Name

: Birwa Thakkar

Roll Number : P 1052 Subject Assignment Date : Change Management : Summary of analyzing the problems of ICICI : 20th August 2011

In May 1996, K.V. Kamath was being appointed as a CEO of ICICI (Industrial Credit and Investment Corporation of India) which was Indias leading financial services company. After he entered into the ICICI, he introduced massive changes in the organizational structure and he was mainly emphasizing on the organizational change as he wanted to make the bank as a marketdriven financial conglomerate. The main aim of the new CEO was to make ICICI as a financial powerhouse. This all Mr. Kamath wanted to do so as to increase the ability of the company to respond to the market changes and to tap newer markets.

However, all this was requiring a change in the culture and also in the working pattern wherein the employees were required to learn new competencies and this where the problems were arising as this changes were creating confusion among the employees and many employees, according to the media reports, were began to feel alienated.

Mr. Kamath studied the market and found out that the company (ICICI) is having only the basic products of the banking area and they were following customer orientation approach which was regional in nature. However, in abroad he found out that lot many changes were occurring in the financial market and he wanted to bring all those changes to ICICI also so that the company can be named as one-stop shop for financial services. The problem which was arising here was that company was ignoring the nuances of lending practices in newly opened sectors like infrastructure.

To cope up with the aforementioned problem, Mr. Kamath brought some changes by forming groups called Infrastructure Group (IIG), Oil and Gas Group (O & G), Planning and Treasury Department (PTD). For these departments, Mr. Kamath selected those employees from
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various departments and who were good at performing their jobs. The problem again arouse here was that, this departments were being moved to the corporate center but the zonal offices were continuing their routine work and due to the new groups, the zonal offices were loosing its importance and this is where the employees felt de-motivated.

In addition to this, the company was again facing the problem due to the change which Mr. Kamath has made. The company should focus on the customers at core this was the aim of Mr. Kamath, however, the customers were facing problems in the new groups that what if a customer is having the requirement for all three new formed groups? It was time consuming for the customer and hence to overcome from the problem again new group were being formed and that are Major Client Group (MCG), Growth Client Group (GCG) and Personal Finance Group. This made the work of customer in very easier manner but still the employees were having problems regarding this.

The feedback process at the ICICI was also at a stake as the manager remarked that the efforts given by employees were not being exactly appreciated as last year in the bonuses there was a variance from Rs 30,000 to Rs 250,000 depending upon the performances of individual. And it was found that in many cases the appraisal scores were same but bonus amount was not same and they were not told the reason that why they had done.

Another problem which was being identified was that as Mr. Kamath wanted that company should provide almost every financial service, hence the bifurcation in the customer service people from the product development group was at a problematic zone. To give a solution, the MCG and GCG groups understood the customers needs and acquired the required set of internal skills.

Moreover, to overcome from the dilemma of the employees, some initiatives were being taken up, such as providing training and seminars to the around 257 officers by external agencies, imparting new skills into them, providing in-house training were also being given at Pune and Mumbai. During 1995-96, around 35 officers were nominated for overseas training programme which was being organized by the universities of US and Europe. In addition to this, they also
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introduced two-year Graduates Training Programme (GMTP) for officers in the junior Management grades. The reward system was also being established at that point of time to set the things right. And to avoid conflict, management also announced that the reward system would be based on the group performance and not individual performances. Moreover, to select any individual performer another technique was being introduced which was being kept transparent. However, this all again created a problem of anxiety and stress in human relations due to the fact of having accountability.

Moreover, Mr. Kamnath also identified the problem in compensation structure and to solve that he created two types of remuneration system where one was on contract base which would attract risk-takers and another was on tenure based compensation which would attract to the employees who wanted security. Further the 360-degree appraisal system was also being introduced at ICICI where the employee was being assessed by the peers, seniors and subordinates. And this created a relaxed atmosphere within the company.

Further change came in the company was when the company got merged with the Bank of Madura (BoM) in December 2000. The personnel were clerks and around 350 were subordinate staff. The difference between the employees of ICICI and BoM was in the profiles, grades, designations and salaries which were creating major conflicts in the mind-sets of BoMs employees. They were feared that ICICI would push up the productivity per employee just to match the level of ICICI and for that they might scrutinize the positions at BoM. Moreover, the working culture of ICICI and BoM was quite different and the emphasis of the respective management was also different.

To overcome from the aforementioned problem, the company turned up its all departments into individual profit centers and bonus was given on the basis of the performance of individual profit center rather than profits of whole organization. Moreover, they also upgraded the technologies of BoM offices and they paid special attention to facilitate a smooth cultural integration and to do so company appointed consultants (Hewitt Associates) to work out for a uniform compensation and work culture mater as well as all the change management dilemmas. Finally,

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to get more insights, ICICI also conducted an employee behavioral pattern study to assess the various fears and apprehensions that employees typically went through during a merger.

The major steps taken up by the HR were as follows:

Management established a clear communication channels throughout to ensure the employee participation and to decrease the resistance to the change.

The training programs were conducted which was having direct emphasis on imparting the knowledge, skill, attitude and technology and this was made to upgrade the competencies of the employees.

Management worked on the contingency plans and initiated direct talk with the employee unions of the BoM to maintain good employee relations.

To work in more smoother way, the company also started the integration process where it transferred 450 BoM employees to ICICI bank and 300 ICICI employees were shifted to BoM branches and promotions were also given to around 800 BoM officers which actually motivated the BoM employees and brought harmony among the employees.

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