THE ROLE OF
HUMAN RESOURCE MANAGEMENT IN STATE BANK OF INDIA, CHENNAI
N.SELVAM
Ph.D
Research Scholar
Department
of Business Administration
Annamalai
University
Annamalainagar-608002
Tamilnadu.
Abstract
An organization cannot
stay stagnant in today’s fast paced, ultra competitive global environment; change
is inevitable. Change management involves defining and adapting corporate
strategies, structures, procedures and technologies to deal with change budding
from the internal as well as external environment; but transformation is not an
easy task especially in a giant like State Bank of India (SBI). The Bank had to
face a dramatic cultural change with the challenges thrown by the private
sector banks which provided customer oriented services while most of the staff
in SBI was not aware of the fact that the bank was losing its hold amongst the
upper end market. According to the Society for Human Resource Management (SHRM)
2007, Change Management Survey report “the top two obstacles encountered during
the major organizational changes are communication breakdown and employee’s
resistance.”Biggest challenge for the management was to convey its idea of
transformation to each and every employee of the organization. The strong
hierarchical design of the organization was the major hurdle. To implement
cultural change the idea of change has to percolate to the lowest level,
motivating staff to accept change willingly.
Keywords:
Training and
development, State Bank of India. Human Resource Management, Parivartan.
Role of HR in transformation of State
Bank of India
An organization cannot
survive unless it changes the old culture and adopt the new with the changing
environment especially in today’s fast paced competitive business scenario. For
any change to occur in an organization each individual must think, feel and
understand the corporate
strategy well enough to enact it as
required. The leaders must win their followers one by one. he employees shall
embrace the changes from within, willingly, they must not be forced. Change anagement is a structured approach to
transform the individual and organization from a current state to a desired
future state. The amazing transformation story of SBI (State Bank of India) is
a milestone in the history of Indian banking. During 1951, when the first five
year plan was aunched, need was felt for
economic regeneration of rural areas and a bank who can work in the interest of
rural development.On the recommendation of All India Rural Credit Survey Committee
the thought of creating a state partnered bank and the Imperial Bank of India
was
taken over integrating it with the State
owned bank. 1955, the year marks the birth of the State
Bank of India when imperial bank of
India was nationalized and named as such, by an act of the parliament and in
1959 it was joined by seven “Darbar banks” formed under the princely states
now known as its Associate banks. In
2008 State bank of Saurashtra, one of the associate banks
merged into the SBI and on 26 th August
2010 with the acquisition of State Bank of Indore, SBI
has now five associate banks. With 480
offices comprising branches, sub offices and three local
head offices inherited from Imperial
Bank; the SBI started its journey with commitment to nation
building by purposeful banking, catering
the financial needs of the nation. The government has
nearly 60 percent shareholding in the
bank. Four out of nine external directors apart from
Chairman and two managing director are
appointed by the government. Today SBI is the largest Bank in India, with
13,000 branches across the country, right from the highest branch at Leh to
Kanyakumari. As on 30 th September 2010 the five associated banks have a
combined network of 4497 branches, making the total branches of SBI along with
its associated bank to nearly 17,000. It has around 131 offices in thirty two
countries, making it a huge organization with over 2, 05,000 employees as on
2009, coming from different regions and cultures. The bank was ranked at 29 th
position in the Forbes, World’s most reputed Companies list leaving Microsoft
behind in 2009. There were only two banks ahead of it: China Merchants Bank and
SberBank of Russia. But for State Bank of India “All was not well” if one have
a look few years back. Before 1990’s the country adopted a socialist model of
economic development, government monopolies were ruling the industries paving
the way to economic growth. But with the inception of industrial revolution
there was a change in the outlook and privatization of public enterprises
started setting its foot reforming the financial markets. With liberalization
of policies many MNC’s stepped in the Indian Markets changing the working
culture altogether within a short span of time.There was a total change in the
