Description
This case study narrates the situation of a large bank, christened Republic Bank of India (REBI) that has undergone a radical transformation. The objective of this case study is to identify triggers leading to large scale transformation efforts and examine the response of a stable and slow moving organization to such triggers. The case study is descriptive in nature and focusses on the content, process and challenges in a large scale change intervention program.
IMJ 31
Volume 4 Issue 4 January-March 2013
Abstract
This case study narrates the situation of a large bank,
christened Republic Bank of India (REBI) that has
undergone a radical transformation. The objective of
this case study is to identify triggers leading to large
scale transformation efforts and examine the response
of a stable and slow moving organization to such triggers.
The case study is descriptive in nature and focusses on
the content, process and challenges in a large scale
change intervention program.
REBI, a ninety year old public sector bank, was facing
competitive pressures from New Private Banks (NPBs)
and also lagged on the technology adoption front. The
bank was known for efficiency in branch operations,
however, had inherited an inward looking culture with
little focus on marketing and sales. As the external
environment changed, private banks started expanding
aggressively into the semi-urban and rural markets that
were considered the stronghold of public sector banks
like REBI. As a response, REBI undertook a cultural
transformation exercise called Project Restructuring
(PR), aimed at making the bank market-focused, sales-
oriented and customer-centric.
The case study provides a brief overview of the Indian
banking industry and conditions that prompted Project
Restructuring at REBI. This is followed by a detail
description of Project Restructuring beginning with the
ideation, visioning exercise and communication channels
used to overcome resistance among employees. The
case study then describes the four pillars of change viz.,
growth in retail assets, growth in SME, enhancing branch
service and centralization of key processes. The change
process is explicated in terms of specific activities
undertaken at the branch level as well as the rebranding
Organizational Transformation: The Case
of Republic Bank of India (REBI)
Ranjeet Nambudiri and Radha Ravichandran
exercise at the corporate level. Finally, challenges faced
by REBI are discussed.
Key words: Change management, restructuring,
intervention, cultural transformation
Introduction
The transformation initiative of Republic Bank of India
(REBI), christened Project Restructuring (PR) had shown
excellent initial results with an increase of nearly 25
percent in Current Account Savings Accounts (CASA)
business. The top management team desired to be
proactive and well prepared before Union Government
announced another around of licenses to new entrants
in the Indian banking space. REBI had achieved good
results in previous financial years showing Year-on-
Year growth of more than 20 percent in total business,
advances, deposits, net profit and other income. Asian
Banker had just rated REBI as the 3
rd
strongest bank in
India. It was widely held that the transformation
initiative introduced three years back was instrumental
for this turnaround in performance.
However, the question facing the top management team
of REBI was how to keep up the tempo of the change
initiatives. PR had not yet touched many parts of the
REBI system. Moreover, new private banks (NPBs) were
fast expanding into the semi-urban and rural markets.
REBI had leveraged technology and arrived at the same
platform as leading banks and were now comparable
in terms of product innovation, alternate channel
presence and technology adoption. However, the vision
statement of the current year was still some way away
as REBI aimed to break into the Top 3 banks of the
nation.
MANAGEMENT CASE
This case study, though based on real events, is a fictionalized version and any resemblance to actual entities or persons is coincidental. There are references
to actual organizations and people in the case study. Names of organizations and persons have been changed to protect their identity.
Ranjeet Nambudiri and Radha Ravichandran
IMJ 32
Volume 4 Issue 4 January-March 2013
The Indian Banking Industry
Reforms were initiated in the Indian banking industry
in early 1991. As a result new private sector banks were
established, interest rate was deregulated, relaxation
was made in the Cash Reserve Ratio (CRR) and Statutory
Liquidity Ratio (SLR), and foreign banks were allowed
either in the form of branches or wholly owned
subsidiaries among other initiatives. This led to the
sector becoming extremely competitive. NPBs and
foreign banks were early adopters of latest technology
and used advanced technology to offer innovative
products and better service quality. At the same time,
newer opportunities arose as the demographic profile
of the customers was changing. Markets opened up for
corporate accounts and high net worth individuals
(HNIs). NPBs offered better service quality and customer
experience resulting in a trend of shifting customer
loyalty. At the same time customer expectations from
the banks increased significantly. New entrants into the
banking sector were free from the legacy of problems
of Non-Performing Assets (NPAs). Backed by a fully
computerized establishment they could adopt advanced
IT based hardware and software solutions rapidly. NPBs
were able to offer the earliest version of what is today
known as a core banking solution because their branches
were networked through a common technology platform.
Transaction time was brought down dramatically, thus
enhancing the customer service quality. Around the
same time, Public Sector Banks (PSBs) offered the
voluntary retirement schemes (VRS) resulting in exodus
of senior level officers from the PSBs to the NPBs.
Though PSBs had the advantage of greater reach, the
PSBs outmaneuvered this using alternate delivery
channels and direct selling agents. PSBs were losing
their market share to more aggressive new private sector
banks.
Republic Bank of India: Need for Change
REBI was one of the leading PSBs of India. The bank
began operations in the early part of the 20
th
century
and was nationalized by the Government of India (GoI)
in 1969. The bank had grown through a strategy of
organic growth as well as a few acquisitions. Steady
growth and profits characterized REBI and in the early
2000s it issued an Initial Public Offering (IPO) followed
by a follow-up offer, both of which were hugely over-
subscribed. It was generally perceived to be a stable and
traditional bank.
REBI had a 4-tier structure consisting of the Head Office,
Zonal offices, Regional offices and branches. In 1998-
99 the zonal offices were dropped to create a leaner
structure. The bank also attempted to modernize its
human resource systems by adopting best practices
from across the globe. Information technology initiatives
were unavoidable, and REBI had computerized 70
percent of its branches by 2000. It was in the process
of augmenting the alternate delivery channels like ATMS
as well as adopting core banking solutions. ATM network
increased 100 times in 10 years while hardly 50 branches
were added in the same period.
REBI was known for the strength and efficiency in
branch operations however, was considered weak in
reaching out to potential customers. Like any other PSB,
the bank had never felt the need to indulge in aggressive
sales. However, this changed when with changes in the
external environment. Competition in the form of NPBs,
increasing awareness of the customers, and technology
advancements created pressure on the bank to maintain
its market position. The trigger for change came when
NPBs also started expanding into the semi-urban and
rural markets that were traditionally the stronghold of
PSBs and threatening the market position of PSBs in
these markets. Branches of NPBs focused completely in
sales and marketing as the branch operations were
centralized. Feet-on-street was the strategy as branch
personnel aggressively pursued sales targets. Internal
reports indicated an impact of the external environmental
changes. The bank was growing but the growth was
slower than the market, especially in fee income, retail
loan accounts and current and savings accounts (CASA).
To adapt to these changes and meet the expectations
of stakeholders REBI went in for planned change efforts
and transformation of the organization. As such, the
bank was not faced with a significant decline in
performance. However, the trigger for change was a
desire to figure among the Top 5 banks and at the same
time reverse the slow growth in few segments. Republic
Ranjeet Nambudiri and Radha Ravichandran
IMJ 33
Volume 4 Issue 4 January-March 2013
Bank of India approached a leading management
consulting firm to advise them on the transformation
initiative. At the same time, the bank was clear that the
transformation would be driven internally. Hence, 10
core team members were appointed to chaperone the
project. The consultants visited branches along with
core team members to understand the existing systems,
processes, organizational culture, and skill gap.
