Change Management @ICICI

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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 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."

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. 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,³ 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)⁴ and Board of Industrial and Financial Restructuring (BIFR)⁵ 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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3] For instance, an eight-year loan, merger and acquisition advice and working capital requirements.
4] Non performing Assets (NPAs) are loans on which interest payments have been due for more than one quarter (3 months) and in the case of monthly installments have been due for more than 3 installments.
5] The Board for Industrial and Financial Reconstruction (BIFR) is responsible for the revival of companies declared sick. A company is declared sick if it has incurred losses continuously for 3 years and its net worth turns negative.

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