, 30,000 employees joined MEME and the platform today
reaches employees across HCL. There are many groups in MEME that cut across varied interests
such as dancing, French cuisine, and even music and recreation. Today, this network is seen as
Page 27 of 43

the most popular platform to engage in one-to-one, one-to-many conversation with colleagues
and also by the management to drive employee participation in various org-wide initiatives.

Ideapreneurship: Employee-Driven, Management-Embraced

It was during the tough times of 2008-2009 when HCL was able to outperform its peers in the IT
industry, led by the right kind of employee empowerment. A noticeable pattern started to
emerge in employee behavior - right at the grassroots. This was being driven by HCLs
Employees First values, which collectively empower and encourage individual employees to
come up with innovative solutions to operational and customer challenges. At HCL this is called
ideapreneurship the culture of grass-roots, business-driven, customer-focused innovation, in
which each employee has the license to ideate. It encourages employees to become idea led
entrepreneurs, who think of new ideas and also drive them to fruition. As stated on the
company website18, "HCL's 87,000-plus employees have become the most powerful drivers of
change, partnering with the management at every step and steering the company to a new
compelling vision".
In this perspective, R. Anand, VP Human Resources, who has been with the company for 15
years, views ideapreneurship as the second step in the major change process that has
accelerated with the arrival of Anant Gupta as the CEO in 2013.
As he puts it: The second phase of the transformation journey was: can we make the process of
co-creating value a self- run one? ... Can we get teams to design ideas, decide what ideas to
discard, pursue, and invest in? Can we transform the decisionmaking process? In retrospective,
the parallel was very obvious value is often created outside of the organization, in the social
networks. Problems, like security breaches on IT, are being solved by teams that were not
initially mandated to do it. They come together because they are just interested in the same
problem, they do not need to prove anything to each otherthey have the joy of sharing. So,
without the incentives and reward, without any recognition, the social networks are able to
produce the same results: gathering individuals who are able to solve very complex problems.
This parallel was not at the time visible to us but it became more obvious when we moved. This
is naturally the next step of transformation"
Today, HCL employees are ideapreneurs working in an entrepreneurial environment with
the following characteristics:
Need to seed: Seek alternatives that go beyond the ordinary, generating and fostering
ideas that challenge the status quo
Desire to nurture: Developing networks that nurture these ideas to realization and
evolving the scope of ideas towards implementation
Commitment to harvest: Recognizing results and rewarding business outcomes.
Incubating an entrepreneurial eco-system that self sustains growth
So how does the company fuel the growth of ideapreneurs? Contribution of ideas and even
potential business opportunities can be made through platforms such as MAD JAM, Value
Page 28 of 43

