Change management at ICICI

Q . Analyse the changes implemented by Kamath in Mid 1990s and comment briefly on the necessity and efficacy of these changes A. The changes that were implemented by Kamath in the Mid 1990s were: 1. Kamath introduced massive changes in the Organizational structure and the emphasis of the organization changed from a development bank more to that of a market driven financial conglomerate. a. Necessity: To introduce flexibility in the organization to increase its ability to respond to market changes. b. Efficacy: 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. 2. In 1992 ICICI tied up with JP morgan of the US. a. Necessity: To form an investment banking company, ICICI securities limited b. Efficacy: ICICI was able to diversify into different forms of asset financing (leasing, asset credit, deferred credit) as well as financing for non project activities. 3. ICICI reconstructed its business based on the recommendations of Mc Kinsey & Co in 1998. a. Necessity: It had the vision of becoming a universal bank. b. Efficacy: It had much better structured business that allowed it to take advantage of being a Universal bank. 4. The change program was initiated within the organization, the first move being the creation of the infrastructure group(IIG), Oil & gas(O&G), Planning and treasury department(PTD) and Structured products group(SPG). a. Necessity: The Lending practices were quite different for all of these types of groups.

b. Efficacy: More effective handling of lending practices specifically for these groups, but internally the strategy was not effective because the employees who were not part of these groups felt their importance within the organization diminished. 5. ICICI setup 3 new departments Major Client Group(MCG), Growth Client Group(GCG), Personal Finance Group(PFG). a. Necessity: ICICI felt that they needed to focus its operations much more sharply around its customers. And there was a need to reduce the turnaround time. b. Efficacy: Though the customers seemed to be happy about this new arrangement, people within the organization found it unacceptable.

Q. Compare and contrast the change management process at ICICI initiated after Kamath became the CEO with the one following the ICICI-BoM merger. Also explain the rationale behind employee resistance in both the cases. A. 1. In the case of the ICICI reorganization the perception of their diminished importance was not addressed (when they picked people for the new group creation IIG,O&G etc.) but in the case of the BOM merger the company ensured that the importance of employees was preserved by upgrading the technological standards of the BOM banks to that of ICICI ones. 2. ICICI never conducted behavioral pattern studies when implementing changes pre- BOM merger but in the post-BOM merger stages they conducted these studies to understand the fears and apprehension typically experienced by their employees. 3. A clear HR blue-print was established to ensure a smooth integration of Human resources post BoM merger. No such activity was undertaken before this merger. 4. To ensure employee participation and to decrease resistance to change, clear communication channels were established by management to avoid any kind of wrong messages being sent across- in the case of post BoM merger. But such activity was not undertaken in pre merger organization changes. 5. In the post merger with BOM training programs were conducted to upgrade skills of the employees but this was not initiated in the pre merger situation. Rationale behind BOM merger resistance: Employees feared that their positions would come in for closer scrutiny.

Rationale behind the pre merger organizational change resistance: Employees felt that their responsibilities were not being suitably upgraded and they were also not being paid fairly.