Chapter 1 INTRODUCTION

1.1 Concept of Change

Changing is the regulation of nature. Any business organization undergoes change on a continuous basis, technically termed as Corporate Restructuring. It can be defined as a strategy to achieve faster growth, desired capital structure and change in the ownership and control of company. The reasons behind change may be external or internal factors. In the present scenario, business organization undertakes changes to increase their cutting edge over the competition and enhance their leadership positions. It is a fundamental fact of finance that growth and capital employed are two basic drivers of the value of an organization. On the other hand neither growth nor improvement in ROCE is possible unless the company is under the control of competent, progressive and visionary management. The present paper is an attempt to understand the strategic move of ICICI bank. The case study will reveal the motives behind and synergies from such M&A activities. An attempt has been made to analyze, Is corporate restructuring a tool to enhance the shareholders value. This entire case study is about the implementation of change in ICICI Bank. Kundapur Vaman Kamath is the man most credited with building the Industrial Credit and Investment Corporation of India Ltd. (ICICI), Mumbai, into India's largest private sector bank. When he took over as CEO and managing director in 1996, ICICI had total assets of Rs 21,000 crores. In April 2009, when Kamath, 61, handed over the reins to Chanda Kochhar and took over as its non executive chairman, ICICI's total assets had grown to a whopping Rs 3,80,000 crores, with an annual profit of Rs 3,750 crores. The visionary banker saw opportunities in both retail and corporate lending that few of his contemporaries thought existed and in doing so changed the face of banking in India. Kamath introduced massive changes (Planned change) in the organizational structure, stimulate innovation, empowered employees, and introduce work teams and the emphasis of the organization changed from a development bank mode to that of a market-driven financial conglomerate.

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1.2 Principles of Change a) Challenging emotions should be greater than positive emotions. b) Change only happens when each person makes a decision to implement the change. c) Confidence of getting tough anywhere. d) Truth" is more important during periods of change and uncertainty than a good news. e) People who work are capable of doing much more than they are doing. f) The intrinsic rewards of a project are often more important than the material rewards and recognition. g) Dont force change on anyone. h) The change process must be linked to business and performance goals. i) The change process involves both organizational and personal participation.

1.3 Challenges of Changes

a) Involves new procedures. b) Leadership - changing the running of an organization from a command and control nature of management to the nurturing and motivational nature of leadership. c) Focus - making business choices to bring alignment and focus to the organization. d) Commitment - creating commitment to the future of the enterprise throughout the organization. e) Resistance- Resistance is a complex entity that directly affects the outcomes of change, both positively and negatively.

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1.4 Eight Steps to Successful Change- John P. Kotter a) Increase urgency - Inspire people to move, make objectives real and relevant. b) Build the guiding team - Get the right people in place with the right emotional commitment, and the right mix of skills and levels. c) Get the vision right - Get the team to establish a simple vision and strategy focus on emotional and creative aspects necessary to drive service and efficiency. d) Communicate for buy-in - Involve as many people as possible, communicate the essentials, simply, and to appeal and respond to people's needs. De-clutter communications - make technology work for you rather than against. e) Empower actions - Remove obstacles, enable constructive feedback and lots of support from leaders - reward and recognise progress and achievements. f) Create short-term wins - Set aims that are easy to achieve - in bite-size chunks. Manageable numbers of initiatives. Finish current stages before starting new ones. g) Don't let up - Foster and encourage determination and persistence - ongoing change - encourage ongoing progress reporting - highlight achieved and future milestones. h) Make change stick - Reinforce the value of successful change via recruitment, promotion, and new change leaders. Weave change into culture.

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1.5 Kurt-Lewins Change Model ICICI has followed some of the scheme and models for managing change in the organization. One models, followed by the organization as well as lines of Kurt Lewin's three phases has, this model has three stages in the managing process when the changes in the organization. Unlock: This is the largest three phases of the model. This step gives the details of the preparatory steps to the changes taking place in the organization. It also explains how to prepare for change, decision to stay in the situation or to make changes and leave the comfort zone. Melt occur and contribute to changes in the organization, not only do not want all the possible consequences that a change has occurred in front of them. Simply put, it is defined by the organization to ensure the motivation of employees, business processes and strategies to ensure the full output of the entire fruit. Motion: If the organization ready to move for change, and are willing to explore new opportunities for others and the direction they need to be forward. This phase includes the creation of third time to new values, principles; develop the changes defined in the organization. Sometimes this may mean changes in the structural forms and processes to support the proposal that the organization change. Re-freeze: If you have recently strategies to the core processes of organizational changes adopted amendment shall be frozen. Some system supports such as the evaluation system to reward, other cultures and sub-systems within the company are being considered to support the acquisition of new functions and actions. The process of re-freezing allows the organization to achieve higher levels of symmetry through the institutionalization of organizational change (D. B. K Srivastava, 2007).

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Kurt Lewins model of change Stage Characteristics People in the organization made aware of problems/performance gap and need for change Organizational impact This diagnosis stage is often driven by a change agent

Unfreezing

Changing

People experiment with new workplace behavior to deal with needed change

This intervention stage features specific training plans for managers and employees

Refreezing

People employ new skills and attitudes and are rewarded by organization

Changes are institutionalized in the corporate culture

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Chapter 2 COMPANY PROFILE

2.1 Background
ICICI Bank is Indias second largest bank, with over 50 years of financial experience and 14 million customers worldwide. Today, ICICI Bank is a global bank, with its presence in 18 countries across the globe. ICICI Bank is the most valuable bank in India in terms of market capitalization and is also ranked second amongst all the companies listed on the Indian stock exchanges. ICICI Bank is the first Indian company to be listed on the New York Stock Exchange and is a part of the well-established and hugely successful ICICI Group. The ICICI Group has expertise in many financial services from banking to broking, mutual funds to insurance, home loans, venture funds and much more. The Group is the largest consumer credit provider and the largest private sector life and general insurer in India, with diverse products and varying expertise. ICICI was established by the Government of India in 1955 as a public limited company to promote industrial development in India. ICICI Bank was originally promoted in1994 by ICICI Limited, an Indian financial institution, and was its wholly owned subsidiary. The major institutional shareholders were the Unit Trust of India (UTI), the Life Insurance Corporation of India (LIC) and the General Insurance Corporation of India (GIC) and its subsidiaries. The equity of the corporation was supplemented by borrowings from the Government of India, the World Bank, the Development Loan Fund (now merged with the Agency for International Development), Kreditanstalt fur Wiederaufbau (an agency of the Government of Germany), the UK government and the Industrial Development Bank of India (IDBI).

