A comperative study of organizational culture of sbi, icici, hdfc bank

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1. 1 MENTORING REPORT ON ORGANIZATIONAL CULTURE ComparativeStudy on Organizational Culture of SBI, ICICI Bank and HDFC Bank “Submitted In the Partial Fulfillment for…
  • 1. 1 MENTORING REPORT ON ORGANIZATIONAL CULTURE ComparativeStudy on Organizational Culture of SBI, ICICI Bank and HDFC Bank “Submitted In the Partial Fulfillment for the Requirement Of Post Graduate Diploma In Management” Submitted to: Submitted by: Mr. Kush Sharma Shweta Mukherjee Roll No. 110 Batch: 2015-2017 Jagannath International Management School Kalkaji, New Delhi
  • 2. 2 TO WHOMSOEVER IT MAY CONCERN This is to certify that Ms. Shweta Mukherjee of PGDM batch (2015-17) has successfully completed her Mentoring Project on the topic “Comparative Study on Organizational Culture of SBI, ICICI Bank and HDFC Bank” under my guidance. Her work is up to my satisfaction and worth appreciation. I wish her all the best for future endeavors. Kush Sharma Project Guide
  • 3. 3 TO WHOMSOEVER IT MAY CONCERN This is to certify that Ms. Shweta Mukherjee of PGDM batch (2015-17) has successfully completed her Mentoring Project on the topic “Comparative Study on Organizational Culture of SBI, ICICI Bank and HDFC Bank” under my guidance. Her work is up to my satisfaction and worth appreciation. I wish him/her all the best for future endeavors. Divya Gupta Project Guide
  • 4. 4 ACKNOWLEDGEMENT The sense of contentment and elation that accompanies the successful working of this project would be incomplete without mentioning the names of the people who helped me to accomplish this project, people whose constant guidance, support and encouragement resulted in its realization. I am highly indebted to JIMS, Kalkaji for providing me with the opportunity to be able to do my Mentorship project in Yes Bank. My earnest thanks to my External Mentor, Mr. Kush Sharma, for his valuable guidance and support in ensuring me a free hand during the course of the work. I owe much to my Internal Mentor Prof. Divya Gupta for the inspiration and guidance which enabled me to take up work which made me learn new things and concepts. Shweta Mukherjee JIMS, Kalkaji
  • 5. 5 Table of Content Serial No. Topic Page No. 1 Introduction 6 2 Objective of the Study 7 3 Rationale of the Study 8 4 Organizational Culture 9-13 5 Importance of Organizational culture 14 6 Organizational Effectiveness 15 7 Organizational Profiles 16-21 8 Data Collected, Quantification and Inference 22-70 9 Conclusion 71 10 Appendix 72-73 11 Bibliography 74
  • 6. 6 INTRODUCTION Culture, at workplace, is a very powerful force, which is consciously and deliberately cultivated and is passed on to the incoming employees. It is the very thread that holds the organization together. The stronger the culture, the more it is directed to the marketplace, the less need is there for policy manuals, organization charts, detailed procedures or rules. In these companies, people way down the line know what they are supposed to do in most situations because the handful of guiding values is crystal clear.
  • 7. 7 Objectives of this study are to determine- 1. The study of current culture of the three organizations. 2. The comparison of the culture in these three organizations. 3. To find the best bank to follow high organizational culture.
  • 8. 8 Rationale for the study The three companies SBI, ICICI and HDFC Bank are the top banking organizations of the country. The companies have been providing valuable banking services to the entire nation for many years. They are now at the top of the list in the ranking. This study would generate valuable information on the current culture of these organizations. It would also provide management with the employees’ outlook of the work culture that is prevalent within these companies.
