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CHANGE MANAGEMENT@ICICI
Published-2002

"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, M ! CE", ICICI, in 1998.

THE CHANGE #EA E$

In May 1996, .!. amath " amath# replaced $arayan !aghul "!aghul#, %&' of India(s leading financial ser)ices company Industrial %redit and In)estment %orporation of India "I%I%I#. Immediately after ta*ing charge, amath introduced massi)e changes in the organi+ational structure and the emphasis of the organi+ation changed , from a de)elopment ban* -1.mode to that of a mar*et,dri)en financial conglomerate.

amath(s mo)es were prompted by his decision to create new di)isions to tap new mar*ets and to introduce fle/ibility in the organi+ation to increase its ability to respond to mar*et changes. $ecessitated because of the organi+ation(s new,found aim of becoming a financial powerhouse, the large,scale changes caused enormous tension within the organi+ation. The systems within the company soon were in a state of stress. &mployees were finding the changes unacceptable as learning new s*ills and adapting to the process orientation was pro)ing difficult. The changes also brought in a lot of confusion among the employees, with media reports fre0uently carrying 0uotes from disgruntled I%I%I employees. 1ccording to analysts, a large section of employees began feeling alienated. The discontentment among employees further increased, when amath formed specialist groups within I%I%I li*e the (structured pro2ects( and (infrastructure( group. 3oubts were soon raised regarding whether amath had gone (too fast too soon,( and more importantly, whether he would be able to steer the employees and the organi+ation through the changes he had initiated.

%ACKG$"&N

N"TE

I%I%I was established by the 4o)ernment of India in 1955 as a public limited company to promote industrial de)elopment in India. The ma2or institutional shareholders were the 6nit Trust of India "6TI#, the 7ife Insurance %orporation of India "7I%# and the 4eneral Insurance %orporation of India "4I%# and its subsidiaries. The e0uity of the corporation was supplemented by borrowings from the 4o)ernment of India, the World 8an*, the 3e)elopment 7oan 9und "now merged with the 1gency for International 3e)elopment#, reditanstalt fur Wiederaufbau "an agency of the 4o)ernment of 4ermany#, the 6 go)ernment and the Industrial 3e)elopment 8an* of India "I38I#. The basic ob2ecti)es of the I%I%I were to

assist in creation, e/pansion and moderni+ation of enterprises encourage and promote the participation of pri)ate capital, both internal and e/ternal

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ta*e up the ownership of industrial in)estment: and e/pand the in)estment mar*ets.

;ince the mid 19<=s, I%I%I di)ersified rapidly into areas li*e merchant ban*ing and retailing. In 19<>, I%I%I co,promoted India(s first credit rating agency, %redit ?ating and Information ;er)ices of India 7imited "%?I;I7#, to rate debt obligations of Indian companies. In 19<<, I%I%I promoted India(s first )enture capital company , Technology 3e)elopment and Information %ompany of India 7imited "T3I%I# , to pro)ide )enture capital for indigenous technology,oriented )entures. In the 199=s, I%I%I di)ersified into different forms of asset financing such as leasing, asset credit and deferred credit, as well as financing for non,pro2ect acti)ities. In 1991, I%I%I and the 6nit Trust of India set up India(s first screen,based securities mar*et, the o)er,the,counter &/change of India "'%T&I#. In 199@ I%I%I tied up with A B Morgan of the 6; to form an in)estment ban*ing company, I%I%I ;ecurities 7imited. In line with its )ision of becoming a uni)ersal ban*, I%I%I restructured its business based on the recommendations of consultants Mc insey C %o in 199<. In the late 199=s, I%I%I concentrated on building up its retail business through ac0uisitions and mergers. It too* o)er IT% %lassic, 1nagram 9inance and merged the ;hipping %redit In)estment %orporation of India ";%I%I# with itself. I%I%I also entered the insurance business with Brudential plc of 6 . I%I%I was reported to be one of the few Indian companies *nown for its 0uic* responsi)eness to the changing circumstances. While its de)elopment ban* counterpart I38I was reportedly not doing )ery well in late @==1, I%I%I had ma2or plans of e/panding on the an)il. This was e/pected to bring with it further challenges as well as potential change management issues. Dowe)er, the organi+ation did not seem to much perturbed by this, considering that it had successfully managed to handle the employee unrest following amath(s appointment.

CHANGE CHA##ENGE' - (A$T II I%I%I had to face change resistance once again in 3ecember @===, when I%I%I 8an* was merged with 8an* of Madura "8oM#-1. . Though I%I%I 8an* was nearly three times the si+e of 8oM, its staff strength was only 1,E== as against 8oM(s @,5==. Dalf of 8oM(s personnel were cler*s and around F5= 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 8oM as they felt that I%I%I would push up the producti)ity per employee, to match the le)els of I%I%I -@.. 8oM 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 I%I%I(s business was largely urban,oriented.

The apprehensions of the 8oM employees seemed to be 2ustified as the wor*ing culture at I%I%I and 8oM were 0uite different and the emphasis of the respecti)e management was also different. While 8oM management concentrated on the o)erall profitability of the 8an*, I%I%I management turned all its departments into indi)idual profit centers and bonus for employees was gi)en on the performance of indi)idual profit center rather than profits of whole organi+ation. I%I%I not only put in place a host of measures to technologically upgrade the 8oM branches to I%I%I(s standards, but also paid special attention to facilitate a smooth cultural integration. The company appointed consultants Dewitt 1ssociates-F.to help in wor*ing out a uniform compensation and wor* culture and to ta*e care of any change management problems. I%I%I conducted an employee beha)ioral pattern study to assess the )arious fears and apprehensions that employees typically went through during a merger. "?efer Table I#. TA%#E I

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)("'T-ME$GE$) EM(#"*EE %EHAVI"$A# (ATTE$N B&?I'3 3ay 1 1fter a month 1fter a Gear 1fter @ Gears Source:www.sibm.edu 8ased on the abo)e findings, I%I%I established systems to ta*e care of the employee resistance with action rather than words. The (fear of the un*nown( was tac*led with adept communication and the (fear of inability to function( was addressed by ade0uate training. The company also formulated a (D? blue print( to ensure smooth integration of the human resources. "?efer Table II#. TA%#E II MANAGING H$ &MB7'G&& 8&D1!I'? 3enial, fear, no impro)ement ;adness, slight impro)ement 1cceptance, significant impro)ement ?elief, li*ing, en2oyment, business de)elopment acti)ities

&$ING THE ICICI-%+M ME$GE$

TD& D? 876&B?I$T

1?&1; '9 D? I$T&4?1TI'$ 9'%6;;&3 '$

1 data base of the entire D? structure ?oad map of career 3etermining the blue print of D? mo)es %ommunication of milestones IT Integration , Beople Integration , 8usiness Integration.

&mployee communication %ultural integration 'rgani+ation structuring ?ecruitment C %ompensation Berformance management Training &mployee relations