The consultants suggested a transformation process
which was then christened Project Restructuring (PR).
The process aimed at transforming people, reengineering
and improving processes with the support of technology,
exploiting technological advancements to improve
service quality and delivery and imbibe sales and
marketing orientation amongst the rank and file of the
bank. The aim was to inculcate a culture of sales and
marketing from the corporate to the branch level and
transform into a sales-oriented, market-focused,
customer-centric work culture.
Project Restructuring: The Content
Buy - in of Top Management and Rank and File
Management of change is usually driven from the top.
However, the top management of REBI was quick to
realize that a consultative process would be more
effective in inculcating a sense of ownership among the
employees. The bank held a conclave for the top
management which was facilitated by their management
consulting agency. Top managers introspected about
the performance of the bank, its strength and weaknesses,
preparedness to take on future competitive pressures
and other related issues. Many of the participants
questioned the need for change when the bank was
performing reasonably well on most parameters.
However, the change management group argued
forcefully in favor of the change initiative and
highlighted the dip in critical parameters like CASA
ratio, retail loan accounts while also indicating the data
on customer satisfaction indices. The matter was driven
home by surfacing the several challenges facing PSBs
in general including aggressive marketing and the
technological edge of the NPBs and the changing
preferences of customers. The top management group
called the attention of the participants to identify areas
of immediate improvement and change. A survey held
amongst the participants identified 9 critical areas with
marketing and sales, human resources, and information
technology emerging as the most critical areas. Many
senior officers were of the view that marketing and sales
needed immediate revamp. REBI set out a road map
for the future in the form of a vision statement. After
several rounds of discussions involving the officer
association and staff Republic representatives the bank
drafted the Vision Statement.
Communicating the Change Agenda
Town hall meetings were arranged across the country
to reach out to the staff with the new vision statement.
The top management briefed the staff about the changing
market scenario, aggressive competitors, changing
demographics of the consumers and their preferences,
and the dominant role of technology in banking. The
need for change was highlighted. REBI used a metaphor
of "redesigning a moving vehicle" to mobilize support
from the staff members. The metaphor infused the
employees with vigor and motivated them toward the
transformation targets.
The top management identified two critical aspects of
growth viz., “instilling the drive of sales and marketing
across bank staff and reconfiguration of the business
model to enable us to grow for the future". The objective
of PR was set out as "Transformation of Republic Bank
of India into Sales oriented, customer and market focused
financial services organization"
Main Themes of Project Restructuring (PR)
Sensing the exploding growth potential in retail and
SME sectors, REBI identified these segments as thrust
areas. To achieve the aggressive growth targets set out,
the bank needed to focus on changing the marketing
orientation, sales and service attitude across the
hierarchy. The initiative also called for back office
centralization to free the branch staff from operational
roles and thus enable them the bandwidth to go out to
the market for direct sales.
Thus, the four pillars of PR were identified as
1) Growth in Retail asset (Marketing &Processing)
Ranjeet Nambudiri and Radha Ravichandran
IMJ 34
Volume 4 Issue 4 January-March 2013
2) Growth in SME (Marketing & Processing)
3) Branch sales and service (Improving customer expe-
rience in branches)
4) Centralization of key processes.
The top management had clearly identified that for this
transformation to be successful it would need to be
driven through internal change agents. The bank hence
embarked upon the task of identifying "coaches" to
drive the change program. The coaches were mandated
to spend between 3-5 weeks at each branch and
demonstrate the selling process as REBI launched the
training through a "participative" approach. This was
necessary because a large proportion of the branch
personnel had never been involved in the selling process.
Many of them believed that they would never be able
to conduct cold calling and field based sales activities.
The coaches were expected to bri ng about a
transformation in these beliefs because they themselves
had been officers without prior selling experience and
hence the tacit message was that selling was a skill that
could be gained.
Project Restructuring: The Process
Pilot Phase and Phase 1
Republic Bank of India selected Mumbai, Pune and
Hyderabad centres in the pilot phase. These centres
were chosen because they offered a typical combination
of HNI customers, salaried middle class and SME of
various types. 70 coaches were assigned to the branches
in these centres. These coaches demonstrated the best
practices by actually doing banking business on the
floor of the branch, and involving branch personnel in
outbound sales activities. The employees not only learnt
the nuances of marketing techniques and technology
based service delivery but also started believing that
selling was a skill they could learn. Restructuring
initiatives were tailored for each type of branch viz.,
retail asset branch, retail banking branches and credit
thrust/SME branches.
Pillar 1: Retail Assets
In the retail segment, specialized branches for retail
assets (RAB) were converted into centralized processing
centres for retail loan termed as Republic Loan Points.
Branches would now generate leads and intimate the
RLP. At the RLP marketing officers were expected to
follow up on these leads. A comprehensive Lead
management system software supported online response
to leads generated by the field staff and relayed it to
marketi ng offi cers for conversi on. Credi t and
documentation officers looked into the credit worthiness
and document execution part. The RLP also had staff
to manage loan repayment, follow up and customer
service. Assured turn around time of 2 days for vehicle
loans and education loans and 5 days for other loans
requiring legal formalities was the norm. Thus, REBI
targeted a significant improvement in customer
experience and service quality. The bank outsourced
Contact Point Verification, Centralized Processing of
Applications and Post-dated cheque Management
activities to outside agencies. Branch staff was
encouraged to plan outbound sales and, marketing at
point of sales (car dealer showroom, builders'
construction site etc). Builders and car dealers were
aggressively pursued for possible alliances for home
loan and 4-wheeler loan respectively. Campus loan
camps were held at premier institutes for promoting
educational loans and providing on the spot in-principle
loan. Thus, the thrust of Project Restructuring was on
transforming into an aggressive sales organization.
Pillar 2: Small and Medium Enterprises (SME)
SME coaches were posted in branches with the aim of
improving the credit flow. These SME coaches helped
branches explore the potential around nearby catchment
areas and also supported marketing efforts for a range
of products which included deposits, current account,
short term/long term loans, and fee based products.
The branch staff generated leads through customer
referrals and outbound marketing in industrial estates
and commercial markets. The coaches also trained credit
officers in marketing skills and best business practices.
Seven SME central processing centers (SMECP Centers)
were established in the major metro centers and were
headed by senior executives. SMECP centers acted as
processing hubs for Business Banking Branches. The
advances officer at each branch along with branch
Ranjeet Nambudiri and Radha Ravichandran
IMJ 35
Volume 4 Issue 4 January-March 2013
manager would lead the SME business effort. Marketing
officers posted at the SMECPC would generate leads
and also take care of conversion of leads from branches.
The processing officers and technical evaluation officers
scrutinized the proposal and submitted to the grid for
clearance. SMECPC marketing officers identified clusters
and adopted intensive marketing techniques to attract
these clusters. The bank adopted a focused and intensive
sales strategy to target the SME segment and this was
evident from the positive results in this segment.