Portal or LeadGen. In addition, HCL has developed an ideapreneurship policy that clearly
outlines the reward and recognition process attached to contributions made through these
platforms.
Value Portal: Co-creating value
A few years ago, the CIO of a large bank, visiting HCL in Bangalore, made a statement about the
high quality of work but complained about the lack of new ideas. This observation/criticism is
what gave rise to the Value Portal which was launched around 2008 but became fully
operational in 2010. It enables employees to directly collaborate with customers and provide
new ideas and solutions.
Ideas that are submitted in the value portal follow a 4-stage cycle: (1) submission of an idea
(cost optimization, process optimization), (2) review of the idea by a review panel (customer
executive and HCL account director), (3) evaluation of the idea on the 4-star scale (only ideas
with 3 or 4-star are considered for implementation), (4) implementation of the idea with
mutual consent of the customer and HCL.
Today, 12,000 employees engage with the Value Portal. It has generated over 22,000 innovative
ideas for 300+ customers on process improvement, cycle time reduction, tool development,
technical solutions and cost optimization. And over 6000 of these ideas have been approved by
customers and implemented by HCL, to deliver over $300 million of value to customers. These
thousands of ideas didnt just deliver one-time value to clients; they also become a part of
HCLs overall solution set with limitless potential to add value, every time they were reused for
other projects and clients.
MAD JAM: Awarding implemented ideas
As a second tier of the Value Portal program, MAD JAM was developed in late 2010 as a
centralized platform for celebrating the business centric implemented ideas and innovation of
employees from across HCL. It provides employees with a platform to share their best ideas for
innovation and transformation. A jury of senior delivery managers shortlist the best ideas,
which are turned into videos and hosted on HCL intranet, and on YouTube where employees
vote for their favorite entries.
A member of the MAD JAM team points out, "MAD JAM has been developed as a centralized
platform to celebrate individuals who bring very innovative ideas that create value for the
customers. This is clearly the second layer of the Value Portal."
In 2012, 647 implemented, innovative solutions were submitted towards MAD JAM, 37 ideas
were retained by a panel of senior leaders. Of these, 17 semi-finalist ideas were made into
videos and submitted to a popular vote of HCL employees (about 43,000 employees voted in
2012). In 2012, the semifinalist ideasincluding the ultimate winner, a Cloud computing
management framework called MyCloudhave already generated more than $33 Million in
savings or new revenue for HCL customers.
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The leader of the winning team of MAD JAM 1 (2011), described the idea of his team in the
following terms 24"so we did a country by country analysis for our customer without being
asked to do it. We then gave recommendations for each country: for North of Europe, France,
Brazil, Australia, Russia, Mexico. We told them if they went with our recommendation we could
give them $ 40 Million extra revenues offside. They approved the project and we made $ 1.5
million through the project. Second it is an exit barrier- We are valued as a service provider. We
say that we can better" Moreover, he curated a small book "Book of Ideas", where a number
of ideas of his and his team (including the MAD JAM winning idea) are described in detail to
spread the innovative spirit throughout the company.
MAD JAM 2013 was taken a step further with the objective to help ideapreneurs take their
ideas to the next levelconvert them from concept to reality with the help of a MAD Venture
Capital fund of USD 250,000. The funding is available not for the winning ideas, but the ones
which have the potential to scale-up and create a big business impact for HCL.
LeadGen: Where any employee can contribute to the topline
Ideas are not just about finding solutions. They are also about identifying new opportunities
and building new business. At HCL, this doesnt just happen through the sales teams or senior
management. Delivery employees, who interface with the customer on a daily basis, were also
identifying leads, key pain points and customer challenges that HCL was not currently
addressing. LeadGen offers these employees the right channel to take these leads forward, by
connecting them with the right sales teams for converting the opportunity into a win for HCL.
LeadGen offers an intuitive portal that acts as an interface between delivery employee,
LeadGen team and sales manager. The delivery employees role is to identify a qualified lead
and enter the details through the lead capture form. The LeadGen marketing team is
responsible for the 2nd level qualification and assignation of lead to sales, who in-turn further
qualifies the lead with the customer representative referred by the employee. Marketing and
sales together take a Go/ No-go decision on each opportunity based on our capability,
attractiveness of lead, strategic importance, contract value etc. On a Go-decision, sales
manager accepts the lead in the SFA system and actively pursues till closure. The contributing
employee gets an automated notification at every step due to integration of systems, keeping
them dynamically informed on opportunity movement. In FY 13, employees contributed 670+
leads through LeadGen. It also created $60 M+ booking and $147 M+ funnel for HCL.
Diversity and Inclusion
Another way to foster the development of ideapreneurship within HCL has been the launch of
the "Diversity and Inclusion" program with its societal dimension. As Srimathi Shivashankar,
Associate Vice President Diversity & Sustainability, HCL Technologies, puts it25 :"All the
programs that my team drives are good examples of the three key beliefs of HCL Trust,
transparency & flexibility; value centricity and Employees First. We are looking at minority
inclusion in this company in terms of higher percentage of leadership cultural assimilation,
Page 30 of 43