2.2 Objectives
assist in creation, expansion and modernization of enterpriseshttp://skillmatters.in/ encourage and promote the participation of private capital, both internal and external take up the ownership of industrial investment; and expand the investment markets.

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2.3 History of ICICI

1. In 1955- ICICI was established as a public limited company by the Government of India to promote industrial development in India. 2. In mid 1980s, ICICI diversified rapidly into areas like merchant banking and retailing. 3. In 1987, ICICI co-promoted India's first credit rating agency, Credit Rating and Information Services of India Limited (CRISIL), to rate debt obligations of Indian companies. 4. In 1988, ICICI promoted India's first venture capital company Technology Development and Information Company of India Limited (TDICI). 5. In 1992 ICICI tied up with J P Morgan of the US to form an investment banking company, ICICI Securities Limited. In line with its vision of becoming a universal bank. 6. In 1998 ICICI restructured its business based on the recommendations of consultants McKinsey & Co. 7. 2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s. 8. 2002 The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI, ICICI PeIn May 1996, Kamath returned to ICICI as its Managing Director and Chief Executive Officer. Kamath was instrumental in expanding the Group's services to the retail customers. He initiated a process of a series of acquisitions of non-banking finance companies in 1996-98, and led the way to the formation of ICICI Bankrsonal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank. After receiving all necessary regulatory approvals, ICICI integrated the group's financing and banking operations, both wholesale and retail, into a single entity. 9. Also in 2002, ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grindlays Bank. 10. ICICI started its international expansion by opening representative offices in New York and London.

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11. 2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it established an alliance with Lloyds TSB. 12. It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai. 13. 2004 ICICI opens a rep office in Bangladesh to tap the extensive trade between that country, India and South Africa.

ICICI is the one which has fast change in the Indian organization. It is above all the plans for development on the grounds that, as already predicted to convey the challenges in the coming future and the issues potential that were faced by the changes management. Is not with the results of this organization is known that the success of managing and controlling the problem by appointing staff Kamath actions. ICICI has been suffering issues internally to organizational change. Internal problems must be the main driver of organization changes. There are many problems which have to be determined by the organization changes as well the obstacles that the organization has to go through its journey. The ICICI has undergone many changes from its date of establishment, the changes were regarding the economic and other which are occurring in the market, few analysis of ICICI for the determination of change in the drivers of organization. The organization has been in-sell and cross-sell products and services aggressively going to the second largest bank and the institution. In its 90-in, Safety and finance joint venture is one of the organizations, such as JP Morgan, the company is known for the same configuration Asset Management. These are all previous phases of development now occur in the further years, various union trades and the organization joint force. ICICI is a one of the leading provider of private organizations, products and services to customers in various fields, the innovative reputation, strength of finance and culture, along a general. All these features changes in the organization of organizations to embrace.

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Chapter 3 SWOT ANALYSIS OF ICICI

SWOT analysis is conducted, organizational strengths and weaknesses, opportunities and risks that, development organization that is used to estimate the potential impact of aggressive companies are analyzed. This process allows the organization to the strategy is accepted and recognized standards in their markets which assist the organization to construct their schemes for overcoming some mistakes in the government. The following are the strengths and weakness analysis of ICICI bank to understand better the positioning of the bank:

3.1 STRENGHTS
1. Brand Name: ICICI Bank has earned a reputation in the market for extending quality services to the market vis--vis its competitors. It has earned a strong Brand name in banking in a very short span of time. 2. Market Share: ICICI Bank has the largest market share of 34% in the IT & ITES industry in Hyderabad according to our survey (within the limitation of the sample size.) 3. Huge Network: There many branches of ICICI in India. ICICI stores are about 500 and its ATMs are 1,800 in India therefore the service quality to the customers around the state.ICICI Bank has the highest number of linked branches in the country. The bank operates through a network of 450 branches and over 1800ATMs across India, thus enabling them to serve customer in better way. 4. Diversified Portfolio: ICICI Bank has all the products under its belt, which help it to extend the relationship with existing customer. ICICI Bank has umbrella of products to offer their customers, if once customer has relationship with the bank. Some Products, which ICICI Bank is offering are: Retail Banking Business Banking Merchant Establishment Services (EDC Machine) Personal loans & Car loans Demat Services with E-Broking Mutual Fund (ICICI Bank is the Distributor of all Mutual Fund) Insurance Housing Loans. Change Management Page 9

5. Salary Account: One very interesting thing that we have observed in our survey is that ICICI is having an edge over other banks in case of Salary Account. Most of the companies are having their Salary Account with ICICI even if their Current Account is with any other Bank. This is mainly because of the huge network of ATMs and branches of ICICI. 6. Working Hours: ICICI is the only bank which is having its working hours from 8to 8 which is one of the major strength of ICICI Bank with respect to IT & ITES Industry As most of the IT & ITES companies are global players and their Parent company is in US, so they have to work according to their office time. Thus some have their Office time in the morning and some have it in the evening so if the working hour of the bank is 8 to 8 it is very convenient for them. 7. Treasury Department: ICICI is the only bank which is having its treasury department especially for Hyderabad Customers. So customers can get the best rates for foreign exchange. 8. Aggressive Marketing: ICICI Bank is known for its aggressive marketing of its products. Recent Endorsement of its product by AMITABH BAHCHAN proves the same. This gives ICICI an edge over other banks. 9. Technology: From its inception, ICICI Bank has adopted a policy of selecting internationally proven and specialized Packaged Systems for its technology. ICICI banks technology platform has been acknowledged globally as one of the best in terms of robustness, flexibility and cost efficiency. ICICI Bank is in a position to leverage this platform to further build cost and service advantage.

