Organisational Structure And Cross Cultural Management Icici Bank Commerce Essay

Organisational Structure And Cross Cultural Management Icici Bank Commerce Essay This paper explores the linkage between organizational structure and cross-cultural management. It suggests that a fluid and continuously evolving structure enables effective cross-cultural management. In support of this, the paper reports on the experience of the second largest bank in India and the largest private sector bank in India by market capitalization. The Bank has a network of 2,509 branches and 5,808 ATMs in India, and has a presence in 19 countries, including India. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and specialization subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank is also the largest issuer of credit cards in India. ICICI Banks shares are listed on the stock exchanges at  BSE,  NSE,  Kolkata  and Vadodara (formerly Baroda)  ; its  ADRs trade on the  New York Stock Exchange  (NYSE). The Bank is expanding in overseas markets and has the largest international balance sheet among Indian banks. ICICI Bank now has wholly owned subsidiaries, branches and representatives offices in 19 countries, including an offshore unit in Mumbai. This includes wholly owned subsidiaries in Canada, Russia and the UK  offshore banking units in Bahrain and Singapore, an advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka, and representative offices in Bangladesh, China, Malaysia, Indonesia, South Africa, Thailand, the United Arab Emirates and USA. Overseas, the Bank is targeting the NRI (Non-Resident Indian) population in particular. ICICI reported a 1.15% rise in net profit to  Indian rupee1,014.21 crore on a 1.29% increase in total income to  Indian rupee9,712.31 crore in Q2 September 2008 over Q2 September 2007. The banks  CASA ratio  increased to 30% in 2008 from 25% in 2007. ICICI Bank is one of the  Big Four Banks  of India, along with  State Bank of India,  Punjab National Bank  and  Canara Bank   its main competitors. Introduction International business houses are increasingly operating with multicultural work forces. One key to competitive advantage for these business houses is effective cross-cultural management. Even conservative business houses such as traditional banks are finding that the thrust of competition requires them to manage diversity in their workforces. An example of one such traditional bank is ICICI Bank. ICICI Banks performance and aspirations are underpinned by a strong organizational culture of dynamism, meritocracy, excellence in execution and high standards of professional integrity that have helped us become an industry leader. The bank runs a leadership development program which aims to build leadership talent within the organization. The program attempts to tap into the potential of employees and develop them into global leaders. It has also extended its role beyond economic growth concerns to directly participate in the pursuit of human development.   CROSS- CULTURE MANAGEMENT Smiths Work View Smith (ICICI MD) and his original team did well. ICICI prospered. Their 8-8 banking service set a new benchmark in the industry BUT its grown too vast. Smith is surrounded by people who do not present the true status of the crippling retail dissatisfaction Smith has become risk averse and has appointed people whove been around him for years, as heads of divisions. They do not have the same drive and enthusiasm as Smith and hence the stagnation. The need of the hour is to expand infrastructure, bring in younger people in the top management (people in 30s and early 40s). and ofcourse until then, ICICI can be avoided. Work culture at ICICI Bank It is a tech-savvy, non-hierarchical, work environment where early responsibility and independent decision-making enable each employee to reach his/her potential. Coupled with this is a strong performance management system that has built a meritocracy where high performing-high potential individuals are duly rewarded. Employees Satisfaction Even during recession ICICI Bank did not cut back on employees But instead announced a policy of No promotion No bonus but no attrition too!! This policy is serving two purposes for ICICI bank, cutting down employee cost and employee retention. Employees also feel that as an employer the bank extends a lot of authority along with justified accountability. Employees perceived the working culture at ICICI bank to be very collaborative in nature. It can be owed to the fact that the bank is highly segmented with a lot of overlapping and mostly distinct roles and responsibilities. The Employees also considered that ICICI bank offers them with a lot of financial benefits ranging from your family health insurance to your kids school donations. But certain concerns in terms of Lack of time for fulfilling social responsibilities And more sales oriented culture are there. Dress Code ICICI Bank would