environment in which the banks operated. The new private sector banks with
different work culture snatched a major portion of the business from the public
sector banks. The rich and the young customers wanted better services within
lesser time and hated queuing at the counters of public sector banks. The
change was in the air and emerged in the face of ICICI for the State Bank of
India. SBI the pioneer in the Indian Banking faced a major challenge as in the
small span of 12 years ICICI Bank became the second largest bank in India and
it was apprehended that by 2010 ICICI will take over the flagship of SBI the
largest bank in India. As per the Banker’s ranking SBI dropped to 107 th position
from 82 nd while ICICI managed to climb up to 132 nd position from 248 th over
the same period.The major challenge before the bank was to maintain its legacy
of 200 years being the largest bank of India along with the transformation in
its work culture to match the pace of growth with private banks which are
commercially propelled. The task was not easy as the bank was conceived with
the commitment for meeting out the financial needs of the remote areas of the
country which is mainly a non profitable market segment. Simultaneously it had
to get hold of the rich and young customers to keep intact its title for the
largest bank. The bank was facing acute lack of specialist and leadership
skills to cater the problem. The answer to all the problems came in the face of
Mr. O.P. Bhatt who joined SBI as chairman in 2006 and earlier served as the Managing
Director of State Bank of Tranvancore. In his view:
The Journey Begins
The process of
transformation started with the identification of various internal factors that
were responsible for poor performance of the bank as follows: Poor Customer
Service: With years of dominance in the market the employees had developed a feeling
of indifference to the needs of the customers. The mentality of the employees
was that the business will come to them; they had no need to attract the
customers as there was no other institution in play. But with the private banks
coming into play, there was a change in the environment, customers became the
king. Transformation had to start from changing this notion of the employees
engrained in their mind due to decade of dominance. The need was a change in the
outlook of the vast workforce. It was observed that in some branches the work
of the customers were not completed promptly and they were made to come again
and again. With the change in the environment the customer had paradigm shift
in its attitude; they wanted better services and prompt dealing of their
grievances. The bank employees unaware of the changes were working on the same
pattern.Poor branch ambience: The bank was mostly operating in the ambience
which was not customer friendly. The space available to the customers was much
less than the space available for bank’s work area. There were no proper
seating arrangement for the customers, no queue management system and no drinking
water facility. On the other hand all these facilities were provided by the
private banks as they were more sophisticated, modern and customer
oriented.Technology not yet stabilized: On the technological front the bank was
far behind as most of the staff was not very much conversant with the use of
computers. Bank had to pave its way to the use of better technology, core
banking system and internet banking. Most of the staff had no exposure to work
in a computerized environment and many of them had not used even mouse. There
was a huge gap of skills and knowledge adversely affecting the customer services.Rigid
internal procedures: The internal process and procedures adopted by the bank were
not in sync with the changing environment. The private banks were faster in
business booking unlike the Bank which followed age old procedures that
demanded a change.
Strategy
Introduction
of new products, entering new business areas.
Style
Establishment
of a separate department to manage change, communicating and involving all employees
in the process of transformation. More customer oriented services.
Skill
New
skills development to work in computerized environment.
Staff
Motivating staff by
meeting their self reorganization needs through career advancements and shouldering
higher responsibility. Recruitment of staff at clerical and officer level. As
the Bank has limited salary packages emphasis was on nonmonetized sources of
incentives.
System
Implementation
of latest technology and Core banking system covering 100% business.
Structure
Delayering
of organizational structure by removing zonal offices.
Shared Values
Create
a sense of self belongingness among the employees, something that could bind
them together. A feeling of what I can do for the bank.