Pillar 3: Enhancing Branch Sales and Service
Sales Initiatives
Branch offices were converted into marketing offices to
include advances department, savings/current account
department, cashiers, fixed deposit department and
customer relationship managers. Each department was
expected to promote products, depending on the
business potential of the customer they handled. For
instance, the cashier could promote alternate delivery
channels like ATM/debit card. Branch sales initiatives
also included reaching out to existing customers for
other businesses like cross selling of third party products
to HNI customers, salary account for corporate clients
and SME customers through tele-marketing. Staff
members were made to undergo intensive training
programs. Lead generati on was the pri mary
responsibility of customer-facing employees, who then
forwarded these to product owners. Product owners
had conversion targets, while lead generation targets
were set for the branch. The coaches showcase how to
put up stalls in potential centers, fixing appointment
with influential contact people for meeting to promote
the banks services and door-to-door campaigns.
Service Improvement in Branches
While aggressive outbound selling was the order of the
day at Republic Bank of India, the transformation
initiative also focused on enhancing the customer
experience. Project Restructuring, not only aimed at
sales growth but also at improving the customer
experience in the branch and migrating them to alternate
channels thus reducing branch operations. Branch
ambience was enhanced by changing the layout, offering
best-in-class wait areas, leisure reading material and
top class infrastructure including fully air-conditioned
cabins and lobby. Lobby banking was introduced in
select cities with facilities of drop box, ATM, touch
screen kiosks in an exclusive aesthetic section within
the branch.
The bank assigned dedicated relationship managers to
handle privilege account clients. Privilege lounges were
set up for HNI customers. Customer service officers
were mandated with a target of 100 calls per month to
review service delivery quality, update of personal data
and explore potential for cross selling. The bank quickly
realized the importance of training their branch staff
of technology advancements. Coaches conducted
intensive training programs for the customer facing
staff to enable them resolve customer queries rapidly.
Pillar 4: Centralization of Processes
Centralization of back office processes was the backbone
of the transformation process. The success of the other
3 initiatives depended on the speed with which back
office operations were centralized. This would
significantly reduce the burden of routine repetitive
work of the branch personnel and enable them to focus
on managing customers in the branch. 5 key processes
were centralized namely inward clearing, outward
clearing, account opening, cheque book issuance and
generation of account statement. The core team drew
up a road map for centralization. As PR reached the
completion of Wave 1 the bank had already centralized
100% clearing of both inward and outbound in 19 centres.
Personalized cheque book issuance for all branches in
India was centralized in Mumbai, taking centralization
to national level. Concurrently, coaches trained the
branch staff in the technology based centralized
processing. This allowed integration of branch
operations with the centralized back office and gave the
branch ample time to focus their energies on acquiring,
retaining, and converting potential customers.
Phase II
Coaches stayed in a region for up to 3 months and at
every branch for nearly 2 to 3 weeks. Efforts of Phase
I lead to a set of trained officers who turned into coaches
Ranjeet Nambudiri and Radha Ravichandran
IMJ 36
Volume 4 Issue 4 January-March 2013
taking the number of coaches to around 140. 46 regional
offices out of 55 were covered in Phase I. PR as a national
rollout was carried out through this chain reaction. As
the next step and to support the transformation effort
Republic Bank of India created business verticals on
specific business segments both on asset and liability
side. This led to realignment of branches along specific
business segments to enable focused development. The
seven verticals focused in large corporates, SME, retail
banking, personal banking and operations, rural and
agriculture business, transaction banking, and treasury
and international business. Of these, the transaction
banking vertical was unique to the industry as for the
first time any bank was providing a specialized and
robust payment and settlement system and cash
management services.
The transformation process was rolled out across the
branches in 2 phases and was accomplished over a
period of 18 months. The whole exercise focused on
combining the power of people and technology, building
relationships through people and fast and efficient
delivery of services with technology support. Republic
Bank of India covered 1000 branches under technology
in 6 months' time on war footing to support PR initiatives
and became the first PSB to be 100% on core banking.
Project Restructuring: Enabling Mechanisms
Project Restructuring had completely revamped the
branch structure and operations. Marketing support
systems for retail and SME businesses at the regional
offices were established. This called for creation of
several enabling structures and processes. Some of these
are discussed in the subsequent sub-sections.
Role of the Branch Manager
The branch manager is perhaps the single most visible
face of the bank for retail customers. Republic Bank of
India wanted the Branch Managers (BMs) to play a
larger role within the branch and in the command area.
BMs are expected to interact, communicate, motivate
and enhance performance of the members of their
respective branches. As a team leader the BM was in
a position to impact the success of PR either positively
or negatively. Job responsibilities of branch staff had
changed drastically and many of the staff members
were neither skilled nor trained in sales activities. Many
even lacked the self-belief that they could conduct direct
selling transactions. Even though, the coach was
providing support and training inputs, the BM was
entrusted with the critical responsibility of motivating
the branch staff, instilling belief and confidence in them
and overcoming their resistance to the change process.
At the same time the BM was also charged with the
responsibility of improving the ambience of the branch.
As part of the direct sales responsibilities the BM would
mandated to participate in public/social events within
and around the command area to increase visibility of
the bank. The branch manager was also expected to
gauge the command area potential through regular
business intelligence and market surveillance activities.
By augmenting the role of BMs, Republic Bank of India
aimed at transforming sales culture at the front end
of the bank and turning them into market outlets. This
paved the way for building the organization into one
of "sales oriented universal financial services". REBI's
case highlights the significance of getting 'buy-in' from
key role holders as organizations undertake radical
transformation initiatives.
Re-skilling
It was evident that a large majority of the staff, including
branch managers, were not equipped to handle their
new responsibilities and roles. Many had never taken
part in direct sales activities in their career and several
were also inadequately trained in technology. Clearly,
PR faced its biggest challenge in terms of the skill sets
of the existing employees and the success of the project
depended in a large measure on the bank's ability to
re-skill its people. Strong leadership communication
initiatives helped reduce the uncertainty and resistance
to change. However, the bank still faced the issue of
re-skilling a large pool of employees. Leadership
development programs for top management were
conducted by reputed business schools while the middle
management underwent training in customer service,
direct sales and managerial competency enhancement.
Ranjeet Nambudiri and Radha Ravichandran
IMJ 37
Volume 4 Issue 4 January-March 2013
Rebranding
REBI was careful not to initiate any re-branding exercise
till there was complete confidence over the results of
PR. The top management reasoned that when a new
client walked into a branch after seeing the new
promotional campaigns s/he should experience the "new
and changed Republic Bank of India". This experience
would generate a lot of positive word-of-mouth and go
a long way in sustain the change effort. A pan India
customer survey covering Republic Bank of India
customers, potential customers and private bank
customers was conducted. The survey revealed that
PSBs were perceived to be laggards in technology based
service delivery and suitable only for old generation
customers. Republic Bank of India wanted to project
their new transformed avatar of being a customer centric
bank with state of the art technology. The bank engaged
a leading advertisement and communication agency to
facilitate the rebranding exercise. The exercise began
with a change in the logo, with the new logo signifying
the proposed customer-centric approach. Similarly, the
bank's ad line was replaced with a new theme that
depicted as a new-age bank that understood customer
needs, thus targeting the younger generation of clients.
Several internal meetings, circulars and employee
engagement activities were carried out to take the
employees into confidence about the need for rebranding.
The campaign was launched with two TVCs and four
print advertisements. All advertisements focused on
the newly imbibed customer-centric approach. Value
for money, multi-channel delivery, assured service
delivery within time and transparency in business
dealings were the brand promises made through the
rebranding exercise. The initial response to this
campaign was quite positive.