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3.2 WEAKNESS
1. Transaction Cost: ICICI Bank charges high cost for its transactions. Throughout data analysis we have find out that most of the small companies prefer nationalized banks only because of this cost factor. Also the group has found out that there are companies which are going for multi bank system i.e. they are using only those facilities of ICICI Bank which are provided at cheaper rates and for other services they are going to nationalize banks and MNCs. So there exists a huge potential for ICICI Bank if they are ready to make their transaction cost flexible. 2. Focus Only On High End Customers: The bank targets only the top bracket of clients and does not cater to the needs of small customers. Due to this reason the bank may sometimes loose good clients. 3. Defensive Approach in Lending: ICICI Bank has a defensive approach in lending. Mainly to IT & ITES companies Bank do not provide loan as these companies are not having collaterals so bank hesitate in giving loans to them. Because of this policy companies prefer nationalized banks and ICICI Bank in turn sometimes loose potential customers. 4. Little Presence Outside India: ICICI Bank is having little presence outside India, because of which companies prefer MNC Bank, mainly Citibank. So if ICICI Bank tries to emerge outside India then it has a huge potential of customers. 5. Poor Customer Care/Service: With its aggressive marketing ICICI Bank is rapidly increasing its customer base. They are not however, increasing the number of employees accordingly. This is leading to deterioration of the standard of customer service.

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3.3 OPPORTUNITIES
1. IT and ITES: ICICI is the future of the market and the large untapped in India in sectors of IT and ITES. The current bank dissatisfaction that many Indian institutions in India are not very much satisfied at this time, it can convert their opportunities in ICICI 2. Consultation with Small Businesses: Business advising for smaller Players: The analysis has also indicated that the concept of business advising though very popular with the higher end players is virtually nonexistent in the lower end of the market. ICICI should take this opportunity to provide business advising to the smaller companies at competitive rates and try to take the first mover advantage How much of the banks to focus on business consulting for small businesses that ICICI to obtain is the opportunity for all business categories 3. Remittances: From the analysis group has also found out that ICICI bank has very little presence as far as the EEFC account is concerned. Companies prefer to bank with MNCs (which have greater presence in the foreign countries) and nationalized banks (which according to the companies provide lower transaction rates) to get their inward remittances in spite of ICICI being providing one of the most competitive rates. So the bank can promote its EEFC account better and get the key to the door of huge potential market.

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3.4 THREAT
1. Company bank increased MNC: The Indian government friendly lot of MNC banks are now increasing threat to banks such as ICICI in India. This will certainly increase competition, which in turn leads to potential threats in ICICI in the market place. 2. Nationalization in bank development: With PSU banks like SBI going all out to compete with the private banks and government giving them a free hand to do so; it can prove to be serious threat for banks like ICICI. The fee has been granted by the bank practical significance for a number of nationalized banks in India like SBI, which is considered a serious threat to ICICI as they compete with them. 3. Customer dissatisfaction: This is the biggest threat and vulnerability ICICI. It was observed that many of the organizations and customers who use the services of ICICI satisfied with the services of ICICI. This should be regarded as a serious problem, and customers are not satisfied by other banks that offer better products and services to their customers.

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Chapter 4 CHANGE MANAGEMENT AT ICICI

4.1 Overview
The story of ICICI Bank indeed is quite exciting as we look into how the company has internationalized its business vis-a-vis the other banks from India. With the least number of international bank branches as compared to many of the other Indian banks, it stands tall in terms of its share of international business, especially in the foreign remittance business. In a short period of time, it has grown to be the largest bank in the private sector with a global foot print. Its share of international remittance business among the banks in India has risen from 4% in 2003-04 to about 30% today while retaining over 75% of the total online international remittance business in India. ICICI has not changed much over the past five years. It was a great success in managing change within an organization. Begin to compete with banks in India to meet their market position. The use of the agency has become an important union with the server, and that the policies implemented by management. ICICI has improved its market position and offers a variety of products and services to customers. In recent years, trust and customer satisfaction after purchase missing. Since technology is the application of certain services by sharing new technologies has changed as a result of their service is quick and easy. Because of these changes can not invest in ICICI in the past five years, and confidence in the market in the same situation over the next five years to do it again. Changed their business processes, strengthening of some units and some of its services powerful body for all categories of its customers. Another of the challenges of change management that the organization has suffered as their client is more pronounced than before the service provision of various services, because this method if the needs of any customer service three sections which are separated and fresh. This process can lead to times where there is the possibility that customer off to another service provider of company. This will ultimately lead to customers losing organization. All of these challenges and ICICI conducted during the last five years and has one of the largest banks in India Not only was the company faced with the challenge of competition from other established players in the industry but also from potential customers for international banking and remittance business. In fact when K.V. Kamath took over as the CEO of Change Management Page 14

ICICI Bank in 1996, the banking industry in India was fast changing with several banking deregulations underway and increasing competition in the market. Around this time, the bank had a high employee turnover to the extent that it could destabilize the operations of the bank. Kamath wondered how to manage the manpower. He also wondered if technology was a solution to handle some of these problems and would it also help in the companys growth plans. ICICI as an organization is divided into six major product divisions like; Retail Banking, International Banking, Rural, MicroBanking and Agri-Business, Government Banking and Corporate Centre. Kamath identified the main problem as the company's ignorance regarding the nuances of lending practices in newly opened sectors like infrastructure. The change program was initiated within the organization. Organization changed from a development bank1 mode to that of a market-driven financial conglomerate.