including people with disabilities. We are creating agendas for cultural inclusiveness this has a
lot to do with how we attract potential employees and retain them. The extension of our core
competencies how we view people and the planet and our strategy around the same, provides
stability to the company in the long run. Some of the programs are no longer Indian they are
global. And we create glocal policies global but with local requirements, those are the
initiatives that are important. The Diversity and Inclusion strategies are aimed at recruiting,
engaging and enabling employees from diverse backgrounds.
The main goal is to reach out to the diverse talent pool that comprise of women, people of
different nationalities, cultures, work experiences and people with disabilities. In terms of
gender diversity, women in HCL comprised approximately 25% of the workforce in 2012.The
goal is to increase this number with special attention to managerial positions where the
number of female managers is below 25%. An interesting initiative was launched in 2012
through an e-book named "Believe" that threw the spotlight on HCL's women employees and
the impact of the "Employees First" philosophy on their careers. Women employees were
interviewed to understand the opportunities and challenges they face at various stages of their
careers. The book was released by Vineet Nayar on International Women's day in 2012. In
summary, all programs and initiatives launched since 2005 that were built around EFCS and,
more recently, around "ideapreneurship" have been designed to deeply transform HCL into an
agile organization likely to meet the challenges of the evolving business model in addressing
larger global clients and developing sophisticated value adding activities (such as Outsourcing
Services in Exhibit 6) .

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As underlined by Srimathi, the capacity of HCL to be an agile organization is largely based upon
the company's management in which empowerment is a reality: "In India, if a person is
empowered to do a job, the person may not be empowered to take the decision. In HCL, because
of the ideapreneurship culture, the person who is empowered can also take a decision. This is
not something that you would see in most of the other large comparable companies. Here, there
is not much hierarchy in the processes; we are much more agile compared to competitors."
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The critical success factor of this strategy lies in the quality of the human capital HCL is able to
attract, develop and retain. In the years to come, with the stepping down of Vineet Nayar as
CEO in early 2013, the sustainability of the EFCS and ideapreneurship models is likely to be
tested in order to meet the future business challenges.
What's Next ?
Vineets ground-breaking vision seeded the idea that value creation does not occur in the
managerial ranks but mostly through employees who are in daily contact with the customers.
Therefore, the logical consequence was to shift the whole organization focus including that of
the CEO, the senior management and the enabling functions (finances, HR, IT) to support
those employees who are in the "value zone". This transformation journey has led to the
development of EFCS initiatives followed, more recently, by the implementation of
"ideapreneurship" programs. Vineets successor, Anant Gupta, will have to fight some internal
resistance that still exists within the company despite all the change initiatives implemented in
2005. Vineet explains:
"Always the challenge of the transformation journey will be: can you find 10% in the
organization that would buy into the new concept? I call them transformers, and the rest would
follow the momentum. In the organization, a lot of new people are coming and, at any given
time, I think 50% of the organization wouldnt understand and appreciate the Employees First
concept. The remaining 50% has to carry the torch. So, as a big company we cannot wait until
everyone is on board. The first challenge is: How do we create architecture where 10%
transformers would get 100%...and the ship keeps moving? That's a lot of diversity. Everyone
should start walking and get everyone aligned. That is the first thing. The second challenge is
that there are lots of disbelievers in our environment and they take energy. Irrespective of how
good an induction program you can create, culture and transformation can only be learned from
experienceit cannot be taught, and therefore there is no shortcut but time. And we have
enough disbelievers, especially the most recent people in HCL, who do not necessarily buy into
this. The third ask is that we need to have clear goals otherwise people will not follow."
Vineet himself does not consider the transformation journey of HCL as a 100% success. His
successor, Anant will have to keep the momentum of the ideapreneurship model in order to
deal with some critical issues such as the general slowdown of business opportunities, the
global economic crisis, and growing competition in India and abroad. Add to this, the challenges
linked to the development of new technologies such as cloud computing, competency gaps
especially within managerial ranks, and the constant improvement of the enabling functions
including HR that is in charge of the most important capital for long term successthe human
capital.
The current leadership at HCL sounds even far strongly committed to drive the ideapreneurial
culture in the company. As resonated by Anant, the management stays focused to empower
employees to maximize business value creation, he says, At HCL we place a great deal of
importance to the spirit of entrepreneurship. Thats how our journey began. Today, the same
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energy drives our employees to create innovative solutions and build next-gen propositions for
customers. Strategic business propositions like Enterprise Function as a Service (EFaaS),
Enterprise of the Future (EOF), My Cloud, Alternative ASM (Alt ASM) are not only contributing to
HCLs growth trajectory, but will be instrumental in providing value beyond the ordinary for our
customers. The innovative and transformational value-add that we bring to our marquee client
base is key reason for the stellar performance that the company has been delivering amidst a
challenging and uncertain business environment.

