THE ROLE OF HUMAN RESOURCE MANAGEMENT IN STATE BANK OF INDIA, CHENNAI

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.