Challenges Faced during Implementation
Project Restructuring was an elaborate exercise the
spanned nearly 2 years. The transformation initiatives
were phased out and carefully planned at every stage.
Even so, such a massive exercise cannot be executed
without challenges and Republic Bank of India was
faced with several such issues during the project design
and implementation. The question at the top of the mind
of most of the employees was "what is the need for such
an exercise when the bank is performing well in all
aspects, on all parameters including the share price
movement in the stock market". The biggest challenge
facing the transformation team was to convince the
contended and complacent employees about the
initiative. Extant literature states that convincing
employees of the need for change in the absence of a
visible external or internal trigger is among the biggest
challenges for a change agent (Beckhard & Harris, 1987).
REBI tackled this problem with the hands on involvement
of the senior management beginning with several town
halls meetings conducted by the CMD.
However, inspite of a strong communication initiative,
the bank faced some resistance to change. Branch
managers no longer had the responsibility of handling
branch operations and this led to some discontent. Branch
managers were now prodded into moving out of their
comfort zones. Those with several years of experience
and adept at handling branch operations had to move
into field sales roles. It was expected that some employees
would not react favorable to this. Learning while doing
was not easy for many of the long-standing employees,
some of whom resented the extra pressure created by
sales targets and customer issues. Lead generation
targets were met with less resistance, however, frontline
employees were wary of customer complaints because
once the lead was generated the customer was no longer
in their control. Moreover, with changes in the job
description of the branch employees it was expected
that the KPAs (Key Performance Areas) would undergo
alteration. The bank aims to address this issue in the
next phase of the change initiative.
Impact of PR and the Road Ahead
Republic Bank of India introduced several new products
both asset and liability items. PR initiatives started
showing results as early as during the course of phase
II implementation. Branch sales and service initiatives
enabled the bank to increase CASA by 23.2% over the
previous period. Performance at personal banking
branches in garnering SB account, deposits and CASA
was much higher compared to other branches and overall
bank average. Likewise SMECPC and RLPs contributed
much more than the other branches towards MSME and
retail loan respectively.
Ranjeet Nambudiri and Radha Ravichandran
IMJ 38
Volume 4 Issue 4 January-March 2013
The Asian Banker ranked Republic Bank of India as the
7th strongest bank in Asia Pacific region and 3rd amongst
Indian banks. The bank was in 275th place amongst
most valuable global banking brands in the current year
(up from 351 in the previous year) By Brand Finance
Plc. Financial Express, Earnest &Young survey of best
banks in India for the current year ranked Republic
Bank of India as 3rd in growth and 4th in efficiency and
profitability amongst nationalized banks. Thus it seems
the transformation initiative though long drawn and
effort intensive had produced the desired results.
Realizing that customer service excellence is the key
success factor in the current competitive situation and
human capital as the key enabler to achieve service
excellence, Republic Bank of India wanted to focus on
these two aspects in Restructuring II to be launched in
about two years' time. The bank is all set to unleash
PR II with customer service excellence and HR
development as the prime focus. Aggressive branch
expansion to the tune of 500 branches per annum for
next 5 years is planned in order to meet the social
objective of financial inclusion which the bank aims to
pursue relentlessly encompassing more and more of the
unbanked population.
Conclusion
The case of REBI highlights several key issues related
to management of change. As is the case with any large
organization, REBI seemed to be in a comfortable
situation with reasonably sound performance metrics.
However, the "corporate cholesterol test" suggested by
Vermuelen, Puranam and Gulati (2010:2) would indicate
that REBI was in immediate need for change. The external
environment was changing rapidly and competitive
pressures on REBI were increasing manifold. Internally,
the top management had a desire to be recognized as
one of the top performing banks in the country. Both
these served as the triggers for change in the case of
REBI.
As a manifestation of its ninety year old legacy, the bank
had a very strong culture and values; beliefs and norms
were shared across the hierarchy. Very often, a strong
culture can create barriers to the change process as staff
members fall into a routine and face inertial pressures.
This case study provides a description of how a large
and stable public organization followed a phased out
strategy to transform itself. Through the detailed
description of the content and process of Project
Restructuring it is evident REBI had chosen the
appropriate change management strategy. The bank
understood that change of this scale and nature could
only be effected with the support of its managerial and
clerical cadre. Many PSBs had faced the brunt of
resistance from their employee unions in the much
written about Voluntary Retirement Schemes of the late
1990s. REBI clearly did not want to commit the same
mistake and thrust a complex change management
program on an unwilling and non-cooperative set of
employees.
While, the case highlights several positive aspects of
the initiative, it is worth considering the also identifies
potential pitfalls. While, the initial results at REBI are
positive, it is also worth considering whether one can
really attribute the results solely to Project Restructuring.
Critics of the planned change claim that it is often not
possible to isolate the impact of change management
programs (Cummings & Worley, 2009:42). The same
can be said about Project Restructuring as well. Another
issue that dogs proponents of change is the sustainability
of such initiatives. It is often noticed that once the initial
euphoria dies down, the change agents find it
increasingly difficult to implement the program. Kotter
(2007) emphasized the significance of "institutionalizing"
the change effort. This includes creating a road map and
clearly articulating successive steps in the change
program. The organization also needs to identify change
milestones and review these periodically. It is evident
that the first installment of Project Restructuring has
met with success, the question is can the top management
of REBI come out with an equally successful sequel.
References
Beckhard, R., & Harris, R. (1987). Organizational transitions:
Managing complex change, Mass: Addison-Wesley
Publishing Co.
Cummings, T.G, & Worley, C.G. (2009) Organization
Development and Change, Cengage Learning.
Kotter, J.P. (2007) Leading change: Why transformation efforts
fail, Harvard Business Review, January 2007.
Vermuelen, F., Puranam, P., & Gulati, R. (2010) Change for
change's sake, Harvard Business Review, June 2010.
Ranjeet Nambudiri and Radha Ravichandran
IMJ 39
Volume 4 Issue 4 January-March 2013
Ranjeet Nambudiri is an Associate Professor in the
Organizational Behavior and Human Resource
Management area at the Indian Institute of Management
Indore, India. His research interests include trust and
distrust related issues in business and non-business
contexts, justice issues during organizational change,
managing organizational transformation, high performance
work systems, self-managed teams, and organizational
commitment. His papers have been published in
International and Indian journals and two of his cases
are registered and published on Ivey Publishing. He has
presented papers at international conferences like EGOS,
Academy of Management, ANZAM, EIASM, AAOM, and
AICSDR.
Radha Ravichandran, PhD has almost 15 year of teaching
experience at an undergraduate and graduate level.
Leave this chanting and singing and telling of beads!
Whom dost thou worship
in this lonely dark corner of temple with doors all shut?
Open thine eyes and see thy God is not before thee!
He is there where the tiller is tilling the hard ground and
where the pathmaker is breaking stones.
He is with them in sun and in shower, and
his garment is covered with dust.
Put off thy mantle and even like him come down on the dusty soil!
Deliverance? Where is this deliverance to be found?
Our master himself has joyfully taken upon him the bonds of creation;
he is bound with us all for ever.
Come out of thy meditations and leave aside thy flowers and incense!
What harm is there if thy clothes becomes tattered and stained?
Meet him and stand by him in toil and in sweat of thy brow.