Page 34 of 43

Conclusion
Employee engagement drives individual performance in an organization, but do companies with
more engaged employees out-perform those with a less-engaged workforce? Does the
company have stronger financial performance and operational efficiency with engaged
employees? If not, then employee engagement is just another time-wasting hoax for executives
to deal with until the HR department comes up with a bigger-and-better distraction to throw
their way.
From the above two case studies; The Rourkela Steel Plant & the HCL one we can conclude that
there is a significant impact of employee empowerment in organisation on its overall efficiency
and profitability. The HR ROI is enhanced when the employees working in the organization are
empowered.
Scholars, consultants, non-profits, and companies have been researching the ROI of employee
engagement for quite some time. The correlative data revealed in their research initiatives is
significant. Here are some recent findings:

Operating Income
In research prepared for the UK government (Engaging for Success: enhancing performance
through employee engagement), David MacLeod and Nita Clarke found the following
correlations to employee engagement:

Companies with low engagement scores earn an operating income 32.7 percent
lower than companies with more engaged employees.

Similarly, companies with a highly engaged workforce experience a 19.2 percent

growth in operating income over a 12-month period.

Profitability & Attrition

The Corporate Leadership Council studied the engagement level of 50,000 employees around
the world to determine its direct impact on both employee performance and retention. Here
are two important findings:

Engaged companies grow profits as much as 3 times faster than their competitors.

Highly engaged employees are 87 percent less likely to leave the organization.

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Customer Loyalty, Productivity, and Turnover

Any business owner can tell you that optimizing productivity levels is an uphill battle, and
customer loyalty is what companies depend on to make payroll. (If only employees would
understand that right?) In an article published by Jonathan Pont, the most-engaged
workplaces experienced the following performance metrics:

2X higher customer loyalty

2X higher productivity

2X lower turnover

Cost of Disengagement
As if the business metrics that correlate to high levels of employee engagement arent
convincing enough, lets take a look at how much disengaged employees can cost a company.
McLean & Company found some very compelling correlations:

A disengaged employee costs an organization approximately $3,400 for every $10,000 in

annual salary.

Disengaged employees cost the American economy up to $350 billion per year due to lost
productivity.

Ouch. Bottom line (pun intended): if companies want to bolster productivity and profitability,
increase customer loyalty and operating income, and slash attrition and disengagement losses,
they have to engage employees.
Therefore, it can be said that empowered employees are easy to retain and they enable to
strengthen the organization; improving the Human resource Return on Investment and
thereby increasing the profitability of the business.
Below ratios shows how it affects the HR ROI:
Sales Per Employee = Revenue/ Headcount (If this increases, the HR ROI also increases)
Recovery Rate = (Cash like rewards + Benefits)/ Revenue (Direct relation to HR ROI)
Profit Per Head = Profit / Headcount (Direct relation to HR ROI)
Above ratios are important to identify if whether after empowering the employees the
organizations bottom line gets affected or not.