The Key Objectives of the Change In ICICI

A number of objectives and problems in the organization who are agreeable to pay ICICI were ready to change. The mainly three issues that have caused five years in the change of atrophy were ICICI, relatives and lateral adjustment. With the Kamath ICICI has seen various organization changes. Kamath said that workers will lose effect on the world of work. They follow some of the strategies to overcome this problem by the scoring system in the organization. He started the distribution of their benefits to workers who stop too lazy and committed to their work. Prior to ICICI employees is not a five-point scale effectively. They change the process of concluding a five-point scale and graded according to the performance. This is degree two percent and three percent of workers increased from creation. Is observed even in the organization uses a DOS-based technology as it becomes available from new technologies (KV Kamath, 2005). Kamath and the process have changed the basis of Oracle to improve business processes in improving the interface of user. Other change drivers in 90 days of a public company ICICI process with INT Kamath. This states the rule that all start to implement a project or task within 90 days of start date. 90-day rule developed by businessmen who have started their business in Silicon Valley do. The employer must be designed, constructed, and to use the product on the market and have lost 90 days of competition. This is a strategy, ICICI Change Management Page 15

will take to complete the projects at hand to win the race competitive in this world. In the Kamath seminar visit to New York, this strategy has attracted decided to take the organization. As this rule is three years six months able to complete 12 of almost all projects are following the strategy ICICI rule of 90 days. However, this strategy has found a good knowledge of the organization to finish the projects in time with the output product perfectly. There are some factors of internal that have covered the way for changes in the organization over the past 5 years. All these changes are to win the competition in the market of Indian and the size of the wholesale and retail market. These changes have led to the source, s part of the business challenges of process management. Above all, ICICI these changes have made some changes to business processes the customer's needs. ICICI creation of development fund, the club IFCI, IDBI and ICICI to participate because of the changes in the sector of finance has decided to do a service to stop ICICI as its customers. The Ministry has decided to make these measures should apply to all financial institutions to provide services to clients, was not a lowbudget scenario or discriminatory. In this situation at the beginning of a change in the organization in the preparation of O & G (oil and gas), IIG (Group Infrastructure), DES (Structured Products Group) and DTP (Planning and Finance) held for the provision of loans to customers. For food processing to control sections have heard some of these experts for their current employees. Following this process the most talented group offers business centers and the attention given to them over the branches. Because many of these workers have a complaint after being informed by the managers must have to be in the group of business or otherwise go out of the organization.

4.2 Organization Divided In Groups

Infrastructure group (IIG) Oil & gas group (O&G) Planning and treasury department (PTD) Structured products group (SPG)

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4.3 Top Management Change at ICICI

V. Vaidyana, executive director, ICICI Bank, was appointed as MD & CEO of ICICI Prudential Life Insurance Company (ICICI Life). He took over from Shikha Sharma last year. Sandeep Bakhshi, MD & CEO, ICICI Lombard General Insurance Company (ICICI General) was appointed as ED of ICICI Bank and is responsible for retail and rural banking. Mr Bakshi's post was filled by Bhargav Dasgupta, ED, ICICI Life. Chanda Kochhar, who took over as MD & CEO, ICICI Bank, from May 1 was also appointed as non-executive chairperson of ICICI Life, ICICI General, ICICI Prudential Asset Management Company (ICICI AMC), ICICI Securities, ICICI Bank UK PLC and ICICI Bank Canada. She assumed charge after the bank's MD & CEO KV Kamath stepped down on April 30 2009, and assumed office as non-executive chairman of the Board effective May 1, 2009. N Vaghul retired as non-executive chairman of the bank on April 30, 2009.

4.4 Operations Focus on Customers

ICICI set up three new departments, 1) Major client group (MCG) A staff of about 30-40 people. Handled top 100 customers of ICICI. A staff of about 60 people. Looked after the needs of mid-size companies.

2) Growth client group (GCG)

3) Personal finance group.

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Chapter 5 THE CHANGE LEADER

In May 1996, K.V. Kamath (Kamath) replaced Narayan Vaghul (Vaghul), CEO of India's leading financial services company Industrial Credit and Investment Corporation of India (ICICI). Immediately after taking charge, Kamath introduced massive changes in the organizational structure and the emphasis of the organization changed from a development bank1 mode to that of a market-driven financial conglomerate. Kamath's moves were prompted by his decision to create new divisions to tap new markets and to introduce flexibility in the organization to increase its ability to respond to market changes. Necessitated because of the organization's new-found aim of becoming a financial powerhouse, the large-scale changes caused enormous tension within the organization. The systems within the company soon were in a state of stress. Employees were finding the changes unacceptable as learning new skills and adapting to the process orientation was proving difficult. But the top management of ICICI Bank seems to have had a clear reason for the expansion of its business worldwide as can be seen from the statement below: "What role am I supposed to play in this ever-changing entity? Has anyone worked out the basis on which roles are being allocated today?" - A middle level ICICI manager, in 1998. "We do put people under stress by raising the bar constantly. That is the only way to ensure that performers lead the change process." - K. V. Kamath, MD & CEO, ICICI, in 1998. When K V Kamath came back from ADB (Asian Development Bank)in 1996,working there for 8 enriching years. Kamath, have seen the changes occurring in the financial sector abroad, wanted ICICI to become a one-stop shop for financial services. But there were basic problems in the organization like- ignorance in the organization about the lending practices in the new sectors like infrastructure, problem of atrophy ( which was deep rooted in the organization), lack of motivation to grow and improve customer services and adapt to new technology( use of internet, ATM for fast services). Change Management Page 18