Rigid Organization
Structure
The
staff in the Bank is divided into three hierarchical levelsExecutives, Clerical
and sub staff, with clerical staff as most populous. At the end of March 2009
executive staff accounted for 31%, clerical 47% and Sub staff as 22% of the total
workforce. The officers are recruited through an all India Probationary
Examination and the successful candidates join the bank at the Assistant manger
level. The bank is characterized by the strong hierarchy and a long chain of
corporate ladder between the executives and Chairman namely Deputy Manager,
Manager, Chief Manager, Assistant General Manger, Deputy General Manager,
General Manager, Chief General Manager, Deputy Managing Director and Managing
Director. For managing purposes the bank is divided into fourteen circles. Each
employee is assigned a circle for HR purposes. The jobs are
transferable
depending upon the need of the organization and thus the employee is exposed to
a
varied job
conditions. It provides an opportunity to rich and varied experience in various
functional
areas. Most of the staff in the bank was not exactly aware of the ground
reality that
they are losing
major market share in the hands of the private banks.
Transformation
in action
The process of
transformation started in early September 2006 at the resort of Aamby valley
with the meeting of the senior management following a top down approach keeping
in mind the huge size of the organization. The major focus was to become a
customer oriented and the most tech savvy bank and then to regain the
leadership over the market which was slowly slipping away. A need of change in
the mindset of more than two lakh employees was required that had deepened their
roots for two centuries. It was recognized that poor internal communication was
a major hurdle and a platform was needed where the problems within the
organizations can be discussed. The Aamby valley meeting provided that platform
where the top executives were made aware of the problems and the challenges of
the organization, After the sessions the executives were asked to vote for the
areas which needed reforms. According to their voting seven areas were
identified
1.
Energizing employees.
2.
Providing consistent and reliable customer service.
3.
Accessing the new middle class.
4.
Pushing for aggressive consolidation.
5.
New and upgraded technology.
6.
Building of profitable global treasury.
7.
Reenergizing the branch / distribution network.
Another problem the
bank faced was of the leadership pool as most of the top management had become
an ageing group and the need of young, energetic, professional staff was felt.
The HR has to be revitalized as it was not able to deliver for the development
of the staff and incentive system had completely become ineffective. The staff
was highly demotivated and had grudges that 15% of the staff does 85% of the
work. The salaries were too low for the managerial level to provide any
motivating factor. Union was another hurdle which protected the employees.
Conception of PARIVARTAN
Working upon the
transformation agenda it was recognized that the people were SBI’s greatest
asset and the real problem. Employees in the organization had low morale and a
complete change in the attitude was required. The change must not be forced it
must come for within. The frontliners shall put customers before the processes
and the middle level shall keep the performance targets in mind. Efforts were
made to find out the solution for the question as to
why shall an employee change, coming out
of their comfort zone, to willfully serve the customer
when there is lack of monetary
incentive. One thing was for sure that the people working in the organization
had a great potential, the need was to make them aware of their power. The workshop
named PARIVARTAN was specifically designed to create a sense of team spirit among
the employees and the campaign was started first to cover the junior executives
and the clerical staff that came out to 1,38,000 employees. The challenge was
to prepare a very strong message not just the sharing of facts but something
that could really bring a permanent change in
their attitude. It was decided to host a
two day workshop covering various aspects for behavioral
change comprising of eight
segments and four objectivesto sensitize the staff about the transformation
efforts, to energize them to become a change agent, to help them to become more
customer
friendly and to foster a sense of inclusiveness The programme had to be started
simultaneously at different centers as
isolated efforts would have lost the gravity of the messag.
Format of
PARIVARTAN
Finally on 16 th July
2007 SBI witnessed its first ever HR initiative meant to transform the whole organization.
The programme started with message from the top level precisely about the problem
with the bank’s culture, strong hierarchy that promoted yes boss culture and
how the
bank was losing its customers. The
message conveyed was “Others don’t have to change ‘you’
need to change”.
Initially it was a shock for most of the employees as they were not aware of
the
competitive threat the bank was facing.
They were so involved in the daily routine that they
didn’t noticed that bank is losing its
customers, though some were aware of the ICICI bank’s rise
but they took plea that SBI is a
different kind of bank. Resistance to change was the next area for
which a video was shown that revolved
around Joel Baker’s “business of paradigm”. Many
powerful examples were given like that
of Japanese adopting the quartz technology to wipe out
the Swiss from watch industry. Proving
that resistance to change can prove to be fatal for any
organization. Example of turnaround of
Indian railways was also cited to reflect the transformation in Railways. The
message was clear if they can do it there was no reason why
SBI can’t. Next was a presentation
showing the shift in the market reflecting the change in the
focus from the sellers to the buyers.
