Index:

Sr No Topic PgNo
1. Change Management An Introduction
3

2. Change Management Need &

Requirement 4

3. Role of Change Management in an

Organization 5

4. Case Study 6
4.1 Contents of the Case Study
4.2 Change Management at ICICI
4.3 Contents of the Case Study

5. Case Study 7-9

5.1 Background Note
5.2 Basic Objectives of ICICI
5.3 Case Study Explanatory
5.4 Change Leader
5.2 Basic Objectives of ICICI
5.3 Risen Problems due to a thought of change

6. Change Challenges
10-12
6.1 Change Challenges Part I
6.2 Change Challenges Part II
6.3 Change Challenges Part III

7. Conclusion 13

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8. Questions for Discussions
14

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Change Management: An Introduction

Change management is a common procedure that is

followed and used in any business environment in
any vertical. It is a way to manage the changes that
are requested in the project modules or any process.
The impact of the change in each of the department
using it should be studied carefully before
implementing the change requested.

Change management is essential to business

success in this rapidly changing economic
environment. Fewer employees now must perform
not only their existing job responsibilities, but they
are also inheriting additional responsibilities as
well. In addition, how companies are doing
business in the new economy is requiring people to
learn new processes and systems. Helping them to
adapt and accept these changes is critical to
corporate survival.

It's always been said that one thing you can count
on is change. Perhaps more than any other time in
history, change is a constant in business. Economic
crisis, globalization, changing markets and
competitionall are forcing a much faster pace
and a much larger. scale of transformation. Change
is occurring at an unprecedented rate and is
challenging virtually every organization.

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Change Management: Need & Requirement

When there is a process in an organization it is not an

easy task to make changes to this process immediately.
Sometimes a single organization may have varied
business entities and changes in an entity may be
reflected in another entity. In such organizations changes
are not so easy. There are different types of
organizations which have many branches across the
world with varied cultures. Implementing a change in
such organizations is a task by itself.

The change process can be thought of a process which

stops the current process, makes the necessary changes
to the current process and the run the new process. It is
easy said than implemented. Stopping a current process
in some industry is fatal for that organization. Hence it
has to be done in steps which have the minimal effect in
the process. These changes can not take place for a
longer time in the organization since that may also be a
disaster for the organization. The involvement of the
staff concerned is also very important for the change
process to be smooth.

The change process could also be considered as a

problem solving situation. The change that is taking
place could be the result of a problem that has occurred.
You should know that a problem is a situation that
requires some action to be taken positively to handle that
situation. This positive action is known as problem
solving. The change process could be problem solving
for a particular situation. In this process there is a move
from one to state to another so that the problem gets
solved. The change process is leaving the current state
and moving to the final state through some structured
organized process.

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Role of Change Management in an Organization

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Change management plays an important role in any organization
since the task of managing change is not an easy one. When we
say managing change we mean to say that making changes in a
planned and systemic fashion. With reference to the IT projects
we can say the change in the versions of a project and managing
these versions properly. Changes in the organization or a project
can be initiated from within the organization or externally. For
example a product that is popular among the customers may
undergo a change in design based on the triggering factor like a
competitive product from some other manufacturer. This is an
example of external factor that triggers a change within the
organization. How the organization responds to these changes is
what that is more concerned. Managing these changes come
under change management. Reactive and proactive responses to
these changes are possible from an organization.

Managing the changes in an organization requires a broad set of

skills like political skills, analytical skills, people skills, system
skills, and business skills. Having good analytical skills will
make you a good change agent. You should evaluate the financial
and political impacts of the changes that can take place. You
should know that following a particular process at that instant
would fetch you immediate financial effects and start that process
so that the change process is noted by the management. The
workflow has to be changed in such a manner to reflect the
financial changes that are taking place. Operations and systems in
the organization should be reconfigured in such a manner that
you get the desired financial impact.

Hence change management plays an important role in an

organization. This allows the organization to give a reactive or a
proactive response to the changes that happen internally or
externally. Knowing the change management and its process
would help an organization and it s processes to be stable.

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Case Study

To have a insight of this subject, let us know look at how this concept of Change Management was used
at ICICI. This below piece of vital information would tell us how a change in the leadership led to a
change in an organizations culture, value, employees and above all the whole of the organization.

This case study shall throw light on the below topics for further discussions and analysis.