issue dress to be worn by all Progamme Participants. This dress, as laid down, would be worn for all classes and other organised activities. Till the time the participants are issued with the dress they would abide by the following dress code: (a) Gentlemen (i) Formal office trousers and shirts with a tie. Most acceptable colours for trousers would be black, brown, blue and grey. Preferable pastel colours for shirts. (ii) Suits for formal occasions. (iii) Formal footwear (iv) Well groomed. (b) Ladies (i) Silk or cotton (starched) sari (ii) Formal western wear (formal trousers/skirts with a top or a jacket) or salwar kameez. (iii) Formal footwear. (iv) Well groomed. Role Of Women In ICICI Bank Chanda Kochhar knew nothing about retail banking when she took over ICICI Banks fledgling retail operations in 1998 at the age of 36. That made Citibank and others think ICICI was only doing a small flirtation, she says, and they underestimated the growth in the market. They also underestimated this smart, assertive woman, known for her colorful saris and carefully matched jewelry. Today ICICI, Indias second-largest and fastest-growing bank, is the market leader in retail banking, with more than 15 million customers, accounting for more than a third of Indias total retail credit. And Kochhar No. 37 on this years list of the worlds most powerful businesswomen added corporate banking to her portfolio in April and is a leading candidate to become managing director and chief executive of the Mumbai bank when the job becomes vacant at the end of 2008. That a woman should achieve such success in a male-dominated industry, in an economy where women often play subservient roles, might be a surprise at any other Indian bank. But  ICICI  (Charts) has made a name for itself by recognizing female talent. Three of the five members of the banks executive board are women, as are 13 of its 40 top managers and one of Kochhars two rivals for the chief executive job Shikha Sharma, the 47-year-old managing director of ICICI Prudential. Once dubbed the petticoat brigade by Mumbais chauvinistic banking fraternity, these highly competitive women have helped build a business known for its aggressive, risk-taking attitude and its growth from a sleepy, bureaucratic development institution into Indias most diversified and customer-oriented bank. Almost all the leaders we have picked have succeeded, and most have been women, says K.V. Smith, ICICIs CEO, who has been responsible for empowering them. Kalpana Morparia, a lawyer and the other joint managing director, retires next May. Her peers at other banks say she has been the backbone of ICICI for the past ten years, looking after the raising of funds and the regulatory environment. She says she stayed at ICICI, when she could have earned far more elsewhere, because the empowerment gives an entrepreneurial framework, where you have all the support systems. Sharma, another early achiever and fast learner, admits she is fiercely competitive. When she was 33 she headed ICICIs side of a securities joint venture with J.P. Morgan, initially knowing little about markets. That led to a two-year stint at Morgan, after which she ran ICICIs corporate planning department and started its retail banking operation. In 2000, knowing nothing about insurance, she set up the joint venture with Britains Prudential, which is restricted by government policy to a 26% equity stake and has only a minimal management presence. That leaves Sharma in charge of Indias largest private-sector insurance company, with 12.5% of the market. She says women are good at succeeding without prior experience because they have smaller egos [than men], and its easier for me to say, Hey, I know nothing about this. Technology Department Very aggressive Bank in terms of adopting the best practices, technology and takng business for a young entrant a very good opportunity to learn and grow Extreme work pressures makes one to learn to respond quickly and efficiently and absorb pressure a trait useful for the future Senior management backing for new initiatves Fairly transperant Performance Appraisal system Open to changes in department for employees, allowing employees to grow Very professional, Good place to work It need only to sell product, brand awareness is high, very strong in systems, minimum paperwork, good training opportunities, opportunities given to do different things other than the regular job. Excellent place to learn marketing and strategy. Unearthly working hours usual. Less involvement from HR regarding welfare of employees, some established managers tend to push down people who dont perform instead of hand holding them, demotions in roles very common, even if you are a good performer. Senior Management care more for your employees, they are more than just another email id! Find ways to understand whats happening on the field, its very different from whatever impression you have! Flexibility in