So he initiated the change within the organization. The first move being the creation of the 'infrastructure group (IIG),' 'oil & gas group (O&G),' 'planning and treasury department (PTD)' and the 'structured products group (SPG)', as the lending practices were quite different for all of these. As these new groups took on the key tasks, a majority of the work, along with a lot of good talent, shifted to the corporate center. While the zonal offices continued to do the same work - disbursing loans to corporates in the same region - their importance within the organization seemed to have diminished. Another change management problem surfaced as a result of ICICI's decision to focus its operations much more sharply around its customers. To tackle this problem, ICICI set up three new departments: major client group (MCG), growth client group (GCG) and personal finance group. In the major client group, a staff of about 30-40 people handled the needs of the top 100 customers of ICICI. On the other hand, about 60 people manned the growth client group, which looked after the needs of mid-size companies. Obviously, the bigger clients required more diverse kinds of services. So working in MCG offered better exposure and bigger orders. This movement has challenged the status quo of the organization. And act as a catalyst to resistance toward the change as it is threat to established power relationships, threat to expertise. The management had tremendous resistance in the first year. People were willing to come to blows and there were emotional breakdowns also Change Challenges. The changes also brought in a lot of confusion among the employees, with media reports frequently carrying quotes from disgruntled ICICI employees. According to analysts, a large section of employees began feeling alienated. The discontentment among employees further increased, when Kamath formed specialist groups within ICICI like the 'structured projects' and 'infrastructure' group. Doubts were soon raised regarding whether Kamath had gone 'too fast too soon,' and more importantly, whether he would be able to steer the employees and the organization through the changes he had initiated.

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Chapter 6 DEREGULATION CHALLENGES

ICICI was a part of the club of developmental finance institutions (DFIs ICICI, IDBI and IFCI) who were the sole providers of long-term funds to the Indian industry. If the requirement was large, all three pooled in the money. However, the deregulation beginning in the early 1990s, allowed Indian corporates' to raise longterm funds abroad, putting an end to the DFI monopoly. The government also stopped giving DFIs subsidized funds. Eventually in 1997, the practice of consortium lending by DFIs was phased out. It was amidst this new found independent status that Kamath, who had been away from ICICI for eight years working abroad, returned to the helm. At this point of time, ICICI had limited expertise, with its key activity being the disbursement of eight-year loans to big clients like Reliance Industries and Telco through its nine zonal offices. In effect, the company had one basic product, and a customer orientation, which was largely regional in nature. Kamath, having seen the changes occurring in the financial sector abroad, wanted ICICI to become a one-stop shop for financial services. He realized that in the deregulated environment ICICI was neither a low-cost player nor was it a differentiator in terms of customer service. The Indian commercial banks' cost of funds was much lower, and the foreign banks were much savvier when it came to understanding customer needs and developing solutions. Kamath identified the main problem as the company's ignorance regarding the nuances of lending practices in newly opened sectors like infrastructure.

Steps taken to overcome challenges:

The change program was initiated within the organization, the first move being the creation of the 'infrastructure group (IIG),' 'oil & gas group (O&G),' 'planning and treasury department (PTD)' and the 'structured products group (SPG)', as the lending practices were quite different for all of these. Kamath picked up people from various departments, who he was told were good, for these groups.

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The approach towards creating these new skill sets, however, led to one unintended consequence. As these new groups took on the key tasks, a majority of the work, along with a lot of good talent, shifted to the corporate center. While the zonal offices continued to do the same work - disbursing loans to corporates in the same region - their importance within the organization seemed to have diminished. An ex-employee remarked, "The way to get noticed inside ICICI after 1996 has been to attach yourself to people who were heading these (IIG, PTD, SPG, O&G) departments. These groups were seen as the thrust areas and if you worked in the zones it was difficult to be noticed."

Another change management problem surfaced as a result of ICICI's decision to focus its operations much more sharply around its customers. In the system prevailing, if a client had three different requirements from ICICI, he had to approach the relevant departments separately. The process was time consuming, and there was a danger that the client would take a portion of that business elsewhere. To tackle this problem, ICICI set up three new departments: major client group (MCG), growth client group (GCG) and personal finance group. Now, the customer talked only to his representative in MCG or GCG. And these representatives in turn found out which ICICI department could do the job.

Though the customers seemed to be happy about this new arrangement, people within the organization found it unacceptable. In the major client group, a staff of about 30-40 people handled the needs of the top 100 customers of ICICI. On the other hand, about 60 people manned the growth client group, which looked after the needs of mid-size companies. Obviously, the bigger clients required more diverse kinds of services. So working in MCG offered better exposure and bigger orders. The net effect was that the MCG executive ended up doing more business than the GCG executive. A middle-level manager at ICICI commented, "The bosses may call it handling growth clients but the GCG manager is actually chasing non-performing assets (NPA) and Board of Industrial and Financial Restructuring (BIFR) cases."

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Kamath was quick to deny this allegation as well, "Just because somebody is within the MCG does not guarantee him success. And these assignments are not permanent. Today's MCG man could easily by tomorrow's GCG person and vice-versa." Complaints against these changes put in continued and ICICI was blamed for not putting in adequate systems in place to develop the right people. The manner, which ICICI recognized an individual's efforts - the feedback process - was also questioned. A manager remarked, "Last year the bonuses varied from Rs 30,000 to Rs 250,000 depending on the performance. In many cases the appraisal scores were same but the bonus amount was not. And we were not told why."

With Kamath's stated objective to make ICICI provide almost every financial service, separating the customer service people from the product development groups was another problem area. In the current scheme of things, an MCG or GCG person acted as a clients' representative inside ICICI. The MCG or GCG person understood the client's need and got the relevant internal skill department to develop a solution. Unlike foreign banks, there were no demarcations between these internal skill groups and client service person. (Demarcation helped in preventing an internal skills person from cannibalizing business being developed by the client service group.) With no such systems in place at ICICI, this distorted the compensation packages between the competing divisions.

While Kamath's comments in the media seemed to dismiss many of the employee complaints, ICICI was in fact, putting in place a host of measures to check this unrest. One of the first initiatives was regarding imparting new skills to existing employees. Training programmes and seminars were conducted for around 257 officers by external agencies, covering different areas.

In addition, in-house training programmes were conducted in Pune and Mumbai. During 1995-96, around 35 officers were nominated for overseas training programmes organized by universities in the US and Europe. ICICI also introduced a two-year Graduates' Management Training Programme (GMTP) for officers in the Junior Management grades. Along with the training to the employees, management also took steps to set right the reward system.

