SYMBIOSIS CENTRE FOR DISTANCE LEARNING

************************************************************

Content Details:

Submission of : Case Study

Topic : Change Management (HR Management)

Student Details:

Name : Mr Aliasgar Abid Ghadiyali

Reg. No : 200749463

Specilization : Human Resource Management

Submission Date : _______________________

Student's Signature :________________________

1 | P a g e

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 10-126.1 Change Challenges – Part I

6.2 Change Challenges – Part II 6.3 Change Challenges – Part III

7. Conclusion 13

8. Questions for Discussions 14

2 | P a g e

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 competition…all 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.

3 | P a g e

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.

4 | P a g e

Role of Change Management in an Organization

5 | P a g e

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.

6 | P a g e

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 ICICIFrom 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?"

- 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.

7 | P a g e

Background NoteICICI 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 ICICIThe 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.

ExplanatorySince 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 the counter Exchange of India (OCTEI).

8 | P a g e

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 thisconsidering that it had successfully managed to handle the employee unrest following Kamath's appointment.

9 | P a g e

The Change LeaderIn 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 changeNecessitated 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.

10 | P a g e

Change Challenges – Part IICICI 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 & ResultThe 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 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.

11 | P a g e

Change Challenges – Part IIAnother 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 consumingand there was a danger that the client would take a portion of that business elsewhere.

Action Plan & ResultTo 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 3040 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 midsize 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 middlelevel 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."

12 | P a g e

Change Challenges – Part IIIWith 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 & ResultWhile 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.

13 | P a g e

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.

14 | P a g e

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.

**********

15 | P a g e