Gitanjali, Rabindranath Tagore
Ranjeet Nambudiri and Radha Ravichandran
doc_885271424.pdf
This case study narrates the situation of a large bank, christened Republic Bank of India (REBI) that has undergone a radical transformation. The objective of this case study is to identify triggers leading to large scale transformation efforts and examine the response of a stable and slow moving organization to such triggers. The case study is descriptive in nature and focusses on the content, process and challenges in a large scale change intervention program.
IMJ 31
Volume 4 Issue 4 January-March 2013
Abstract
This case study narrates the situation of a large bank,
christened Republic Bank of India (REBI) that has
undergone a radical transformation. The objective of
this case study is to identify triggers leading to large
scale transformation efforts and examine the response
of a stable and slow moving organization to such triggers.
The case study is descriptive in nature and focusses on
the content, process and challenges in a large scale
change intervention program.
REBI, a ninety year old public sector bank, was facing
competitive pressures from New Private Banks (NPBs)
and also lagged on the technology adoption front. The
bank was known for efficiency in branch operations,
however, had inherited an inward looking culture with
little focus on marketing and sales. As the external
environment changed, private banks started expanding
aggressively into the semi-urban and rural markets that
were considered the stronghold of public sector banks
like REBI. As a response, REBI undertook a cultural
transformation exercise called Project Restructuring
(PR), aimed at making the bank market-focused, sales-
oriented and customer-centric.
The case study provides a brief overview of the Indian
banking industry and conditions that prompted Project
Restructuring at REBI. This is followed by a detail
description of Project Restructuring beginning with the
ideation, visioning exercise and communication channels
used to overcome resistance among employees. The
case study then describes the four pillars of change viz.,
growth in retail assets, growth in SME, enhancing branch
service and centralization of key processes. The change
process is explicated in terms of specific activities
undertaken at the branch level as well as the rebranding
Organizational Transformation: The Case
of Republic Bank of India (REBI)
Ranjeet Nambudiri and Radha Ravichandran
exercise at the corporate level. Finally, challenges faced
by REBI are discussed.
Key words: Change management, restructuring,
intervention, cultural transformation
Introduction
The transformation initiative of Republic Bank of India
(REBI), christened Project Restructuring (PR) had shown
excellent initial results with an increase of nearly 25
percent in Current Account Savings Accounts (CASA)
business. The top management team desired to be
proactive and well prepared before Union Government
announced another around of licenses to new entrants
in the Indian banking space. REBI had achieved good
results in previous financial years showing Year-on-
Year growth of more than 20 percent in total business,
advances, deposits, net profit and other income. Asian
Banker had just rated REBI as the 3
rd
strongest bank in
India. It was widely held that the transformation
initiative introduced three years back was instrumental
for this turnaround in performance.
However, the question facing the top management team
of REBI was how to keep up the tempo of the change
initiatives. PR had not yet touched many parts of the
REBI system. Moreover, new private banks (NPBs) were
fast expanding into the semi-urban and rural markets.
REBI had leveraged technology and arrived at the same
platform as leading banks and were now comparable
in terms of product innovation, alternate channel
presence and technology adoption. However, the vision
statement of the current year was still some way away
as REBI aimed to break into the Top 3 banks of the
nation.
MANAGEMENT CASE
This case study, though based on real events, is a fictionalized version and any resemblance to actual entities or persons is coincidental. There are references
to actual organizations and people in the case study. Names of organizations and persons have been changed to protect their identity.
Ranjeet Nambudiri and Radha Ravichandran
IMJ 32
Volume 4 Issue 4 January-March 2013
The Indian Banking Industry
Reforms were initiated in the Indian banking industry
in early 1991. As a result new private sector banks were
established, interest rate was deregulated, relaxation
was made in the Cash Reserve Ratio (CRR) and Statutory
Liquidity Ratio (SLR), and foreign banks were allowed
either in the form of branches or wholly owned
subsidiaries among other initiatives. This led to the
sector becoming extremely competitive. NPBs and
foreign banks were early adopters of latest technology
and used advanced technology to offer innovative
products and better service quality. At the same time,
newer opportunities arose as the demographic profile
of the customers was changing. Markets opened up for
corporate accounts and high net worth individuals
(HNIs). NPBs offered better service quality and customer
experience resulting in a trend of shifting customer
loyalty. At the same time customer expectations from
the banks increased significantly. New entrants into the
banking sector were free from the legacy of problems
of Non-Performing Assets (NPAs). Backed by a fully
computerized establishment they could adopt advanced
IT based hardware and software solutions rapidly. NPBs
were able to offer the earliest version of what is today
known as a core banking solution because their branches
were networked through a common technology platform.
Transaction time was brought down dramatically, thus
enhancing the customer service quality. Around the
same time, Public Sector Banks (PSBs) offered the
voluntary retirement schemes (VRS) resulting in exodus
of senior level officers from the PSBs to the NPBs.
Though PSBs had the advantage of greater reach, the
PSBs outmaneuvered this using alternate delivery
channels and direct selling agents. PSBs were losing
their market share to more aggressive new private sector
banks.
Republic Bank of India: Need for Change
REBI was one of the leading PSBs of India. The bank
began operations in the early part of the 20
th
century
and was nationalized by the Government of India (GoI)
in 1969. The bank had grown through a strategy of
organic growth as well as a few acquisitions. Steady
growth and profits characterized REBI and in the early
2000s it issued an Initial Public Offering (IPO) followed
by a follow-up offer, both of which were hugely over-
subscribed. It was generally perceived to be a stable and
traditional bank.
REBI had a 4-tier structure consisting of the Head Office,
Zonal offices, Regional offices and branches. In 1998-
99 the zonal offices were dropped to create a leaner
structure. The bank also attempted to modernize its
human resource systems by adopting best practices
from across the globe. Information technology initiatives
were unavoidable, and REBI had computerized 70
percent of its branches by 2000. It was in the process
of augmenting the alternate delivery channels like ATMS
as well as adopting core banking solutions. ATM network
increased 100 times in 10 years while hardly 50 branches
were added in the same period.
REBI was known for the strength and efficiency in
branch operations however, was considered weak in
reaching out to potential customers. Like any other PSB,
the bank had never felt the need to indulge in aggressive
sales. However, this changed when with changes in the
external environment. Competition in the form of NPBs,
increasing awareness of the customers, and technology
advancements created pressure on the bank to maintain
its market position. The trigger for change came when
NPBs also started expanding into the semi-urban and
rural markets that were traditionally the stronghold of
PSBs and threatening the market position of PSBs in
these markets. Branches of NPBs focused completely in
sales and marketing as the branch operations were
centralized. Feet-on-street was the strategy as branch
personnel aggressively pursued sales targets. Internal
reports indicated an impact of the external environmental
changes. The bank was growing but the growth was
slower than the market, especially in fee income, retail
loan accounts and current and savings accounts (CASA).
To adapt to these changes and meet the expectations
of stakeholders REBI went in for planned change efforts
and transformation of the organization. As such, the
bank was not faced with a significant decline in
performance. However, the trigger for change was a
desire to figure among the Top 5 banks and at the same
time reverse the slow growth in few segments. Republic
Ranjeet Nambudiri and Radha Ravichandran
IMJ 33
Volume 4 Issue 4 January-March 2013
Bank of India approached a leading management
consulting firm to advise them on the transformation
initiative. At the same time, the bank was clear that the
transformation would be driven internally. Hence, 10
core team members were appointed to chaperone the
project. The consultants visited branches along with
core team members to understand the existing systems,
processes, organizational culture, and skill gap.
