Change Management @ ICICI By Group-5 Group Members: 1)Adrish Ray 2)Deepak Prakash Tejale 3)G. B. Sambhrama 4)Girish Krishnamurthy 5)Neelkant Rajaghatta 6)Neha Gupta Q1. ‘ The changed focus of ICICI to become a non-stop shop for financial services necessitated the changes in the organization culture and goals. ’ Analyze the changes implemented by Kamath in mid-1990s and comment briefly on the necessity and efficacy of these changes. Answer : In 1996, when Kamath took charge over ICICI, he introduced massive changes in the organizational structure.
He wanted to change the development bank into a market-driven financial conglomerate. Some of the changes implemented by Kamath for ICICI are: 1. The first change was initiated within the organization by forming Infrastructure group (IIG), Oil & gas group (O&G), Planning and treasury department (PTD) and the Structured products group (SPG). This was necessary because the lending practices were quite different for all of these groups. He picked the efficient people from various departments for these groups. 2. The next move by Kamath was to focus its operations much more around its customers i. . they wanted to be customer oriented. For this ICICI set up 3 new departments : • Major client group (MCG) • Growth client group (GCG) • Personal finance group Now the customer would communicate only to his representative group i. e. MCG & GCG who helps them to identify the required department to do the job. It was necessary to make such changes because previously the customers had to approach the relevant departments separately which was ultimately time consuming. This step also resists the customers to move to other competitors. 3.
Now ICICI wanted to provide almost every financial service, separating the customer service people from the product development groups. The MCG & GCG person understood the clients need and possessed the required skill to develop the solution. For this purpose ICICI took the initiative to impart new skills to existing employees. This was done by conducting training programmes and seminars by external agencies covering different areas. This was necessary because the employees need to trained from time to time according to the changing business scenario. . The management also took steps to build a reward system to avoid negative impact of profit centre approach. The most important thing was that the management ensured rewards only for group performance rather than individual performances. This created the spirit of team work among the employees. 5. The next step was taken for compensation structure in work place. Two types of remuneration was considered : • On contract basis- which attracted the risk takers, & • On tenure basis- which is appealing to employees who resists change and wanted security 6.
Kamath also took steps for proper appraisal system for their employees. So he implemented a 360-degree appraisal system in which an individual was assessed by his peers, seniors and subordinates. The employees were happy for their appraisals and recognition which leaded to the job satisfaction of the employees. The above changes were necessary to be taken by ICICI to achieve its objective of becoming a non-stop shop for financial services. And because of these changes by 2000, ICICI emerged as the second largest financial institution in India, with assets worth rs. 82 billion. Q2. Compare and contrast the change management process at ICICI initiated after Kamath became the CEO with the one following the ICICI-BoM merger. Also explain the rationale behind the employee resistance in both the cases. Ans. Following were the change management process induced by Mr Kamath once he became the CEO of ICICI in may 1996. 1. Kamath identified the main problem as the company’s ignorance regarding the difference of lending practices in newly open sectors like infrastructure in relation to its foreign counter parts. . The change program initiated within the organization lead to the creation of following groups like infrastructure group (IIG), oil & gas group (O&G), planning and treasury group (PTD), and structured product group (SPG) having different lending practices. 3. Prime focus tends to shift from operations to customers. 4. With the intend of making ICICI to render every financial service Mr Kamath took a step of separating the customer service people from the product development group, which turned out to be another problem area.
Following were the change management process that were induced when ICICI bank merged with Bank of Madura in December 2000. 1. Technological upgradition of BoM branches: This intended to upgrade the technological standards of BoM branches to the standards of ICICI. 2. Facilitation of Smooth cultural integration: To facilitate such a complex integration ICICI appointed consultants Hewitt Associates to help in working out a uniform compensation and work culture issues and related change management problems. 3. Formulation of HR Blue Print: This was created to ensure smooth integration of human resources. MANAGING HR DURING THE ICICI-BoM MERGER THE HR BLUEPRINT |AREAS OF HR INTEGRATION FOCUSSED ON | |• A data base of the entire HR structure |• Employee communication | |• Road map of career |• Cultural integration | |• Determining the blue print of HR moves |• Organization structuring | |• Communication of milestones |• Recruitment & Compensation | |• IT Integration – People Integration –Business Integration. • Performance management | | |• Training | | |• Employee relations | 4. Establishment of clear communication channels: To ensure employee participation and to decrease the resistance to the change, management established clear communication channels throughout to avoid any kind of wrong messages being sent across. 5. Integration process between ICICI and BoM: This process was concerned with transfer of employees within ICICI and BoM.
Arround 450 BoM employees were transferred to ICICI bank while 300 ICICI bank employees were shifted to BoM branches. 6. Introduction of promotion schemes for BoM employees: This scheme could identify around 800 BoM officers who were eligible for promotions. In contrast with the above mentioned changes in two different scenarios the employee reaction is as follows: SCENARIO 1: Change management process induced by Mr Kamath on his appointment as CEO of ICICI in may 1996. 1. Peoples resist to first change as they started feeling they may go unnoticed. 2.
Peoples resist to second change due to discrimination in bonus allotment even after having same appraisal points 3. People resisted to distorted compensation packages between competing divisions, as there was no demarcation between customer service people and product development groups. SCENRIO 2:ICICI AND BoM MERGER 1. Uneasiness among staff of BOM as they felt that ICICI push up the productivity for employee to match the levels of ICICI. 2. BOM employee feared that their positions would come in for closer scrutiny. 3. There were not sure that rural branches would continue as ICICI business was largely urban oriented. POST-MERGER’ EMPLOYEE BEHAVIORAL PATTERN |PERIOD |EMPLOYEE BEHAVIOR | |Day 1 |Denial, fear, no improvement | |After a month |Sadness, slight improvement | |After a Year |Acceptance, significant improvement | |After 2 Years |Relief, liking, enjoyment, business development activities |
Hence this case reveals the importance of change management for the former and how effective management of change could bring out best results from the employees in the case of latter.