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A Good read
How HR Drives Profits
Academic research and real-world experience show how HR practices affect the bottom line.
It's not about obsessive cost cutting. It's about effectively investing in human capital.
Let's say that you were given $1,900 per employee to spend on human resources for the year
and your CEO wants you to spend that money in a way that generates the biggest bang for the
buck. In other words: profit. Where are you going to put that money? Into compensation
design? Training? A new human resources information system? And how are you going to
demonstrate whether that investment did indeed produce a return for the company?
Sure, you may know in your gut that HR contributes to the bottom line, but intuition doesn't cut
it in today's business world. Executives want proof that HR is a profit-maker and not just a cost
center -- and they want you to design HR initiatives accordingly.
Fortunately, more and more studies are coming out that demonstrate a remarkable correlation
between specific HR practices and shareholder return. Furthermore, an increasing number of
individual companies are able to provide solid anecdotal evidence that HR is, if not a profit
center, then at least an important contributor to their profitability goals. Together, the research
and individual case studies provide significant insight into how the HR function must operate in
order to drive the bottom line.
"HR has never been more uniquely situated and placed than they are right now in terms of
helping organizations achieve bottom-line results," says Shirley Richard, president of the
Richard Company, a consulting firm in Phoenix. Why? Because not only are executives
beginning to understand that the "human" resource is the most valuable resource they have,
but there's also proof available now to show that investment in human resources does pay off.
So what does the research say about HR's impact on profit? The news is good, very good. Ed
Lawler and Susan Mohrman of the Center for Effective Organizations at the University of
Southern California recently completed an intensive study of management practices
in Fortune 1000 companies. Their study demonstrates that employee-involvement practices
such as information sharing, skills training, rewards programs, and empowerment efforts -- all
of which fall squarely into HR's domain -- show a significant bottom-line return.
In 1999, companies that were big users of employee-involvement practices boasted a 66
percent higher return on sales, a 20 percent higher return on assets, a 20 percent higher return
on investment, and a 13 percent higher return on equity, USC investigators report.
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"This study clearly suggests that the kinds of practices that HR develops and supports have an
impact on the bottom line," Lawler says. "While HR doesn't directly produce revenue -- it
doesn't go out and find new business or open new markets -- HR certainly improves the
effectiveness of the organization, which allows the company to find new business or open new
markets."
Chris Ryan, director of the People Strategy Practice for the Chicago Market Circle of Andersen's
Human Capital Group, is conducting a study that is providing even more specific data about
HR's contribution to the bottom line. He and his colleagues are reviewing a broad range of
human capital practices and how they relate to total shareholder return. Although the study is
still under way, early results clearly indicate that companies that use HR practices such as
helping new hires to assimilate, letting employees know what is expected of them, and
regularly pruning low performers tend to achieve higher total shareholder return over a period
of three to five years than companies that don't.
"Our study, along with the work of other researchers, refutes the notion that HR is simply a cost
center," Ryan says, adding that various studies have shown that 15 to 30 percent of the total
value of a company can be correlated to specific human capital practices. So what does all this
mean for HR professionals in the trenches? "The point is that HR professionals have a choice in
terms of how they spend their money and invest in the human capital of the firm," Ryan says.
"What the data makes clear is that some choices have much greater impact than others."
In order to boost corporate profitability, HR has two ways of looking at building profit: 1)
cutting costs and 2) helping to generate revenue.
Cost-cutting is a quick and relatively easy way to boost profits. It is typically HR's first tactic. One
of the most common ways that HR has gone about cutting costs is utilizing technology to
provide employee self-service, says Alicia Main, HR analyst with Best Practices, LLC, in Chapel
Hill, North Carolina. Self-service technology enables employees -- and their managers -- to do
such things as pursue e-learning, change benefit options, get answers to stock and
compensation
questions,
and
manage
performance
without
the help of HR professionals or expensive HR handbooks.
Baxter International in Deerfield, Illinois, for example, has saved over half a million dollars by
investing in employee self-service, says Karen May, vice president of human resources. Xerox
Corporation, which uses a PC-based human resources management system to give employees
and managers online access to personnel information, has slashed annual printing costs by $1.5
million. Although the cost of the system was $2 million, the aggregate annual savings made the
investment worthwhile.
When done well, measures that utilize technology to bring efficiency to administrative
processes have the potential to reduce costs an average of 30 percent, says Brian Lowenthal,
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benchmark director of Hackett Benchmarking & Research, a division of Answerthink, Inc., in