The consultants suggested a transformation process
which was then christened Project Restructuring (PR).
The process aimed at transforming people, reengineering
and improving processes with the support of technology,
exploiting technological advancements to improve
service quality and delivery and imbibe sales and
marketing orientation amongst the rank and file of the
bank. The aim was to inculcate a culture of sales and
marketing from the corporate to the branch level and
transform into a sales-oriented, market-focused,
customer-centric work culture.
Project Restructuring: The Content
Buy - in of Top Management and Rank and File
Management of change is usually driven from the top.
However, the top management of REBI was quick to
realize that a consultative process would be more
effective in inculcating a sense of ownership among the
employees. The bank held a conclave for the top
management which was facilitated by their management
consulting agency. Top managers introspected about
the performance of the bank, its strength and weaknesses,
preparedness to take on future competitive pressures
and other related issues. Many of the participants
questioned the need for change when the bank was
performing reasonably well on most parameters.
However, the change management group argued
forcefully in favor of the change initiative and
highlighted the dip in critical parameters like CASA
ratio, retail loan accounts while also indicating the data
on customer satisfaction indices. The matter was driven
home by surfacing the several challenges facing PSBs
in general including aggressive marketing and the
technological edge of the NPBs and the changing
preferences of customers. The top management group
called the attention of the participants to identify areas
of immediate improvement and change. A survey held
amongst the participants identified 9 critical areas with
marketing and sales, human resources, and information
technology emerging as the most critical areas. Many
senior officers were of the view that marketing and sales
needed immediate revamp. REBI set out a road map
for the future in the form of a vision statement. After
several rounds of discussions involving the officer
association and staff Republic representatives the bank
drafted the Vision Statement.
Communicating the Change Agenda
Town hall meetings were arranged across the country
to reach out to the staff with the new vision statement.
The top management briefed the staff about the changing
market scenario, aggressive competitors, changing
demographics of the consumers and their preferences,
and the dominant role of technology in banking. The
need for change was highlighted. REBI used a metaphor
of "redesigning a moving vehicle" to mobilize support
from the staff members. The metaphor infused the
employees with vigor and motivated them toward the
transformation targets.
The top management identified two critical aspects of
growth viz., “instilling the drive of sales and marketing
across bank staff and reconfiguration of the business
model to enable us to grow for the future". The objective
of PR was set out as "Transformation of Republic Bank
of India into Sales oriented, customer and market focused
financial services organization"
Main Themes of Project Restructuring (PR)
Sensing the exploding growth potential in retail and
SME sectors, REBI identified these segments as thrust
areas. To achieve the aggressive growth targets set out,
the bank needed to focus on changing the marketing
orientation, sales and service attitude across the
hierarchy. The initiative also called for back office
centralization to free the branch staff from operational
roles and thus enable them the bandwidth to go out to
the market for direct sales.
Thus, the four pillars of PR were identified as
1) Growth in Retail asset (Marketing &Processing)
Ranjeet Nambudiri and Radha Ravichandran
IMJ 34
Volume 4 Issue 4 January-March 2013
2) Growth in SME (Marketing & Processing)
3) Branch sales and service (Improving customer expe-
rience in branches)
4) Centralization of key processes.
The top management had clearly identified that for this
transformation to be successful it would need to be
driven through internal change agents. The bank hence
embarked upon the task of identifying "coaches" to
drive the change program. The coaches were mandated
to spend between 3-5 weeks at each branch and
demonstrate the selling process as REBI launched the
training through a "participative" approach. This was
necessary because a large proportion of the branch
personnel had never been involved in the selling process.
Many of them believed that they would never be able
to conduct cold calling and field based sales activities.
The coaches were expected to bri ng about a
transformation in these beliefs because they themselves
had been officers without prior selling experience and
hence the tacit message was that selling was a skill that
could be gained.
Project Restructuring: The Process
Pilot Phase and Phase 1
Republic Bank of India selected Mumbai, Pune and
Hyderabad centres in the pilot phase. These centres
were chosen because they offered a typical combination
of HNI customers, salaried middle class and SME of
various types. 70 coaches were assigned to the branches
in these centres. These coaches demonstrated the best
practices by actually doing banking business on the
floor of the branch, and involving branch personnel in
outbound sales activities. The employees not only learnt
the nuances of marketing techniques and technology
based service delivery but also started believing that
selling was a skill they could learn. Restructuring
initiatives were tailored for each type of branch viz.,
retail asset branch, retail banking branches and credit
thrust/SME branches.
Pillar 1: Retail Assets
In the retail segment, specialized branches for retail
assets (RAB) were converted into centralized processing
centres for retail loan termed as Republic Loan Points.
Branches would now generate leads and intimate the
RLP. At the RLP marketing officers were expected to
follow up on these leads. A comprehensive Lead
management system software supported online response
to leads generated by the field staff and relayed it to
marketi ng offi cers for conversi on. Credi t and
documentation officers looked into the credit worthiness
and document execution part. The RLP also had staff
to manage loan repayment, follow up and customer
service. Assured turn around time of 2 days for vehicle
loans and education loans and 5 days for other loans
requiring legal formalities was the norm. Thus, REBI
targeted a significant improvement in customer
experience and service quality. The bank outsourced
Contact Point Verification, Centralized Processing of
Applications and Post-dated cheque Management
activities to outside agencies. Branch staff was
encouraged to plan outbound sales and, marketing at
point of sales (car dealer showroom, builders'
construction site etc). Builders and car dealers were
aggressively pursued for possible alliances for home
loan and 4-wheeler loan respectively. Campus loan
camps were held at premier institutes for promoting
educational loans and providing on the spot in-principle
loan. Thus, the thrust of Project Restructuring was on
transforming into an aggressive sales organization.
Pillar 2: Small and Medium Enterprises (SME)
SME coaches were posted in branches with the aim of
improving the credit flow. These SME coaches helped
branches explore the potential around nearby catchment
areas and also supported marketing efforts for a range
of products which included deposits, current account,
short term/long term loans, and fee based products.
The branch staff generated leads through customer
referrals and outbound marketing in industrial estates
and commercial markets. The coaches also trained credit
officers in marketing skills and best business practices.
Seven SME central processing centers (SMECP Centers)
were established in the major metro centers and were
headed by senior executives. SMECP centers acted as
processing hubs for Business Banking Branches. The
advances officer at each branch along with branch
Ranjeet Nambudiri and Radha Ravichandran
IMJ 35
Volume 4 Issue 4 January-March 2013
manager would lead the SME business effort. Marketing
officers posted at the SMECPC would generate leads
and also take care of conversion of leads from branches.
The processing officers and technical evaluation officers
scrutinized the proposal and submitted to the grid for
clearance. SMECPC marketing officers identified clusters
and adopted intensive marketing techniques to attract
these clusters. The bank adopted a focused and intensive
sales strategy to target the SME segment and this was
evident from the positive results in this segment.
