Corporate transformation or cosmetic makeover? Case of a public sector bank in India.
| Author | Awasthy, Richa |
Introduction
"Chains of habits are too light to be felt until they are too heavy to be broken"
Warren Buffet
Warren Buffet's words reinforce the antediluvian fact that change is the only constant. The current paper intends to present data collected over a period of time in an Indian public sector bank (PSB). A longitudinal study in India's leading PSB is inspired by the change scenario in the banking industry. The banking industry in India, due to changes in economic conditions and continuous deregulation, is currently in the stage of a turnaround (George & Hedge, 2004). The challenge is much higher in magnitude for public sector banks due to the competition from private or multinational banks. There are 27 nationalized and 27 foreign banks in India (Goyal & Joshi, 2012).
Managing change is much more challenging than deciding what needs to be changed. Authors such as, Worrall, Cooper & Jamison (2000), Ryan et al. (2008), Fronda & Moriceau (2008) have conducted longitudinal studies in public sector organizations and pointed out that, public sector organizations respond to the changing demands of the environment. However, mostly changes were top driven, hence organizations faced difficulty in winning employees' hearts.
Any change, whether it relates to strategy (Black & Lynch, 2004), technology (Bell et al., 2006), finance (Broadbent et al., 2001), marketing (Farrell, 2000) or logistics (Chapman et al., 2003), is invariably aligned with the people who act as the initiators of change, change agents and perhaps even victims of change initiatives. People create social fabric of the organization, which is popularly labeled as Organizational Culture (OC) in management literature. Since culture is considered as the backbone of institutionalizing change in the organization, the following section takes a deeper look at culture.
Culture at the Core of Change
Culture does not change because we desire to change it. Culture changes when the organization is transformed; the culture reflects the realities of people working together every day.
Frances Hesselbein (1999: 6)
Employees in PSBs tend to have a deeply entrenched behavioral culture which impedes change rather than facilitating change.
Due to the decades of relationship with the organization, employees in PSBs tend to have a deeply entrenched behavioral culture which impedes change rather than facilitating change. When the organizational culture is aligned with the prospective or planned changes, these changes might be embraced with enthusiasm and implemented quicker. Schraeder et al. (2005) shares one such positive case where, in public sector, change in the culture was brought in by training and leading by example. Opposite is pointed out in many studies where organizational changes were implemented without focusing on OC change (Balthazard et al., 2006; Holbeche, 2006; Cameron & Quinn, 1999). In fact, OC is an important aspect of the planned change process (e.g., Burke, 1995). According to Burke and Litwin (1992) and Burke (2002), "Organizational change, which is an overhaul of the company's business strategy, stems more from environmental impact than from any other factor. Moreover, in large scale or total organizational change, mission, strategy, leadership and culture are more important than structure, management practices and systems. Cultural change has to be planned and aligned along with strategy and leader's behavior."
Theoretical Framework: Organizational Culture
Since this is a longitudinal study we intend to refer to a similar theoretical framework, that is, Schein's framework to study the impact of organizational change. The study endeavors to ascertain the extent and depth of change in an Indian public sector bank by undertaking a five year longitudinal study. Schein (1985, 1990) indicate that "Culture is what a group learns over a period of time as that group solves its problems of survival in an external environment and its problems of internal integration"; he emphasizes that "such learning is simultaneously a behavioral, cognitive and an emotional process".
Culture consists of some combinations of artifacts (also called practices, expressive symbols or forms), values and beliefs and underlying assumptions that the organizational members share about appropriate behavior (Gordon & DiTomaso, 1992; Schein, 1992; Wilson, 2001). Schein has argued that culture consists of three layers--assumptions, values and artifacts. Schein's model of organizational culture looks at two levels: (i) surface level, i.e., behavioral aspects and (ii) deeper level, i.e., internal values and assumptions. Since the purpose of the study is to seek the extent and depth of changes in the organization, current study considers both levels simultaneously. A number of examples provide evidence of the dissatisfaction, anguish and alienation that is usually experienced by employees during culture changes (e.g., Elsmore, 2001; Huy, 2001; Kavanagh & Ashkanasy, 2006; Brooks & Harfield, 2000; Forster, 2006). Also, bringing outsiders during the culture change process not only creates discomfort and conflict, it also raises the anxiety levels. Schein (2004) points out that the new leader, who is often brought in specifically to change the culture, needs to manage the anxiety and conflicts.
Gaps in Literature
There is a dearth of articles in research journals that explicitly address the topic of culture change in the public sector (for exceptions see Stinchcomb & Ordaz, 2007; Bryson & Anderson, 2000; Wise, 2002; Mani, 1995; Robertson & Seneviratne, 1995; Awasthy, Vijayalakshmi & Gupta, 2011), especially from Schein's perspective. There is also a dearth of studies carried out in India on organizational change and cultural change but for Public Sector, which is undergoing mega organizational changes, not many studies have been attempted to capture this aspect. Our emphasis on the public sector organizations stems from the conviction that there are cultural distinctions in these organizations in comparison with the private sector and this would, therefore, lead to different directions and findings in the studies. Unless sufficient number of extensive case studies is written, indigenous model of organizational change would not emerge and current study is an attempt to fill this gap.
Background
The organization studied, called here by the acronym PSB (pseudonym), is a hundred and two years old bank, which is a reputed and trustworthy public sector bank in India. To better understand the cultural change, a five year longitudinal study (2007-2012) was undertaken in PSB. The business environment in the Indian banking industry is changing rapidly. Indian public sector banks like PSB are facing increasing competitive pressure from local private sector banks and overseas banks. In order for a bank to survive in this competitive environment, it has to control the costs, improve quality and increase productivity. In addition to these factors, more demanding customers, rapid technology advancement as well as more regulatory requirements (such as code of practice or disclosure) have made PSB to adopt major change initiatives to improve its service quality.
Study Objectives
Although we know that PSB is on its road to major changes, we do not know what kind of changes are taking place and what PSB has achieved through these changes. The study aims to understand the extent and depth of the change in PSB over a time period of five years. The study focuses on understanding and evaluating the employees' perception about the impact of organizational changes in the PSB. The study strives to answer the following research questions:
* What kinds of changes have taken place in the last five years?
* What has been their impact on business parameters such as customers' satisfaction?
* Has there been any sustainable change in the culture of PSB? If yes, what, how and why?
Methodology
The case study approach was adopted because of its ability to reveal rich and in-depth data (Yin, 2009), which was essential for understanding the concept of 'cultural change' in the public sector services industry. As a case that has 'intrinsic value' (Stake, 1995), we selected the case of PSB. To understand the phenomenon of organizational change, which is a slow process, the longitudinal case study was found to be the most suitable approach. The first round of data collection was conducted in the year 2007 and the second round in the year 2012. Data was collected in different phases from different locations in India (corporate office, two regional and branches) since its main aim was to uncover people's experiences rather than to reflect objectively a-priori reality. Data was simultaneously collected across the locations. To delve deeper into the phenomenon of how employees' experiences change over a period of time, a number of...
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