terms of changing job profiles; power and authority assigned at each level is very motivating; employees feel very powerful in ICICI as compared with other organisations. Literature Review The author reviews the theoretical and empirical literature to examine the traditional perception that the following trade-off exists between economic efficiency and stability in the banking system: a competitive banking system is more efficient and therefore important to growth, but market power is necessary for stability in the banking system. That this trade-off exists is not clear. Market power can have positive implications for efficiency, and the potentially negative implications of competition on stability may be manageable through prudential regulation. Neither extreme (perfect competition nor monopoly) is likely ideal. Rather, it may be optimal to facilitate an environment that promotes competitive behaviour (contestability), thereby minimizing the potential costs of market power while realizing benefits from any residual that remains. It can be very difficult to assess the contestability of a banking market. Recent work suggests that the number of banks and the degree of co ncentration are not, in themselves, sufficient indicators of contestability. Other factors play a strong role, including regulatory policies that promote competition, a well-developed financial system, the effects of branch networks, and the effect and uptake of technological advancements. Classical views of organizational structure have emphasized the durable arrangements within an organization. Jackson Morgan (1982) define organizational structure in line with the classical view as: the relatively enduring allocation of work roles and administrative mechanisms that creates a pattern of inter-related work activities, and allows the organization to conduct, coordinate, and control its work activities. This definition of organizational structure with the caveat that work arrangements need not always be relatively enduring. Early writers on the subject, including Taylor (1911), Fayol (1930), and Weber (Gerth Mills, 1958), had stipulated an ideal-type of organizational structure for all situations. In the late 1960s and throughout the 1970s, the one best form fits all view was replaced by the contingency approach. A contingency perspective such as that of Lorsch Morse (1974) prescribes that an alignment should exist between structure, task, technology, the environment, and people. This approach takes into account that structures can be flexible and responsive to change. Contingency theorists such as Duncan (1977), Lawrence Lorsch (1967), Burns Stalker (1961), Minzberg (1979), Miles Snow (1978), and Galbraith (1973) recommended that organizational structure should be either organic or mechanistic depending on the nature of the external environment. A stable external environment called for a mechanistic structure, while a turbulent environment required an organic structure one flexible enough to evol ve. The power of the contingency theory was validated in two countries from the non-English speaking world by Boseman Simonetti (1975), indicating that non-traditional notions of structure apply in a variety of cultural contexts. In the past twenty-five years several researchers have made a case for viewing organizational structure in terms of transient features rather than durable ones. Duncans work (1977) was among the earliest in this genre. Duncan advocated a bifurcated initiation and implementation structure for creative organizations. It then became possible to envisage structures that were bifurcated in other ways, such as those that have organic and bureaucratic structures existing conterminously as described by Peterson (1981). Here, the segment of the organization that engages in creative activities is separated from the rest of the organization, which is essentially bureaucratic. Just as creativity exerted a pressure for organizations to adopt transient structures, lately, knowledge generation and transfer in high information-intensity and velocity contexts have likewise exerted pressures for looser structures. Miles Snow (1995) have argued for flexible networked structures for such organizations. In their literature review piece, Child McGrath (2001) too note how continuously changing structures, are de rigour in knowledge based organizations. Coulson-Thomas (1991) has predicted that corporations dealing with complex operations would opt for flatter and more fluid organizational structures that can develop into networks, as well as have greater flexibility and responsiveness to customer needs. This would be accompanied by a management approach which pushes organizational hierarchy to individuals, who require access to expertise and specialists. Pepper (1995) advanced an even more dynamic perspective on structure, which incorporated such elements as working relationships, actual experiences of members, and