Pillar 3: Enhancing Branch Sales and Service
Sales Initiatives
Branch offices were converted into marketing offices to
include advances department, savings/current account
department, cashiers, fixed deposit department and
customer relationship managers. Each department was
expected to promote products, depending on the
business potential of the customer they handled. For
instance, the cashier could promote alternate delivery
channels like ATM/debit card. Branch sales initiatives
also included reaching out to existing customers for
other businesses like cross selling of third party products
to HNI customers, salary account for corporate clients
and SME customers through tele-marketing. Staff
members were made to undergo intensive training
programs. Lead generati on was the pri mary
responsibility of customer-facing employees, who then
forwarded these to product owners. Product owners
had conversion targets, while lead generation targets
were set for the branch. The coaches showcase how to
put up stalls in potential centers, fixing appointment
with influential contact people for meeting to promote
the banks services and door-to-door campaigns.
Service Improvement in Branches
While aggressive outbound selling was the order of the
day at Republic Bank of India, the transformation
initiative also focused on enhancing the customer
experience. Project Restructuring, not only aimed at
sales growth but also at improving the customer
experience in the branch and migrating them to alternate
channels thus reducing branch operations. Branch
ambience was enhanced by changing the layout, offering
best-in-class wait areas, leisure reading material and
top class infrastructure including fully air-conditioned
cabins and lobby. Lobby banking was introduced in
select cities with facilities of drop box, ATM, touch
screen kiosks in an exclusive aesthetic section within
the branch.
The bank assigned dedicated relationship managers to
handle privilege account clients. Privilege lounges were
set up for HNI customers. Customer service officers
were mandated with a target of 100 calls per month to
review service delivery quality, update of personal data
and explore potential for cross selling. The bank quickly
realized the importance of training their branch staff
of technology advancements. Coaches conducted
intensive training programs for the customer facing
staff to enable them resolve customer queries rapidly.
Pillar 4: Centralization of Processes
Centralization of back office processes was the backbone
of the transformation process. The success of the other
3 initiatives depended on the speed with which back
office operations were centralized. This would
significantly reduce the burden of routine repetitive
work of the branch personnel and enable them to focus
on managing customers in the branch. 5 key processes
were centralized namely inward clearing, outward
clearing, account opening, cheque book issuance and
generation of account statement. The core team drew
up a road map for centralization. As PR reached the
completion of Wave 1 the bank had already centralized
100% clearing of both inward and outbound in 19 centres.
Personalized cheque book issuance for all branches in
India was centralized in Mumbai, taking centralization
to national level. Concurrently, coaches trained the
branch staff in the technology based centralized
processing. This allowed integration of branch
operations with the centralized back office and gave the
branch ample time to focus their energies on acquiring,
retaining, and converting potential customers.
Phase II
Coaches stayed in a region for up to 3 months and at
every branch for nearly 2 to 3 weeks. Efforts of Phase
I lead to a set of trained officers who turned into coaches
Ranjeet Nambudiri and Radha Ravichandran
IMJ 36
Volume 4 Issue 4 January-March 2013
taking the number of coaches to around 140. 46 regional
offices out of 55 were covered in Phase I. PR as a national
rollout was carried out through this chain reaction. As
the next step and to support the transformation effort
Republic Bank of India created business verticals on
specific business segments both on asset and liability
side. This led to realignment of branches along specific
business segments to enable focused development. The
seven verticals focused in large corporates, SME, retail
banking, personal banking and operations, rural and
agriculture business, transaction banking, and treasury
and international business. Of these, the transaction
banking vertical was unique to the industry as for the
first time any bank was providing a specialized and
robust payment and settlement system and cash
management services.
The transformation process was rolled out across the
branches in 2 phases and was accomplished over a
period of 18 months. The whole exercise focused on
combining the power of people and technology, building
relationships through people and fast and efficient
delivery of services with technology support. Republic
Bank of India covered 1000 branches under technology
in 6 months' time on war footing to support PR initiatives
and became the first PSB to be 100% on core banking.
Project Restructuring: Enabling Mechanisms
Project Restructuring had completely revamped the
branch structure and operations. Marketing support
systems for retail and SME businesses at the regional
offices were established. This called for creation of
several enabling structures and processes. Some of these
are discussed in the subsequent sub-sections.
Role of the Branch Manager
The branch manager is perhaps the single most visible
face of the bank for retail customers. Republic Bank of
India wanted the Branch Managers (BMs) to play a
larger role within the branch and in the command area.
BMs are expected to interact, communicate, motivate
and enhance performance of the members of their
respective branches. As a team leader the BM was in
a position to impact the success of PR either positively
or negatively. Job responsibilities of branch staff had
changed drastically and many of the staff members
were neither skilled nor trained in sales activities. Many
even lacked the self-belief that they could conduct direct
selling transactions. Even though, the coach was
providing support and training inputs, the BM was
entrusted with the critical responsibility of motivating
the branch staff, instilling belief and confidence in them
and overcoming their resistance to the change process.
At the same time the BM was also charged with the
responsibility of improving the ambience of the branch.
As part of the direct sales responsibilities the BM would
mandated to participate in public/social events within
and around the command area to increase visibility of
the bank. The branch manager was also expected to
gauge the command area potential through regular
business intelligence and market surveillance activities.
By augmenting the role of BMs, Republic Bank of India
aimed at transforming sales culture at the front end
of the bank and turning them into market outlets. This
paved the way for building the organization into one
of "sales oriented universal financial services". REBI's
case highlights the significance of getting 'buy-in' from
key role holders as organizations undertake radical
transformation initiatives.
Re-skilling
It was evident that a large majority of the staff, including
branch managers, were not equipped to handle their
new responsibilities and roles. Many had never taken
part in direct sales activities in their career and several
were also inadequately trained in technology. Clearly,
PR faced its biggest challenge in terms of the skill sets
of the existing employees and the success of the project
depended in a large measure on the bank's ability to
re-skill its people. Strong leadership communication
initiatives helped reduce the uncertainty and resistance
to change. However, the bank still faced the issue of
re-skilling a large pool of employees. Leadership
development programs for top management were
conducted by reputed business schools while the middle
management underwent training in customer service,
direct sales and managerial competency enhancement.
Ranjeet Nambudiri and Radha Ravichandran
IMJ 37
Volume 4 Issue 4 January-March 2013
Rebranding
REBI was careful not to initiate any re-branding exercise
till there was complete confidence over the results of
PR. The top management reasoned that when a new
client walked into a branch after seeing the new
promotional campaigns s/he should experience the "new
and changed Republic Bank of India". This experience
would generate a lot of positive word-of-mouth and go
a long way in sustain the change effort. A pan India
customer survey covering Republic Bank of India
customers, potential customers and private bank
customers was conducted. The survey revealed that
PSBs were perceived to be laggards in technology based
service delivery and suitable only for old generation
customers. Republic Bank of India wanted to project
their new transformed avatar of being a customer centric
bank with state of the art technology. The bank engaged
a leading advertisement and communication agency to
facilitate the rebranding exercise. The exercise began
with a change in the logo, with the new logo signifying
the proposed customer-centric approach. Similarly, the
bank's ad line was replaced with a new theme that
depicted as a new-age bank that understood customer
needs, thus targeting the younger generation of clients.
Several internal meetings, circulars and employee
engagement activities were carried out to take the
employees into confidence about the need for rebranding.
The campaign was launched with two TVCs and four
print advertisements. All advertisements focused on
the newly imbibed customer-centric approach. Value
for money, multi-channel delivery, assured service
delivery within time and transparency in business
dealings were the brand promises made through the
rebranding exercise. The initial response to this
campaign was quite positive.