Contents of the Case Study:

Background Note of ICICI.

The basic objectives of the ICICI.

Change Leadership.

Change Challenges.

Action Plan and Effects of the change.

Discussions & Questions relating to the Case Study.

Change Management
at ICICI
From the Leaders..

"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?"

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 - 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.

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Background Note
ICICI was established by the Government of India in 1955 as a public limited company to promote
industrial development in India. 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).

Basic Objectives of ICICI

The basic objectives of the ICICI were to
assist in creation, expansion and modernization of enterprises
encourage and promote the participation of private capital, both internal and external
take up the ownership of industrial investment; and
expand the investment markets.

Explanatory
Since the mid 1980s, ICICI diversified rapidly into areas like
merchant banking and retailing. 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.

In 1988, ICICI promoted India's first venture

capital company Technology Development and
Information Company of India Limited (TDICI)
to provide venture capital for indigenous
technology oriented ventures.

In the 1990s, ICICI diversified into different forms

of asset financing such as leasing, asset credit and
deferred credit, as well as financing for non project
activities.

In 1991, ICICI and the Unit Trust of India set up

India's first screen based securities market, the over

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the counter Exchange of India (OCTEI).

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Explanatory contd

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 ICICI
restructured its business based on the recommendations of
consultants McKinsey & Co in 1998.

In the late 1990s ICICI concentrated on building up its

retail business through acquisitions and mergers. It took
over ITC Classic Anagram Finance and merged the
Shipping Credit Investment Corporation of India (SCICI)
with itself.

ICICI also entered the insurance business with Prudential

plc of UK. ICICI was reported to be one of the few Indian
companies known for its quick responsiveness to the
changing circumstances.

While its development bank counterpart IDBI was

reportedly not doing very well in late 2001.
ICICI had major plans of expanding on the anvil. This was
expected to bring with it further challenges as well as
potential change management issues. However the
organization did not seem to much perturbed by this
considering that it had successfully managed to handle the
employee unrest following Kamath's appointment.

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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 bank 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.

Risen Problems due to a thought of change

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.
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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Change Challenges Part I
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 long term 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 newfound 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 more savvy 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.

Action Plan & Result

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. 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
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attach yourself to people who were heading these (IIGPTDSPGO&G) departments. These groups
were seen as the thrust areas and if you worked in the zones it was difficult to be noticed." Refuting
this Kamath remarked "This may be said by people who did not make it. And there will always be
such people." Some of the people who did not fit in this set-up were quick to leave the organization.
However this was just the beginning of change-resistance at ICICI.

Change Challenges Part II

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.

Action Plan & Result

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."

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."

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Change Challenges Part III
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.

Action Plan & Result

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.

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Conclusion

The ability of organisations to manage change effectively has become more important because of the
rapid advances in technology and the increasing uncertainty and risk associated with the business
environment. Managing change requires flexibility, good planning, an effective decision making system
and an efficient management information system, as well as effective communication systems and
channels.

Managers must show leadership, have behavioural knowledge, especially with regards to the
management of teams, demonstrate analytical skills in basic economic reasoning, be agents of change,
proactive rather than reactive; be able to tolerate ambiguity and uncertainty, and understand why change
is so often perceived as threatening.

The possibility of change tends to provoke resistance among the employees that the change will affect.
This is due to a very natural fear and mistrust of the unknown. This resistance will manifest itself in
different ways, ranging from outright refusal to cooperate through to a covert undermining of proposals.
This mistrust can be best overcome by a deliberate policy of keeping people informed about what is
being proposed and getting them involved as far as possible in the discussions and decision making.

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Questions for Discussions:

1. What are the major issues discussed in the Change Management case study of ICICI?
2. What were the shortcomings because of one product view of ICICI prior to diversification?
3. What were the different problems/issues that rose due to Change in Leadership?
4. What are your personal views on this situation of Change Management?
5. What was one of the first initiatives that ICICI put in place to check this unrest?
6. What are the different aspects of HR Management that were considered in this case study?
7. What was the outcome of working in Groups?
8. Enumerate any such instance that has worked well for an organization due to Change
Management?
9. Explain your views in terms of need to learn new techniques, skills and methodology of work
due to a Change Management.
10. List all the various trival and big challenges seen in the above case study and state which aspect
of HR Management shall solve this.

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