interpretations of occurrences. Pepper suggested that structure should be treated like a document that is authored by organizational members. Weick (1995) also postulated a dynamic view of structure. Weick talked about enacting organizations which are a function of organizational members preferences. He observed, Organizing is a continuous flow of movement that people try to co-ordinate with a continuous flow of input. Taking off from the notion of enactment, is that of inverted firms. Anderson, Finkelstein, Quinn (1996) have recommended that hierarchies be dispensed with in certain contexts; instead, structures be organised in the form of patterns tailored to specific needs. Also closely related to the notion of enactment is that of improvisation. Improvisation connotes flexibility of form, an area a few contemporary researchers are currently discussing. Volberda (1999) holds that the extent of flexibility of a firms structure should be aligned to the extent of turbulence prevalent in its environment. Additionally, a firm may on the whole be averagely flexible but have both a unit that is extremely flexible and a unit that is extremely rigid, functioning within it. Gold Hirshfeld (2005) have demonstrated how the principles of improvisation underlying jazz music can be used to promote strategic renewal within organizations. McHugh Wheeler (1995) described a particularly fluid structure called holonic network. This is a set of companies that acts integrated and organically; it is constantly re-configured to manage each business opportunity a customer presents. Each company within the network provides a different process capability and is called a Holon. This capacity for frequent re-configuring has been termed more recently by Eisenhardt Galunic (2001) as architectural innovation. Here, the different capabilities of an organization, including its structural components are re-combined in various ways to enhance performance. Table I: Consider how our view of structure has changed over time I From durable structures to flexible structures Theorist Essence of Theory Period Weber, Taylor, Fayol One best form of structure that is largely unvarying, durable and bureaucratic. Focus was on establishing order and maintaining predictability Early 20th Century Duncan, Lawrence Lorsch, Burns Stalker, Minzberg, Miles Snow, and Galbraith Structure should not be consistently unvarying. A stable environment necessitates a mechanistic structure, while a turbulent environment calls for an organic and flexible structure. The type of structure adopted should be contingent on the nature of the environment. 1960s 1970s Duncan, Peterson A creative organization should have certain elements of structure that are flexible. 1970s early 1980s Child McGrath, Miles Snow A knowledge generation and transfer organization should have a flexible structure. 1990s early 2000s Table II: Consider how our view of structure has changed over time II Different imperatives for flexible structures Theorist Essence of Theory Period Coulson-Thomas Complex, high-performance organizations require flat, fluid, flexible structures that enable responsiveness to customer needs. These structures can develop into networks. 1991 McHugh Wheeler Complex, high-performance organizations require a fluid structure that enables re-configuration suited to each business opportunity that arises. These structures can develop into colonic networks. 1995 Pepper High-performance organizations require flexible structures capable of incorporating such features as actual experiences of members, etc. These structures enable employee participation in and ownership of organizational processes 1995 Weick High-performance organizations require flexible structures that enable employees to enact their work-related preferences. These structures promote efficiency and employee participation. 1995 Anderson, Finkelstein, Quinn High-performance organizations sometimes require inverted structures that enable the removal of hierarchies. These structures can be tailored to specific needs. 1996 Volberda High-performance organizations should be internally differentiated so that units have varying extents of flexibility. This promotes efficiency and alignment with the environments demand. 1999 Eisenhardt Galunic High-performance organizations should emphasise the architectural innovation capability of its structure. This enhances performance. 2001 Gold Hirschfield High-performance organizations require structures that are capable of improvisation. This enables strategic renewal. 