  • 9. 9 ORGANIZATIONAL CULTURE Organizational culture has assumed considerable importance in the 21st century, because of its impact on employee performance and job satisfaction. It is imperative of every organization to understand its own dynamic culture so that managers can capitalize on the insights generated by the cultural perspective to wield greater control over their organizations. The culture of an organization has an important impact on its performance. Robbins postulates that culture, as a concept, has had a long and chequered history. In the last decade, it has been used by some organizational researchers and managers to indicate the climate and practices that organizations develop around their handling of people or to refer to the espoused values and credo of an organization.  Schein (1999:200) defines culture as a pattern of shared basic assumptions that the group learned as it solved problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.  Aswathappa refers to culture as a, complex whole which includes knowledge, belief, art, morals, law, custom, and other capabilities and habits acquired by man in a society.  Mullins (1999:806) presents a cultural web, as illustrated in the following figure, which brings together different aspects for the analysis of organizational culture. Organizational culture is a concept in the field of Organizational studies and management which describes the attitudes, experiences, beliefs and values of an organization. It has been defined as "the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization Strong culture is said to exist where staffs respond to stimulus because of their alignment to organizational values. Conversely, there is weak culture w he r e t he r e is lit t le a lignme nt w it h o rganizational values and control must be exercised through extensive procedures and bureaucracy. Where culture is strong—people do things because they believe it is the right thing to do—there is a risk of another phenomenon, Groupthink . "Groupthink" was described by Irving L. Janis. He defined it as "...a quick and easy way to refer to a mode of thinking that people engage when they are deeply involved in a cohesiveingroup, when members' strivings for unanimity override their motivati on torealistically appraise alternatives of action." This is a state where people, even if they have different ideas, do not challenge organizational thinking, and therefore there is a reduced capacity for innovative thoughts. This could occur, for example, where there is heavy reliance on a central charismatic figure in the organization, or where there is an evangelical belief in the organization’s values, or also in groups where a friendly climate is at the base
  • 10. 10 of their identity (avoidance of conflict). In fact groupthink is very common, it happens all the time, in almost every group. Members that are defiant are often turned down or seen as a negative influence by the rest of the group, because they bring conflict. Innovative organizations need individuals who are prepared to challenge the status quo—be it groupthink or bureaucracy, and also need procedures to implement new ideas effectively.
  • 11. 11 The cultural web of an organization The cultural web, help define and develop the culture of an organization. An organization’s culture can be disseminated by analyzing each aspect of the cultural web.
  • 12. 12 Levels of organizational culture Hosted (1990) developed a four - layered hierarchical model of culture which helps to identify and categorize the constituent elements of culture, as reflected in the figure The least visible or deepest level is that of basic shared assumptions, which represents beliefs about reliability and human nature that are taken for granted. The next level of culture is that of cultural values, which represent collective beliefs, assumptions, and feelings about what things are good, normal, rational, and valuable. Cultural values might be very different in different organizations; in some, employees may care deeply about money, but, in others, they may care more about technological innovation or employee well-being. The next level is that of shared behaviors, including norms, which are more visible and somewhat easier to change than values. The reason is that people may be unaware of the values that bind them together.
  • 13. 13 The most superficial level of organizational culture consists of symbols. Cultural symbols are words (jargon or slang), gestures, and pictures or other physical objects that carry a particular meaning within a culture.
  • 14. 14 The importance of organizational culture Culture helps to explain why different groups of people perceive things in their own way and perform things differently from other groups. Culture can help reduce complexity and uncertainty. It provides a consistency in outlook and values, and makes possible the process of decision-making, co-ordination and control. There is nothing accidental about cultural strengths there is a relationship between an organizations culture and its performance. Types of organizational culture Harrison and Stokes (1993:13) identify four culture types. These four culture types are power culture, role culture, achievement culture and support culture.  The power culture: A power - orientated organization is based on inequality of access to resources. In other words, the people in power use resources to either satisfy or frustrate the needs of others, and, by so doing, they control behavior of others.  The role culture: In a role culture orientated organization, structures and systems give protection to sub - ordinates and stability to the organization. The duties and rewards of employees’ roles are clearly defined. This is usually defined in writing as a job description.  The achievement culture: The achievement - orientated organization is known as the ‘aligned’ organization because it lines people up behind a common vision or purpose. This type of organization uses the mission to attract and release the personal energy of its employees in the pursuit of common goals. There is an inner commitment within these achievement orientated individuals.  The support culture: The support culture may be defined as an organization climate that is based on mutual trust between the individual and the organization. In such organizations, people are valued as human beings and are not just cogs in a machine. This culture centers on warmth and even love and it makes people want to come to work in the morning, not only because they like their work but also because they care for their colleagues. These four types of culture all have different implications to the success of a business where the power culture is dependent on a central power source with rays of power and influence spreading out from the central figure. These types of cultures are proud and strong and have the ability to move quickly and can react well to threat and danger, as postulated by Handy.
