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Downturn Tests HCL's Pledge to Employees

December 2, 2009
India-based HCL Technologies has lived up to its pledge not to lay off anybody during the downturn. As a result of that kept promise and the tech services firm’s broader “Employee First” philosophy, employee engagement has remained high and fueled business success, says Shami Khorana, president of HCL America, a Sunnyvale, California-based division of the company.

Khorana says the pressures of the recession served as a test for the Employee First program, which seeks to give workers greater income security and a stronger voice in the firm. It appears HCL Technologies aced the exam. The firm posted a revenue gain of 21 percent year over year for the quarter ending in June, far outperforming India-based rivals Wipro and Infosys Technologies. For the year ending in June, HCL reported net income of $264 million.

Driven employees have helped HCL compete for more complex, lucrative deals such as a $350 million contract to outsource IT tasks for Reader’s Digest, Khorana says. The Employee First program “helped us to get through the problems better than most,” Khorana says.

Last year, HCL Technologies CEO Vineet Nayar gave his word that no “HCLite” would be laid off because of the financial crisis. The pledge was in keeping with a decision, dating to 2005, to focus on employees as the firm’s top priority. Under the Employee First program, HCL improved communication among workers, and Nayar instituted “trust pay.”

In contrast to an industry practice of making 30 percent of engineers’ pay variable, HCL chose to pay higher fixed salaries that included all of what would have been the variable component—essentially trusting that employees would deliver.

During the past year, HCL has tinkered with trust pay to reintroduce a financial carrot. But the amount of variable pay is still modest—about 5 to 6 percent of the total, Khorana says.

The trust-pay change was just fine with Raj William, an HCL systems administrator based in Sunnyvale. “This is actually a way to increase productivity for employees and to have them strive to reach their goals,” William says. To avoid any layoffs over the past year, the firm trimmed travel expenses. It also sought to boost morale by organizing community volunteering projects for employees.

HCL generally seems to have kept its 54,000-person workforce upbeat during the downturn. Signs of employee engagement include HCL’s impressive showing earlier this year in “best employer” contests run by consulting firm Hewitt Associates. HCL topped Hewitt’s list of the best employers in India and earned a spot among the 30 best employers in Asia.

HCL’s employee-first approach fits with calls by experts for a more involved, reciprocal relationship between employer and employee, and with employees’ current concerns about job security.

Suen Ming Lim, an HCL desktop support manager based in Sunnyvale, says the follow-through on the no-layoffs promise gave him a positive feeling about the company—a sentiment firms like to see when trying to retain talent. “It made me feel fortunate to be part of the company,” he says.

Workforce Management, November 16, 2009, p. 23 -- Subscribe Now!