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To avoid the negative impact of profit center approach, wherein pressure to show profits might affect standards of integrity within an organization, management ensured that rewards were related to group performance and not individual performances. To reward individual star performers, the method of selecting a star performer was made transparent. This made it clear, that there would be closer relationship between performance and reward. However, it was reported that pressure on accountability triggered off some levels of anxiety within ICICI which resulted in a lot of stress in human relationships. Dismissing reports of upsetting people, Kamath said, 'much of the restructuring plan has come from the bottom.' ICICI also reviewed the compensation structure in place. Two types of remuneration were considered - a contract basis which would attract risk-takers and a tenure-based compensation which would be appealing to employees who wanted security. Kamath accepted that ICICI had been a bit slow on completing the employee feedback process. Soon, a 360-degree appraisal system was put in place, whereby an individual was assessed by his peers, seniors and subordinates. As a result of the above measures, the employee unrest gradually gave way to a much more relaxed atmosphere within the company.

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Chapter 7 MERGER CHALLENGES

By 2000, ICICI had emerged as the second largest financial institution in India with assets worth Rs 582 billion. The company had eight subsidiaries providing various financial services and was present in almost all the areas of financial services: medium and long term lending, investment and commercial banking, venture capital financing, consultancy and advisory services, debenture trusteeship and custodial services. ICICI had to face change resistance once again in December 2000, when ICICI Bank was merged with Bank of Madura (BoM). Though ICICI Bank was nearly three times the size of BoM, its staff strength was only 1,400 as against BoM's 2,500. Half of BoM's personnel were clerks and around 350 were subordinate staff. There were large differences in profiles, grades, designations and salaries of personnel in the two entities. It was also reported that there was uneasiness among the staff of BoM as they felt that ICICI would push up the productivity per employee, to match the levels of ICICI7. BoM employees feared that their positions would come in for a closer scrutiny. They were not sure whether the rural branches would continue or not as ICICI's business was largely urban-oriented. The apprehensions of the BoM employees seemed to be justified as the working culture at ICICI and BoM were quite different and the emphasis of the respective management was also different. While BoM management concentrated on the overall profitability of the Bank, ICICI management turned all its departments into individual profit centers and bonus for employees was given on the performance of individual profit center rather than profits of whole organization. ICICI not only put in place a host of measures to technologically upgrade the BoM branches to ICICI's standards, but also paid special attention to facilitate a smooth cultural integration. The company appointed consultants Hewitt8 Associates to help in working out a uniform compensation and work culture and to take care of any change management problems.

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7.1 POST MERGING CHALLENGES

The amalgamation of ICICI bank with BoM came in to effect on August 13, 2010 when RBI approved the deal. The key issues that hindered the proposed merger have been discussed earlier, now the focus of ICICI bank should be on followings:a) HR ISSUES: Human capital has always being a major concern for the merging firms. The integration of human resource of both the entities sets the path of growth through synergy. Work cultures have always differed from organization to organization. To cope up with the change depends on the ability of the organization and its problem solving approach. In the amalgamation of ICICI bank and BoR, the issue related to the fear in the minds of employees of being sacked by the transferee bank should be considered as major challenge after merger. It was already assured by Ms. Chanda Kochhar, CEO and Managing Director of ICICI bank that no employee will lose job after merger. b) RISK OF DETERIORATION OF QUALITY OF ASSET : As Bank of Rajasthan have members of branch in the interior and rural area of Rajasthan, number of loans disbursed to agricultural workers and the low profile people of the rural areas. In future, there may be problem of recovery and chances of delinquency of such pre merge loans by Bank of Rajasthan. It may increase the NPA in the near future. c) LEVERAGE AND SYNERGY: Before the deal announcement the share price of the ICICI bank was Rs. 889 where the swap ratio implied substantial premium to the Bank of Rajasthans present price which was almost 89% higher. Do this high amount paid for synergy? The major challenge before this merger deal would be to gain synergies which could be in any flow such as cost optimization through better negotiation with vendors, economies of scale, eliminating overlaps and many more. Secondly, through revenue enhancement this infers new market access (as ICICI bank will be able to get readymade access to Bank of Rajasthans wide branch network in north and west India). Thirdly, by way of technological leverage and forth could be forward and backward integration.

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ICICI conducted an employee behavioural pattern study to assess the various fears and apprehensions that employees typically went through during a merger. (Refer Table I). Table I

'Post-Merger' Employee Behavioral Pattern

Period Day 1 After a month After a Year After 2 Years Employee Behavior Denial, fear, no improvement Sadness, slight improvement Acceptance, significant improvement Relief, liking, enjoyment, business development activities

Based on the above findings, ICICI established systems to take care of the employee resistance with action rather than words. The 'fear of the unknown' was tackled with adept communication and the 'fear of inability to function' was addressed by adequate training. The company also formulated a 'HR blue print' to ensure smooth integration of the human resources. (Refer Table II).

Table II

Managing HR during the ICICI-BoM Merger

The HR Blueprint A data base of the entire HR structure Road map of career Determining the blue print of HR moves Communication of milestones I.T Integration - People Integration Business Integration. Areas of HR Integration Focussed On Employee communication Cultural integration Organization structuring Recruitment & Compensation Performance management Training Employee relations

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7.2 Managing HR during The ICICI-BoM Merger Areas Of HR Integration Focussed On : Employee communication Cultural integration Organization structuring Performance management Training Employee relations