Results of
PARIVARTAN
PARIVARTAN was a team
thinking platform but was not a regular exercise but aggressive enough to had a
tremendous effect on the employees. It touched the core of every employee forcing
them to think about the way they behave, their attitude towards work. Thousands
of unsolicited letters from the employees across the country with positive
response shows the success of the programme. Based on a questionnaire survey of
SBI customers it was found that the programme had a biggest effect on the
various aspects of the employees. Over 48% customers agreed about the fact that
there has been an improvement in the employees as far as updating them about
the new products and services are concerned. Over 28% agreed that the
employees gave more attention than
before. There were 24 aspects that were examined and most
of them provided a positive result. By
an SBI inspection team it was examined that maximum
improvement was evident in the Kolkata
circle while the southern circlesBangalore, Chennai, Hyderabad, Kerala did best
in the overall customer service levels. Though positive effect were evident
after the programme but a two day workshop was not enough the transformation
required follow up and everyday reaffirmation at the workplace. To take the
employees motivation to the next level another programme was conceived in
September 2009 as Citizen SBI Campaign.
Citizen SBI
Citizen SBI was more
ambitious programme than PARIVARTAN, while PARIVARTAN aimed at making the staff
aware of the problem on behavioral front and provided a platform to look into the
changes required in their attitude; Citizen SBI was planned to touch the core
value system of the employee inspired by the teachings of Swami Ranganathnanda
of the Ram Krishna Mission. The campaign aimed at motivating the employees by
an approach based on traditional values of Indian culture and philosophy of
self development. Unlike PARIVARTAN, this programme was designed in association
with a HR consulting firm Illumine Resources Pvt. Limited. The aim of the
Citizen SBI programme was:
1.
To customer fulfilling organization aimed at fulfilling the customer’s needs as
opposed to a customer servicing organization.
2.
To facilitates proactive engagement with customer’s communities.
3.
To close the actualization gaps creating an organization where people can
execute what
they believe
they should do. Citizen SBI was a two day programme based on the belief that
every individual has a belief system which cannot be changed by force and which
develops over a period of years. All that can be done is to provide them a
direction by guiding people to consider the alternative way of thinking. The
change must be voluntary not forced.
Conclusion
The change initiative
that took place in SBI was beyond imagination due to the vast size of the organization
and what was more important was its lasting effect which was created by linking
the identity of an individual with the soul of the organization. Going beyond
the commercial motive of the organization to beat the competition, the
transformation journey aimed at revolutionizing the individuals working in the
organization. It is one of the largest transformation exercise and HR
initiative that took place ever in India.
Acknowledgement
The authors are deeply indebted to
Professor and Head, Department of Business Administration, Annamalai
University, Annamalainagar-608002, Tamil Nadu, India for their inspiring help,
constant support and for providing facilities in the department to carry out
the research work
Notes and
References
1.
Rajesh Chakrabarti, foreword by Rajat Gupta (2010) Grit, Guts and gumption,
driving
change in the
state owned giant, Penguin publications.
2.
Harvard Business review on Change, Harvard business school press, Boston.
3.
Trainer’s notes Udaan, internal resources of SBI.
4.
Trainer’s notes Parivartan, internal resources of SBI.
5.
Trainer’s notes SBI Citizen, internal resources of SBI.
6.
http://www.sbisyd.com.au/EVOLUTION%20OF%20SBI.pdf ‘Evolution of State
Bank of India’
accessed on 18/1/2011.
7.
http://www.statebankofindia.com/user.html company website accessed on
18/1/2011,
accessed during
April 2011.
8.
http://www.onlinesbindore.com/ , http://www.onlinebanksguide.com/sbibank/
branches.html
company website accessed on 18/1/2011, accessed during April
2011.