2005 Looking at organizational structure in terms of a historical perspective is useful, since it underscores the fact that its components do not have to be durable. Thus due to several imperatives, organizational structures are assuming flexible forms. Cross-cultural management can be a further reason why organizations should adopt flexible structures with transient features. That personnel can have preferences for structural forms that reflect their cultural heritage is indicated by the INSEAD study of Stevens (cited in Hofstede, 1991). In this study, MBA students from Great Britain, France and Germany were presented with a caselet about and interpersonal problem in a corporation. The students were requested to present a solution that involved re-engineering the structure. The interpersonal problem was that two department heads could not see eye to eye. The British students diagnosed the problem as being one of poor communication between the department heads. The problem could be resolved, according to the British students, by providing training in interpersonal skills to the feuding department heads. The French students suggested that the problem be referred one level up to the president of the corporation. The German students recommended that there should be greater clarity regarding the roles, responsibilities, and spheres of activity of the two department heads. These roles, etc. the German students opined, should be described and specified unambiguously. Stevens study specifically suggests that flexible structural forms may be appropriate in cross-cultural management contexts. Changs (2002) paper written notes that culture has implications for job design. Thus, managers from individualistic ethnic cultures will value personal accomplishments. Meanwhile managers from collectivist cultures would place a premium on working harmoniously with others. The challenge is to design structures so that managers from both types of cultures can work productively together. We present here the experience of ICICI Bank as indicative that a fluid, flexible structure enables cross-cultural management. The fluid, flexible structure at ICICI Banks enabled managers from different cultures (collectivist and individualistic, high power-distance and low power-distance, etc.) to work synergistically with each other. Flexible structures obviate the sense that a structure or work pattern is being imposed by one cultural group on others. It provides a mechanism whereby culturally different work patterns can be reconciled in a meaningful fashion. (Reconciliation is a term used by Trompenaars (1993) for the process he developed to work through the tensions created by cultural differences.) RESEARCH EFFORT This study constitutes an exploratory effort. Its purpose is to examine how a fluid, flexible organizational structure facilitates cross-cultural management. Huberman Miles (1994) have recommended that when a deeper understanding of management contexts is sought, qualitative research designs may be appropriate. Similarly, organization theorists like Marjoribanks (2000) and Vogel (1996) have deliberately used fine-grained case studies to capture how institutional diffusion occurs. The present study employs qualitative methods and a substantive case study to observe and report the co-evolution of a fluid, flexible organizational structure and cross-cultural management practices. ICICI Bank has a vast and a well-connected network of branches offering incomparable banking and other financial services to its customers. You need not look far for an  ICICI bank branch  and can get all the relevant information regarding the address, phone number and other information about the nearest branch of ICICI bank in your area using an online tool of branch locator to locate an ICICI bank branch. The ICICI bank has established its branches in easily accessible market places across India enabling its customers to avail a variety of retail banking products offered by the bank.   The ICICI bank branches are spread throughout India and the world having  1,488 branches both in India and  18  countries. The customer care executives at branches are willing to help in order to provide assistance in all sorts of bank related products and services. The current office timings of ICICI bank branches are 8AM-8PM which has been proposed to 9AM-6PM. The bank has spread its reach far across the globe with branches in  Canada, USA, Singapore, Malaysia, Thailand, Sri Lanka. It has established its presence in places such as Kuala Lumpur, San Francisco, San Jose, New York, California  etc. As the bank is playing an important role in countrys Political, Socio- economic, Technological environment as it provides many facilities to many customers throughout many countries and future plans are to expand the branches across the borders to meet the pace of Globalization and contribute to maximum Optimum utilization of resources in a well structured manner. ICICI Bankà ¢Ã¢â€š ¬Ã‚ ¦Background in brief In 1955, The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. In 1994, ICICI established Banking Corporation as a banking subsidiary. Formerly known as Industrial Credit and Investment Corporation of India, ICICI Banking Corporation was later renamed as ICICI Bank Limited. ICICI founded a separate legal entity, ICICI Bank, to