Hudson, Ohio. Unfortunately, he says, many companies that have been focusing on cost
reduction through technology "haven't been doing it very well." Despite all the focus on costcutting, HR costs have actually risen, on average, 16 percent since 1998. "This is because many
companies have been focused on technology and cost-cutting and have not done much to
improve work processes or deal with the cultural-change issues," Lowenthal says.
Furthermore, research shows that even if companies do realize valuable savings through costcutting or technology, there are other, more effective ways for HR to build value over time.
While these value-adding efforts go by various names, including transformational HR, strategic
HR, and cultural support, they all, in essence, refer to the same thing: the ability of HR to select
and retain the right employees and help them do their best work. This is where the real profit
gains are to be found.
"Line and HR managers need to shift their focus from thinking of HR as a cost to be minimized
and embrace the idea that investments in human capital can be a significant source of value
creation for shareholders," says Mark Huselid, an associate professor of HR Strategy in the
School of Management and Labor Relations at Rutgers University and author of numerous
studies demonstrating the financial impact of HR. So what do these "investments in human
capital" look like in practice? What is value-added HR all about in real life? Well, when you take
a look at companies that continue to be profitable despite today's brutal economic conditions,
you'll find that their HR departments operate in much the same way.
Workforce talked to the HR directors at three such companies to learn what they do to support
the company's bottom-line goals. These companies are:
1. Universal Technical Institute, Inc., based in Phoenix, Arizona. This 1,100-employee
company is a nationwide leader in providing technical training for heating, ventilating,
and air-conditioning systems. If you operated a Mercedes-Benz car dealership and
needed technicians who could work on the cars' climate-control systems, you might
send employees to courses sponsored by UTI. Over the last 18 months, UTI has
implemented a major cultural-change initiative that boosted revenue by 17.5 percent,
reduced employee turnover by 35 percent, and increased enrollment in the company's
manufacturer training program by a whopping 228 percent.
2. Whole Foods Market, Inc., based in Austin, Texas. This chain of natural foods stores has
22,500 employees in 23 states and Canada, and is adding an average of 20 stores per
year, an annual growth rate of 20 percent.
3. Valassis, a marketing services company based in Livonia, Michigan. This 1,400-person
company helps other companies market their products and services, most notably
through coupon inserts in Sunday newspapers around the country. Valassis posted 10
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percent net growth last year and continues to grow despite the tough climate for
advertisers.
There are many similarities in how the HR efforts at these companies help to strengthen the
bottom line. What's important to remember when reviewing these efforts is that not any one
of them, in isolation, can build profit. As Joe Buys, a partner with Crystal Clear Concepts, Inc., a
management consulting firm in Detroit, says: "You can't look at any one element in isolation."
HR activities must work together to create an overall culture that is conducive to profit-making.
Profitable companies have the following HR initiatives in common:
1. They communicate extensively. The vision, values, and goals of the company are
regularly communicated to employees. Not only that, but bad news is routinely shared,
and successes are celebrated. "There is no rule in our book that says you can overcommunicate," says Marcia Hyde, vice president of human resources and the
communications center at Valassis.
At Whole Foods, the thrust for open communication is taken so seriously that all
managers and executives -- including the CEO -- maintain an open-door policy. "I came
in to work on Monday and had 1,000 e-mails to answer," says Cindy Strunk, vice
president of team member services and human resources. The e-mails were about
everything from paternal leave to a disagreement about a termination, and Strunk
worked to answer each one.
The company also discloses wages so that every employee, if interested, can learn what
coworkers, managers, and executives are paid. "While this openness takes some getting
used to," Strunk admits, "we're a company based on knowledge, and we don't believe in
hiding any knowledge or information from our team members."
2. Employees are involved in setting goals. About 18 months ago, UTI decided to pursue a
new business model that would orient employees to a new customer. Instead of
focusing solely on the students in its training programs, UTI decided that the industry -the car manufacturers and dealerships that utilize its students -- was also a key
customer base. This new strategic focus mandated a new way of thinking about the
business.
Sharon Gleeson, vice president of HR, says the company's executives did not sit down
and devise a list of objectives for every employee to follow. Instead, each one of its
1,100 employees was involved in creating the new strategy and finding revenuegenerating opportunities predicated on the new customer base. Employees from all
divisions in the company worked together to identify the business drivers, create the
strategic plan, devise the leadership principles, set the accountability measures, and roll

