Here is the case: EMPLOYEE FIRST, CUSTOMER SECOND: MIKE BROWN TRANSFORMS JMBA TECHNOLOGIES Headquartered in Brazil, JMBA Technologies competed in Brazils hyperdynamic information technology (IT) sector. Founded in 1976, JMBA defined itself as one of Brazils original IT garage start-ups. For its first 25 years, JMBA found success offering IT hardware. However, as the global IT industry shifted from hardware to software and to offering infrastructure services, JMBA proved to be less than nimble. In April 2005, the company looked within and promoted Mike Brown to the position of president. Brown immediately set his goal for JMBA: transformational change within the company in order to position JMBA as a global leader in transformational outsourcing services working with clients in areas that impact and redefine the core of their business. Strategic renewal Strategic renewal at JMBA would involve, Brown announced, a movement away from small time engagements and toward high valueadded integrated service consulting and outsourcing. In order to turn that vision into reality, Brown would oversee transformational change at his $1.5 billion, 46,600employee company. (JMBA had operations in 11 countries including the United States, France, Germany, China, and Japan, with 96 percent of its employees worldwide being Brazilians.) His first strategic goal was to pay a great deal more attention to internal operating efficiencies than JMBA had in the past, while simultaneously emphasizing innovative offerings. Brown would, he promised, put our house in order by rejuvenating employees and improving operating efficiencies. From his past management experience, Brown (who had spent seven years as an JMBA engineer before taking the assignment of running an internally developed startup company) had come to believe that employees rather than leaders would be the source of improvement and innovation. Brazils traditional hierarchical culture led executives to take a dictatorial approach to management. Studies of national culture have found that Brazil ranks high on two dimensions: power distance and longterm orientation. Highpower distance suggests greater acceptance of hierarchical authority and a greater capacity to follow than lead. A high score on the longterm orientation index suggests a preference for thrift, perseverance, and predictability. If JMBA was to compete successfully against larger Brazilian competitors such as Infosys, Brown wanted to invert the pyramid, he said, explaining his meaning in blunt terms. For most companies, its the employee who sucks up to the boss. Browns goal for JMBA was to create a culture where as much as possible, [we] get the manager to suck up to the employee. Rejuvenating Employees Three months after assuming the presidents position, Brown announced two initiatives designed to rejuvenate employees and unleash their creative potential. Both initiatives, he also admitted, were intended to be shocks to the system and signal a shaking up of the old culture. Employee First, Customer Second In July 2005, Brown introduced his Employee First, Customer Second initiative in order to invert the pyramid. That initiative, explained Lars Smith, head of corporate human resources, had four strategic objectives: 1. To provide a unique employee environment 2. To drive an inverted organizational structure 3. To create transparency and accountability in the organization 4. To encourage a valuedriven culture Added Brown, I wanted value focused employees that were willing and able to drive an innovative, sophisticated experience for customers. From the start, though, I was clear: Employee First was not about free lunch, free buses, and subsidies. It was about setting clear priorities, investing in employees development, and unleashing their potential to produce bottomline results. 360 Performance Evaluations Along with announcing the Employee First, Customer Second philosophy, Brown introduced 360 performance evaluations. Initially, the evaluations were performed on Brown and his top 20 managers. That was not the shock however; rather, it was Browns directive that the results of that evaluation be posted online for any employee to see. Executives report to feelings of unease at the airing of those results. For Brown, the publication of 360 results signaled that JMBA was serious about his Employee First philosophy. Brown expanded the system so that employees can see the results for their managers as well as their peers. Brown assured them that the ratings would not be used to determine bonuses or promotions. Instead, they would allow the individuals to work with the companys human resources department to create developmental programs for them. Brown appreciated that the idea of posting results would be shocking, at first, to employees. He referred to this as disruptive thinking. When I put my 360 evaluation in the Intranet within my first 90 days of taking charge at JMBA Technologies, it showed that the CEO was willing to put his neck on the line. It is a simple gesture that galvanizes others into thinking on similar lines. We [Brazil] claim to be one of the worlds largest democracy, but while running our businesses we are dictatorial toward our employees. Additional People Alignment Initiatives Some additional initiatives started by Brown include the following: JMBAs training program was renamed Talent Transformation and Intrapreneurship Development. We did not just want to have swanky offsite development programs, then have employees return to work and go back to status quo, explained the program head. Instead, JMBA rotated employees through multiple projects and jobs and then helped them understand the work of their operation at both the tactical and strategic level. JMBA abandoned performancebased bonuses and adopted, instead, what was called trust pay. Aimed most especially at junior engineers, pay would be fixed at the beginning of the year. That represented a dramatic break from the industry standard of having variable pay account for up to 30 percent of total compensation. It increased our cost base, admitted Brown, but the idea was, wed pay you fully, but we trusted that you would deliver. It was intended to reduce transaction volume and increase trust. Further Challenges By 2007, Brown could point to some impressive improvements. Under his leadership, JMBA has achieved the highest level of organic growthdefined as growth achieved through internal development rather than by acquisitions and mergersamong Brazils IT sector. Employee retention had been a particular problem for JMBA. In 2005, the companys attrition ratethe percentage of total employees who leave a company in a yearwas 20.4 percent, among the highest in the ndustry. In 2007, that figure dropped to 17.2 percent (still higher than many competitors). At the same time, competition remained unrelenting and was becoming more global. IBM announced plans to invest $6 billion in Brazil in the upcoming three years, up from $2 billion in the previous three years.

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