By June 2001, the process of integration between ICICI and BoM was started. According to a news report, "The win-win situations created by HR initiatives have resulted in high level of morale among all sections of the employees from the erstwhile BoM." 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. Training programmes were conducted which emphasized on knowledge, skill, attitude and technology to upgrade skills of the employees. Management also worked on contingency plans and initiated direct dialogue with the employee unions of the BoM to maintain good employee relations. By June 2001, the process of integration between ICICI and BoM was started. ICICI transferred around 450 BoM employees to ICICI Bank, while 300 ICICI employees were shifted to BoM branches. Promotion schemes for BoM employees were initiated and around 800 BoM officers were found to be eligible for the promotions. By the end of the year, ICICI seemed to have successfully handled the HR aspects of the BoM merger. According to a news report, "The win-win situation created by HR initiatives has resulted in high level of morale among all sections of the employees from the erstwhile BoM." Even as the changes following the ICICI-BoM merger were stabilizing, ICICI announced its merger with ICICI Bank in October 2001. The merger, to be effective from March 2002, was expected to unleash yet another series of changes at the organization. With Kamath still heading ICICI, analysts were hopeful that the bank would come out successfully in the task of integrating the operations of both the entities this time as well. Change Management Page 27

Chapter 8 ICICI BANK'S 'FIVE S CLEAN UP ACT

Five S is one of the basic tenets of lean Manufacturing. It originated in Japan as a work-environment enhancing measure, but the Japanese believe this visually-oriented exercise is useful not just for improving the physical environment, but also for improving Total Quality Management (TQM) processes The Five S are as follows: 1. Seiri (sorting out) 2. Seiton (systematic arrangement) 3. Seiso (spic-n-span) 4. Seiketsu (standardise) and 5. Shitsuke (self-discipline)

In the first step (sorting out), individual owners sort their belongings into needs and wants. This is followed by making a systematic layout of the workplace, specifying the storage areas and deciding where to put each item, right from files and documents down to the stapler and pins.

The third phase (spic-n-span) monitors whether the earlier steps (S1 and S 2). Next is to standardise the policies and rules. Finally, it is self-discipline that is required to sustain Five S

8.1 Principles of Five S

The dominating principle of Five S is to create ownership for every object in the organisation, so that nothing is neglected. In the first step(sorting out), individual owners sort their belongings into needs (used regularly, used irregularly) and wants (may be used later or scrap). This is followed by making a systematic layout of the workplace, specifying the storage areas and deciding where to put each item, right from files and documents down to the stapler and pins.

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The third phase (spic-n-span) monitors whether the earlier steps (S1 and S2) are being regularly and effectively carried out and the workspace is kept clean. What follows next is to standardise the policies and rules that are to be followed by the entire workplace. These include making timetables and indexes that indicate where you can find what, using charts and visuals.

Finally, it is self-discipline that is required to sustain Five S.

The Five S practice not only helps to impress the customers but also to establish effective quality processes for good services and products. Five S is a part of the kaizen family that talks about continuous innovation. In India companies like Hindustan Lever, Bhel (Bharat Heavy Electricals Limited) and the Aditya Birla group practice the principles of Five S.

8.2 Implementation of Five S at ICICI

It's been just 12 or 14 months since the bank began implementing Five S (a management initiative to keep the workplace in order), but compared to other quality control drivers like Six Sigma and ISO, which have been running for more than four years, Five S made a clean sweep almost immediately. In certain cases, such as ICICI's back office for integrated operations at Mahalaxmi (central Mumbai), the company claims to have saved Rs7.5 crore (Rs 75 million) as a result of quality programmes in the current year. However, it was Five S that contributed generously, making up 50 per cent of the savings. At another location, employees confident that earlier document retrievals would take up to two or three days. Five S is a workplace transformation exercise. When we implemented it across the organisation, it appeared functional with many tangible benefits. But implementation was nowhere as easy. When ICICI Bank announced the initiative in December 2003, nearly 15,000 employees grudgingly gave up their weekends to come in to office and clean their workplace! In the process, the bank freed up huge amounts of shelf space. Consider this: in the HR department alone, throwing out old, unwanted rsums cleared up six cupboards. At the central Mumbai back office, too, employees discarded their pack-rat tendencies, freeing about 10 per cent storage space. There was a Change Management Page 29

direct pay-off consequently: ICICI Bank saved more than Rs 600,000 a year on payments to third-party warehousing companies, since records can now be stored in the office The bank set up retail banking operations in1994; by 2000, it had half a million retail bank account holders. That number skyrocketed in the next few years; at present, it has 10 million retail bank account holders. The track record in credit cards has been equally awe-inspiring. ICICI Bank claims to be the number one credit card company in the country with 2.5 million cards issued in less than five years. The bank was growing furiously in the period1997-2001, compromising on quality. Customer grievances were increasing: from poor service at the branches to interminable waits for reissue of cards, the laundry list of complaints grew. Calls to the customer care helpline were of no use: it was not unusual to be put on hold for up to half an hour at a stretch. By end of 2003, ICICI Bank of ficials realized they needed to take action fast. A close look at global best practices that could help improve the customer experience turned up Five S, a Japanese concept used mainly on manufacturing shop floors around the world. They soon realised that the main principles of Five S (sorting out, systematic arrangement, spic-n-span, standardise and self-discipline) could be easily imported into the services sector as well. Another advantage is that Five S could be easily followed by everybody from the "peon to the president." The best thing about Five S is that it is extremely simple and yet powerful. More importantly, the benefits are visible immediately.

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8.3 Outcomes of Five S Implementation In December 2003, ICICI Bank managers from across the country participated in a one-day leadership programme that included not just Five S but also sessions on workplace improvement and change management. The aim was to help them encourage employees down the line to adapt to Five S. It is not enough to just engage zonal heads and branch managers. If Five S has to be successful, it must be owned by the line employees The bank followed up the initial sessions with pilot projects across 30 locations, involving 25 people at each location. The750 employees so covered accounted for just 5 per cent of the total workforce. It took the bank close to six months to implement Five S at all its offices across the country. Employees navigate their way through the workplace using colours for reference (orange is for cabinets, blue for workstations, mauve for vaults and pink for storage). Life at the back office has become simpler after Five S. The biggest change has been in cataloguing. Earlier, records were filed haphazardly, strewn across cupboards and rooms. There is more science to file-keeping. Files are now cross-referenced in alphabetic order, by date and by month making retrieval far simpler. Some regional offices also offer vernacular explanations for Five S, making it easy for even the housekeeping boys to retrieve documents. Finally, 10 minutes at the end of each working day is reserved for a staff meeting, where employees discuss various initiatives and identify problems, and achievers are publicly applauded. Incidentally, for these 10minutes, lights and computers are switched off to save power. Five S is an entirely people-driven initiative and ICICI Bank hasn't been slow in recognising that. In order to sustain employee involvement, the bank is awarding individual and group efforts with certificates signed by the chairman. There have been two such ceremonies in the past six months alone. The bank has also tied-up Five S project involvement with the performance management systems, so that no employee is caught napping at the workplace.