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out the communications surrounding the new strategy. Many of the employees had no
previous experience with such efforts.
Involving employees in this way has had an impact not only on profits -- gross earnings
at UTI rose 44 percent in 2000 and 28 percent in 2001 -- but also on morale. According
to employee surveys, between 1990 and 2001, overall employee satisfaction and morale
moved from 37 to 75 percent; belief in the company's vision increased from 82 to 93
percent; and employees' understanding of how their jobs contribute to the company's
business objectives soared to 96 percent.
3. Employees understand how their jobs affect the bottom line and how the bottom line
affects their paychecks. As UTI's experience demonstrates, when employees
understand the impact of their work, amazing things can happen. But research proves
that in addition to devising a clear line of sight between an employee's job and company
success, it's vital for a company to share its success with employees. Hyde says that
when employees understand the vision and how they contribute to it and benefit from
it, they are much more inclined to help achieve it.
There are a number of ways to share financial gains with employees. Whole Foods has
had great success with a team-based gain-sharing program. Employees have the
opportunity to receive gain-sharing payouts every four weeks, if their teams achieve
certain goals related to sales and profit, Strunk says. Unlike profit-sharing, which reflects
the performance of the company overall, the payout is based on a team's performance,
and gain-sharing targets are determined by whatever measures are important to that
team. Every four weeks, payouts are possible for the company's 1,300 teams, and in
keeping with the open communication policy, all gain-sharing results are posted on the
company's intranet.
4. HR is not solely responsible for HR activities. When UTI decided to reorient the
company toward a new customer, HR facilitated the process by bringing in consultants
and hosting meetings. But employees themselves did the actual culture-change work.
"Our measure of success is that HR does not take any claim for doing this," Gleeson says.
"Companies fail if they believe any one department should handle cultural
responsibilities."
The idea that employees and executives should jointly carry the torch of culture and
other HR responsibilities is an oft-repeated sentiment in profitable companies. "HR
responsibilities are diffused through our organization," Strunk says. "Not only that, but if
there is any such thing as an HR 'agenda,' it is driven from the stores on up. I don't
determine the HR agenda. Our entire focus comes up from the team members
themselves."

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5. Cost-savings are important, but not the focus of HR. HR directors agree that saving
money is an ongoing concern for HR. But cost-saving, as mentioned earlier, should not
be the primary focus of HR professionals who want to generate value for their
companies. "I'm not constantly looking at training programs, systems, and procedures to
learn how I might be able to affect the bottom line from a savings or efficiency
perspective," Hyde says. "While those things are important, my focus is on maintaining a
culture that can ensure our business grows and that employees are creative and
innovative enough to get the job done."
6. Employees are given what they need to be productive. It may go without saying that
employees in profitable companies have the tools they need to get the job done. But
those "tools" are not always obvious and may include everything from training and
work/family initiatives to competitive compensation and corporate ethics programs.
David Russo, formerly vice president of human resources for SAS Institute, a Workforce
Optimas Award winner, and currently president and CEO of Empliant, Inc., an HR
software company based in Raleigh, North Carolina, explains it this way: "HR adds value
to the bottom line by creating an attractive workplace that helps employees stay and
want to be productive. When the nickel stands on end, you want employees pushing
that nickel to the company's side. If your company is a good place to work, with good
policies and procedures and a good environment, productivity -- and profit -- increases."
So what's the moral of the story? It's that if you are handed $1,900 per employee to spend on
human resources next year -- which is the average HR cost per employee, according to the
Hackett Group -- spend that money on human capital practices that are closely associated with
the business at hand and appear to have the biggest payoff: getting an employee acquainted
and productive, setting goals and expectations, and having a results-oriented culture. Then sit
back and watch your star rise.

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Bibliography
http://www.sail.co.in/rourkela-steel-plant/about-rourkela-steel-plant
http://www.hcltech.com/
http://www.managementexchange.com/story/crafting-one-of-worlds-largestideapreneurship
http://forbesindia.com/article/real-issue/it-dilemma-sales-growth-v/s-job-freeze/34867/1
https://www.decision-wise.com/show-me-the-money-the-roi-of-employee-engagement/
http://www.workforce.com/articles/how-hr-drives-profits

The Indian Journal of Industrial Relations, Vol. 48, No. 4, April, 2013
HCL Technologies since the Global 2008-09 Crisis: Creating Value through Employee
Empowerment By Associate Professor Charles-Henri Besseyre des Horts, PhD
HEC Paris
Organizational publication of Rourkela steel plant , We Make a Difference.HRD Center.
Regenerating Strength with People: Our Samskar, Our Mission
Google & Wikipedia

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