THE CHANGE LEADER

BACKGROUND NOTE

CHANGE CHALLENGES - PART I

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)[1] and Board of Industrial and Financial Restructuring (BIFR)[2] 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."
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.

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.

Along with the training to the employees, management also took steps to set right the reward system. To avoid the negative impact of profit center approach, wherein pressure to show profits might affect standards of integrity within an organization, management ensured that rewards were related to group performance and not individual performances. To reward individual star performers, the method of selecting a star performer was made transparent. This made it clear, that there would be closer relationship between performance and reward.

However, it was reported that pressure on accountability triggered off some levels of anxiety within ICICI which resulted in a lot of stress in human relationships. Dismissing reports of upsetting people, Kamath said, 'much of the restructuring plan has come from the bottom.'

ICICI also reviewed the compensation structure in place. Two types of remuneration were considered - a contract basis which would attract risk-takers and a tenure-based compensation which would be appealing to employees who wanted security. Kamath accepted that ICICI had been a bit slow on completing the employee feedback process. Soon, a 360-degree appraisal system was put in place, whereby an individual was assessed by his peers, seniors and subordinates. As a result of the above measures, the employee unrest gradually gave way to a much more relaxed atmosphere within the company.

By 2000, ICICI had emerged as the second largest financial institution in India with assets worth Rs 582 billion. The company had eight subsidiaries providing various financial services and was present in almost all the areas of financial services: medium and long term lending, investment and commercial banking, venture capital financing, consultancy and advisory services, debenture trusteeship and custodial services.

CHANGE CHALLENGES - PART II

[1]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.

[2]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 networth turns negative.