undertake normal banking operations taking deposits, credit cards, car loans etc. In 2001, ICICI acquired  Bank of Madura  (est. 1943). Bank of Madura was a  Chettiar  bank, and had acquired  Chettinad Mercantile Bank  (est. 1933) and  Illanji Bank  (established 1904) in the 1960s. In 2002, The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI,  ICICI Personal Financial Services Limited  and  ICICI Capital Services Limited, into ICICI Bank. After receiving all necessary regulatory approvals, ICICI integrated the groups financing and banking operations, both wholesale and retail, into a single entity. At the same time, ICICI started its international expansion by opening representative offices in  New York  and London. In India, ICICI Bank bought the  Shimla  and  Darjeeling  branches that  Standard Chartered Bank  had inherited when it acquired  Grindlays Bank. In 2003, ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it established an alliance with Lloyds TSB. It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai. In 2004, ICICI opened a representative office in Bangladesh to tap the extensive trade between that country, India and South Africa. In 2005, ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in assets, head office in  Balabanovo  in the  Kaluga  region, and with a branch in  Moscow. ICICI renamed the bank ICICI Bank Eurasia. Also, ICICI established a branch in  Dubai  International Financial Centre and in  Hong Kong. In 2006, ICICI Bank UK opened a branch in  Antwerp, in Belgium. ICICI opened representative offices in  Bangkok,  Jakarta, and  Kuala Lumpur. In 2007, ICICI amalgamated Sangli Bank, which was headquartered in  Sangli, in  Maharashtra  State, and which had 158 branches in Maharashtra and another 31 in  Karnataka  State. Sangli Bank had been founded in 1916 and was particularly strong in rural areas. With respect to the international sphere, ICICI also received permission from the government of  Qatar  to open a branch in  Doha. Also, ICICI Bank Eurasia opened a second branch, this time in St. Petersburg. In 2008, The  US Federal Reserve  permitted ICICI to convert its representative office in  New York  into a branch. ICICI also established a branch in Frankfurt. In 2009, ICICI made huge changes in its organization like elimination of loss making department and re-stretching outsourced staff or renegotiate their charges in consequent to the recession. In addition to this, ICICI adopted a massive approach aims for cost control and cost cutting. In consequent of it, compensation to staff was not increased and no bonus declared for 2008-09. On 23 May ICICI Bank announced that it would merge with  Bank of Rajasthan  through a share-swap in a non-cash deal that values the Bank of Rajasthan at about  Indian rupee3,000 crore. ICICI announced that the merger expand ICICI Banks branch network by 25%. On 18h October 2010, ICICI will inaugurate I-Express, an instant cross-border money transfer option for Non-Resident Indians (NRIs). This service will be available through the ICICI Banks select partners in the  Gulf Cooperation Council. ICICI Bank is Indias second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended March 31, 2010. The Bank has a network of 2,509 branches and 5,808 ATMs in India, and has a presence in 19 countries, including India. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany.à ‚   ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). Controversies over timeà ¢Ã¢â€š ¬Ã‚ ¦ ICICI Bank has been in focus in recent years because of alleged harassment of customers by its recovery agents. Listed below are some of the related news links: ICICI Bank was fined  Indian rupee55 lakh for hiring goons (known coloquially as goondas) to recover a loan. Recovery agents had ,allegedly, forcibly dragged out a youth (who was not even the borrower) from the car, beaten him up with iron rods and left him bleeding as they drove away with the vehicle. We hold ICICI Bank guilty of the grossest kind of deficiency in service and unfair trade practice for breach of terms of contract of hire-purchase/loan agreement by seizing the vehicle illegally,No civilised society governed by the rule of law can brook such kind of conduct said Justice Kaleem, who was born in Laddhawala, Muzaffarnagar is the president of the consumer commission. [11], [12], [13], [14], [15], [16], [17], [18] Four ICICI loan employees arrested on theft charges in Punjab. [19] ICICI Bank told to pay  Indian rupee1 lakh as compensation for using unlawful recovery methods. [20] RBI warns ICICI Bank for coercive methods to recover loans. [21] ICICI Bank drives customer to suicide Four men including an employee of ICICI Bank booked under sections 452, 306, 506 (II) and 34 of IPC for abetting suicide. According to the suicide note they advised him, If you cannot repay the bank loan, sell off your wife, your kids, yourself, sell everything at your home. Even then if you cannot n