Challenges Faced during Implementation
Project Restructuring was an elaborate exercise the
spanned nearly 2 years. The transformation initiatives
were phased out and carefully planned at every stage.
Even so, such a massive exercise cannot be executed
without challenges and Republic Bank of India was
faced with several such issues during the project design
and implementation. The question at the top of the mind
of most of the employees was "what is the need for such
an exercise when the bank is performing well in all
aspects, on all parameters including the share price
movement in the stock market". The biggest challenge
facing the transformation team was to convince the
contended and complacent employees about the
initiative. Extant literature states that convincing
employees of the need for change in the absence of a
visible external or internal trigger is among the biggest
challenges for a change agent (Beckhard & Harris, 1987).
REBI tackled this problem with the hands on involvement
of the senior management beginning with several town
halls meetings conducted by the CMD.
However, inspite of a strong communication initiative,
the bank faced some resistance to change. Branch
managers no longer had the responsibility of handling
branch operations and this led to some discontent. Branch
managers were now prodded into moving out of their
comfort zones. Those with several years of experience
and adept at handling branch operations had to move
into field sales roles. It was expected that some employees
would not react favorable to this. Learning while doing
was not easy for many of the long-standing employees,
some of whom resented the extra pressure created by
sales targets and customer issues. Lead generation
targets were met with less resistance, however, frontline
employees were wary of customer complaints because
once the lead was generated the customer was no longer
in their control. Moreover, with changes in the job
description of the branch employees it was expected
that the KPAs (Key Performance Areas) would undergo
alteration. The bank aims to address this issue in the
next phase of the change initiative.
Impact of PR and the Road Ahead
Republic Bank of India introduced several new products
both asset and liability items. PR initiatives started
showing results as early as during the course of phase
II implementation. Branch sales and service initiatives
enabled the bank to increase CASA by 23.2% over the
previous period. Performance at personal banking
branches in garnering SB account, deposits and CASA
was much higher compared to other branches and overall
bank average. Likewise SMECPC and RLPs contributed
much more than the other branches towards MSME and
retail loan respectively.
Ranjeet Nambudiri and Radha Ravichandran
IMJ 38
Volume 4 Issue 4 January-March 2013
The Asian Banker ranked Republic Bank of India as the
7th strongest bank in Asia Pacific region and 3rd amongst
Indian banks. The bank was in 275th place amongst
most valuable global banking brands in the current year
(up from 351 in the previous year) By Brand Finance
Plc. Financial Express, Earnest &Young survey of best
banks in India for the current year ranked Republic
Bank of India as 3rd in growth and 4th in efficiency and
profitability amongst nationalized banks. Thus it seems
the transformation initiative though long drawn and
effort intensive had produced the desired results.
Realizing that customer service excellence is the key
success factor in the current competitive situation and
human capital as the key enabler to achieve service
excellence, Republic Bank of India wanted to focus on
these two aspects in Restructuring II to be launched in
about two years' time. The bank is all set to unleash
PR II with customer service excellence and HR
development as the prime focus. Aggressive branch
expansion to the tune of 500 branches per annum for
next 5 years is planned in order to meet the social
objective of financial inclusion which the bank aims to
pursue relentlessly encompassing more and more of the
unbanked population.
Conclusion
The case of REBI highlights several key issues related
to management of change. As is the case with any large
organization, REBI seemed to be in a comfortable
situation with reasonably sound performance metrics.
However, the "corporate cholesterol test" suggested by
Vermuelen, Puranam and Gulati (2010:2) would indicate
that REBI was in immediate need for change. The external
environment was changing rapidly and competitive
pressures on REBI were increasing manifold. Internally,
the top management had a desire to be recognized as
one of the top performing banks in the country. Both
these served as the triggers for change in the case of
REBI.
As a manifestation of its ninety year old legacy, the bank
had a very strong culture and values; beliefs and norms
were shared across the hierarchy. Very often, a strong
culture can create barriers to the change process as staff
members fall into a routine and face inertial pressures.
This case study provides a description of how a large
and stable public organization followed a phased out
strategy to transform itself. Through the detailed
description of the content and process of Project
Restructuring it is evident REBI had chosen the
appropriate change management strategy. The bank
understood that change of this scale and nature could
only be effected with the support of its managerial and
clerical cadre. Many PSBs had faced the brunt of
resistance from their employee unions in the much
written about Voluntary Retirement Schemes of the late
1990s. REBI clearly did not want to commit the same
mistake and thrust a complex change management
program on an unwilling and non-cooperative set of
employees.
While, the case highlights several positive aspects of
the initiative, it is worth considering the also identifies
potential pitfalls. While, the initial results at REBI are
positive, it is also worth considering whether one can
really attribute the results solely to Project Restructuring.
Critics of the planned change claim that it is often not
possible to isolate the impact of change management
programs (Cummings & Worley, 2009:42). The same
can be said about Project Restructuring as well. Another
issue that dogs proponents of change is the sustainability
of such initiatives. It is often noticed that once the initial
euphoria dies down, the change agents find it
increasingly difficult to implement the program. Kotter
(2007) emphasized the significance of "institutionalizing"
the change effort. This includes creating a road map and
clearly articulating successive steps in the change
program. The organization also needs to identify change
milestones and review these periodically. It is evident
that the first installment of Project Restructuring has
met with success, the question is can the top management
of REBI come out with an equally successful sequel.
References
Beckhard, R., & Harris, R. (1987). Organizational transitions:
Managing complex change, Mass: Addison-Wesley
Publishing Co.
Cummings, T.G, & Worley, C.G. (2009) Organization
Development and Change, Cengage Learning.
Kotter, J.P. (2007) Leading change: Why transformation efforts
fail, Harvard Business Review, January 2007.
Vermuelen, F., Puranam, P., & Gulati, R. (2010) Change for
change's sake, Harvard Business Review, June 2010.
Ranjeet Nambudiri and Radha Ravichandran
IMJ 39
Volume 4 Issue 4 January-March 2013
Ranjeet Nambudiri is an Associate Professor in the
Organizational Behavior and Human Resource
Management area at the Indian Institute of Management
Indore, India. His research interests include trust and
distrust related issues in business and non-business
contexts, justice issues during organizational change,
managing organizational transformation, high performance
work systems, self-managed teams, and organizational
commitment. His papers have been published in
International and Indian journals and two of his cases
are registered and published on Ivey Publishing. He has
presented papers at international conferences like EGOS,
Academy of Management, ANZAM, EIASM, AAOM, and
AICSDR.
Radha Ravichandran, PhD has almost 15 year of teaching
experience at an undergraduate and graduate level.
Leave this chanting and singing and telling of beads!
Whom dost thou worship
in this lonely dark corner of temple with doors all shut?
Open thine eyes and see thy God is not before thee!
He is there where the tiller is tilling the hard ground and
where the pathmaker is breaking stones.
He is with them in sun and in shower, and
his garment is covered with dust.
Put off thy mantle and even like him come down on the dusty soil!
Deliverance? Where is this deliverance to be found?
Our master himself has joyfully taken upon him the bonds of creation;
he is bound with us all for ever.
Come out of thy meditations and leave aside thy flowers and incense!
What harm is there if thy clothes becomes tattered and stained?
Meet him and stand by him in toil and in sweat of thy brow.
Gitanjali, Rabindranath Tagore
Ranjeet Nambudiri and Radha Ravichandran
doc_885271424.pdf