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Chapter 9 EFFECTS OF CHANGE

During the process of change over the last five years is expected ICICI to solve few challenges in the change. The whole process of change in an organization there will be some surprise as the normal stress, but how to manage stress and make a difference in perspective on change management within the organization. ICICI also follow few methods as amended by the adoption of Real-time scenarios such as the parking of vehicles. Opposes any change in the organization's leadership to try, good employees, while some employees to change, or wishing to enter these areas. These workers will change parking in some areas in order to remove a barrier and is flush with the front as needed. This scenario has been changed to ICICI organization. He was a golden handshake that staff have their fields rather than with the changes (KV Kamath, 2005) may be responsible. ICICI is also some changes in business processes and infrastructure in the past five years. Management of services of finance, such as P & G, IIG, etc. to provide one-stop financial services to its customers. But the way this process takes time, if you need customer service in various departments at the same time, because the opportunity arose, and that customers can switch suppliers. To meet this challenge, because of changes in business, ICICI have formed in other parts of the Personal Finance Group, the largest group of clients and customers are becoming more and more. Through these passages demanding customers come into contact with the representatives of this group to obtain the services of different departments. Thus by ICICI and the change has been following a policy rule to provide customers satisfied and get the same services more efficiently. The following were some of the effects of change management at ICICI: A majority of the work along with a lot of good talent shifted to the corporate center. An ex-employee remarked, "The way to get noticed inside ICICI after 1996 has been to attach yourself to people who were heading these departments. These groups were seen as the thrust areas and if you worked in the zones it was difficult to be noticed.

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Complaints against these changes put in continued and ICICI was blamed for not putting in adequate systems in place to develop the right people. The feedback process - was also questioned. In many cases the appraisal scores were same but the bonus amount was not.

9.1 Imparting New Skills to Existing Employees

Training programmes and seminars were conducted. Overseas training programmes. Introduced a two-year Graduates' Management Training Programme (GMTP). Best advantage is that Five S could be easily followed by everybody from the "peon to the president. ICICI company claims to had saved Rs 7.5 crore. Five S had contributed generously, making up 50 per cent of the savings. The lower rung employees boast of tracing documents in record time just 30 seconds. The company appointed consultants Hewitt Associates to help in working out a uniform compensation and work culture and to take care of any change management problems.

9.2 ICICI also reviewed the compensation structure in place.

Two types of remuneration were considered A contract basis which would attract risk-takers. A tenure-based compensation which would be appealing to employees who wanted security.

9.3 Engineering a Change, the ICICI Bank Way

The bank is planning to recruit over a batch of 500 engineers the next couple of months. There will roughly be one engineer for each branch. ICICI Bank is taking in a combination of fresh engineers from the campus as well as those with a few years experience in different industries. These engineers are being recruited to "transform the workplace" and introduce process efficiencies in Change Management Page 33

branches. Whether it is redesigning the branch layout, or the height of the counter, or cutting down the customer interaction time, or reducing the steps involved in counting of cash, or cutting down on the forms that collect the same detail, engineers will apply their skills to the problem. The decision to recruit engineers came after there was an internal brain storming about the kind of talent that the bank needed to recruit in planning for the future. If these engineers could come up with 10 to 20 great innovations in processes, it would have more than repaid the investment and the effort in recruiting them.

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Chapter 10 CONCLUSIONS
Change has to be a common system in the world at present days are changes in the organization are a number of reasons, processes such as mergers, divisions or departments, etc., personnel management, although it should have a strong will and the ability to change and resistance in the results of the changes at the organization. OU change is an important process and should provide a detailed study and manage an organization. Management and business change is not solely dependent on, "but the business processes, but it also depends on culture, resources, and many other factors contributing to the organization. Show here the analysis of research projects, change management, was ICICI Bank, the Institute for the Future in the management of change in the past five years undertakes short-term support. ICICI main objectives of the organization of businesses in their statements and the process of modernization can encourage private investment in partnership with some of the organization and much more. The change occurs share in any organization, because of certain factors that demand for change. These factors are considered factors change. Change Given these factors, factors. changes in internal and external factors of the organization. Internal factors include changes in leadership, shortage of labor, the application of new technologies and some their internal affairs. Externalities change in government policies, including competition, economic changes and rising costs of infrastructure and raw materials. ICICI is one of the banks in India as a quick reaction to changes in the organization. Since its inception it has been many changes in the organization. But in the last five years, a few steps from design and politics. In the appointed Kamath past as the organization of business processes has changed in the past five years, with an exciting plot and follow some of the strategies for organizational change and change management. Rule 90 days, the rental system the basic rule is bound by certain strategies of change management in planning and managing change without affecting the policies of the central bank. ICICI successfully manage change, following a few models that exchange Model Kurt Lewin was unable to obtain customer satisfaction with the support of the changes you made in your business processes.

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BIBLIOGRAPHY
www.businessballs.com leadership/management http://www.businessballs.com/changemanagement.html www.skillmatters.in/icici.pdf http://www.slideshare.net http://articles.economictimes.indiatimes.com http://www.icicibank.com/aboutus/pdf/changemanagement.pdf en.wikipedia.org/wiki/K.V.Kamath http://wiki.answers.com/Q/History_of_icici_bank_in_detail www.icmrindia.org/.../casestudies/icici-changemanagement1.html http://seminarprojects.com/s/icici-change-management-casestudy

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