  • 15. 15 ORGANIZATIONAL EFFECTIVENESS Organizational effectiveness is the concept of how effective an organization is in achieving theoutcomest he o r ga niza t io n int e nd s t o p r o d uc e . The id e a of organizational effectiveness is especially important for non-profit organizations as most people who donate money to nonprofit organizations and charities areinte rested in knowing whether the organization is effective inaccomplishingitsgoals.A n o r ga niza t io n' s e ffe c t ive ne s s is a ls o d e p e nd e nt o n it s c o mmunic a t ive competence and ethics. The relationship between these three is simultaneous. Ethics is a foundation found within organizational effectiveness. An organization must exemplify respect, honesty, integrity and equity to allow communicative competence with the participating members. Along with ethics and communicative competence, members in that particular group can finally achieve their intended goals. Organizational effectiveness is an abstract concept and is basically impossible to measure. Instead of measuring organizational effectiveness, the organizationde termines proxy measures which will be used to represent effectiveness. Proxy measures used may include such things as number of people served, types and sizes of population segments served, and the demand within those segments for the services the organization supplies. For instance, a non- profit organization which supplies meals to house bound people may collect statistics such as the number of meals cooked and served, the number of volunteers delivering meals, the turnover and retention rates of volunteers, the demographics of the people served, the turnover and retention of consumers, the number of requests for meals turned down due to lack of capacity(amount of food, capacity of meal preparation facilities, and number of delivery volunteers), and amount of wastage. Since the organization has as its goal the preparation of meals and the delivery of those meals to house bound people, itmeasures its organizational effectiveness by trying to determine what actuala ctivities the people in the organization do in order to generate the outcomes the organization wants to create. Activities such as fundraising or volunteer training are important because they provide the support needed for the organization to deliver its services but they are not the outcomes per se. These other activities are overhead activities which assist the organization in achieving its desired outcomes
  • 16. 16 Organizations profile
  • 17. 17 State Bank of India State Bank of India (SBI) is the largest Indian banking and financial services company (by turnover and total assets) with its headquarters in Mumbai, India. It is state-owned. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. The State Bank of India is the largest of the Big Four banks of India, along with ICICI Bank, Punjab National Bank and HDFC Bank—its main competitors. It is the 29th most reputed company in the world according to Forbes. Also SBI is the only bank featured in the coveted “top 10 brands of India” list in an annual survey conducted by Brand Finance and the Economic Times in 2010. There are seven other associate banks that fall under SBI. They all use the “State Bank of” name followed by the regional headquarters’ name: 1. State Bank of Bikaner & Jaipur 2. State Bank of Hyderabad 3. State Bank of Indore 4. State Bank of Mysore 5. State Bank of Patiala 6. State Bank of Saurashtra 7. State Bank of Travancore Foreign Offices State Bank of India is present in 32 countries, where it has 84 offices serving the international needs of the bank’s foreign customers, and in some cases conducts retail operations. Formalization: The formalization of the State bank of India is as follows:  All the officers have certain financial powers and administrative powers depending upon their positions.  The delegation of financial powers of various grades of officials is decided by the Central Board which is revised from time to time, depending upon the organization’s requirement and also Government / RBI guidelines.
  • 18. 18  There is a well defined organizational structure and a clear system of accountability and control system, which also take into account the RBI / CVC guidelines.  There are quite a number of documents like manuals, book of instructions, codified circulars, scheme of delegation of powers, proceedings of the board etc and also the periodical circulars used by the employees for discharging various functions. There are quite a number of documents like manuals, book of instructions, codified circulars, scheme of delegation of powers, proceedings of the board etc and also the periodical circulars used by the employees for discharging various functions. Centralization and Decentralization in State Bank of India  Regarding sanction of loans, each officer of the Bank will consider loan proposals and take a decision in terms of the scheme of delegation of powers, on the merits of the proposals.  If bank need to purchase any kind of equipment like computers or software branch managers are required to take permission from the high authority.  So in term of decision making centralization is high and low decentralization, managers have some power to take decision but it is very limited.
  • 19. 19 ICICI Bank: ICICI Bank is India's second-largest bank with total assets of about Rs. 1trillion and a network of about 540 branches and offices and over 1,000 ATMs. 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 specialized subsidiaries and affiliates in the areasof investment banking, life and non- Banking , venture capital, asset management and information technology. ICICI Bank's equity shares are listed in India on stock exchanges at Chennai, Muzaffar nagar, Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indianfina nc ia l ins t it ut io n, a nd w a s it s w ho lly o w ne d s ub s id ia r y. I C I C I ' s shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the N YSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term andlong- term project financing to Indian businesses. In the 1990s, ICICItransform ed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in thec ontext of the emerging competitive scenario in the Indian bankingindust ry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholderst hr o ugh t he me r ge d e nt it y' s a c c e s s t o lo w - c o s t d e p o s it s , gr e a t e r opportunities for earning fee-based income and the ability to
  • 20. 20 participate inthe payments system and provide transaction- banking services. Themerger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee- based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly owned retail finances subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services L
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