INSIDE THE ICICI Leadership Academy

<h1>INSIDE THE ICICI Leadership Academy</h1>​

The bank’s leadership in the industry is exemplary. But nothing to compare its ability to spot, groom and deploy leaders in-house.

Indrajit Gupta & George Smith Alexander


IT SEEMED like a random move then. In 2002, Sanjoy Chatterjee, 33, an almost unknown face to the outside world, was assigned to head ICICI Bank's UK subsidiary. Asking a young and relatively inexperienced executive to lead the bank's UK operations may have looked risky and reckless to many at that time. But late last year, when the bank rejigged its top brass, the plot began to fall in place. Chatterjee got elevated to lead its critical international business and corporate banking divisions. His elevation hints at two things: the bank's phenomenal talent screening process and its courage to bet on young and bright executives much ahead in their careers.

Chief executive officer K V Kamath, 59, knows that that's the only way ICICI Bank will be able to maintain its edge and growth going forward. The average age of Indians will fall to 28 in the next 10 years, he says. In the meantime, ICICI Bank's appetite for leaders and managers will grow voraciously. “We have to ask ourselves: who should lead a group whose average age is 28?” Kamath asks. “Will be it a 58-year old, a 48-year old or a 38-year old? I believe it should definitely be towards 28. Whether it is 38 or 48 is debatable, but it cannot definitely be 58.”

Kamath's poser may sound provocative. CEOs across India Inc. are looking to nurture leaders to take their companies to tomorrow's youthful market. Every HR head polled for workplace surveys lists leadership development as a major challenge. But the trouble is that many programmes they have in place to spot talent aren't working. There is an urgent need to find a well-oiled machine that delivers tailor-made leaders in needed numbers.

There's one place they could surely look for some clues: inside ICICI Bank, where a strong system has been put in place to find answers to the question. And oddly enough, it is designed to reduce dependence on the one man who enjoys the enviable reputation of spotting and grooming more leaders than any other CEO in India Inc.

Right from 1996, when he took over as the bank's head, Mr Kamath has created an incredible breeding ground that spawned leaders. Many like Shikha Sharma, Ananda Mukherji, Nachiket Mor, Chanda Kochar, Madhabi Puri Buch, Vishakha Mule and Bhargav Dasgupta have blazed their way to individual glory. They have moved from one assignment to another, taken up different leadership roles and served the bank with distinction. “Mr Kamath has an amazing ability to pick a leader and identify potential way beyond what the people believed in. Less than 20-25% of us had any clue where we were headed in our careers," says Kalpana Morparia, the bank's joint managing director who worked closely with Kamath for more than two decades.

Another institution would have let this go on as far as possible. But shortly after the long-awaited reverse merger between ICICI and ICICI Bank in 2000, Ms Morparia and group HR head K Ramkumar decided to do some plain-speaking with their boss. The bank should make the transition from depending on Kamath's personal genius to working off a formal system, they argued. Their logic was sound: from a 1,000 member organisation, the bank was rapidly moving to a scale—with a 7,000-strong team—where it was well-high impossible for Mr Kamath to personally know every senior leader.

Initially, there was no buy-in. They then appealed to his heart and head. They put forward a list of names for Mr Kamath to evaluate for a particular assignment. “How well do you know them, sir?” they asked him. Mr Kamath knew a few on the list—but drew a blank on the rest. Next came the emotional pitch: “What would happen when you step down as CEO? We aren't suggesting taking away your veto and judgment, but when we are a 50,000 strong organisation, you can't do it all yourself? You simply won't know who is where. Besides, wouldn't it make more sense to pass on the secret of what it took to select and nurture talent to other leaders at ICICI, while you were still around?" That last bit seemed to cut ice. Mr Kamath thought hard about his legacy—and finally agreed.

Since then, the shift from a CEO-centric model to an institutionalised process of leadership development has already evolved through six annual cycles. Mr Ramkumar, who modified the model for the bank based on his experience in mature organisations like HLL (now HUL) and ICI, worked hard with the top team—especially Kamath, Morparia and the ICICI Bank board led by chairman N Vaghul—to create a system that has consistently thrown up the 12-odd people that the bank needs to take up critical leadership roles across the ICICI group every year.

But in making the transition, there was one critical thing that Mr Ramkumar and his team did right: they didn't throw the baby out with the bathwater. So, ICICI continued to visit the best B-schools and hire the best CAs, just as they had done since 1996. They also persisted with the entrepreneurial model that Mr Kamath had consciously adopted. Each of the sub businesses—be it ICICI Ventures, ICICI Home Finance, et al—were handed over to an entrepreneur, who was rated as core talent.

One-man show

LISTEN to Mr Kamath as he recounts his original formula. “This entrepreneur was told you that have the support system of ICICI. You have a limited amount of capital. We will give you one good person whom you can pick. The rest of the team you will have to build and this is your business case. Detail your business case, build your team, tell me how you will execute, start executing, report to the board on that basis. Thereafter, move it to a managementby-objective type of scenario—where objectives are very clearly set, keep meeting those performance targets. Keep ramping up these targets, if necessary, maybe course correcting the strategy as you go on.”

The model was successful. “It allowed the young business heads to evolve into leaders because they took the entire stress of building those businesses and getting them into shape. In that process they evolved into leaders. They had the cloud cover or the organisational support system. But the hard work had to be done by them,” says Mr Kamath.

So what did he look for in a person? “I tried to assess 3 or 4 qualities in a person. First, what is the level of raw intellect? What are the person's strengths and weakness? I never look for a person with no weakness. It is utopian. Thereafter, is the person open to acknowledge that his strengths and weakness must evolve? Plenty of leaders do not acknowledge their weaknesses. That is fine with me as long as they work at a subconscious level on those weaknesses. The next was a step into unknown territory—whether the person would build an entrepreneurial business. That had to do with a person's ability to take challenges and react under pressure. How you approached work and delivered gave an inkling of the person. We did not have anything to go by on pure entrepreneurial yardsticks. I still don't have answers on how to find an entrepreneur.”

Mr Kamath also instituted a star system for the top 5% of the bank's talent. They were treated preferentially while giving away bonuses. This made some strive to be stars and others who believed they can't make the cut simply leave. The pipeline was cleansed of low-rated employees clogging the system.

Dealing With Size

THE new process-driven system displaces none of Mr Kamath's precepts. It is not a computer generated list of leaders. Human judgement prevails. The new leaders are allowed to fail, to an extent. Every leader has two or sometimes three backstops. There is always someone to take the place. Performance targets are still sacrosanct.

But now, the company does the vetting rather than just Mr Kamath. First, among the 15,000-odd managers across the group, about 2,000 are empanelled as leadership talent. To be considered as talent, a manager would have to be a top performer. “The assumption is that unless you are a performer, you won't have credibility as a leader,” said Mr Ramkumar.

A thorough 360-degree appraisal is done for these people, which is then shared with each individual. The HR department then converts it into a data sheet and also writes a one-page profile of the person.

This is where the new talent assessment system takes over. It covers all those empanelled as talent—from joint managing director Chanda Kochar to the lowest rung manager. All of them go through the same rigorous process. Ms Kochar's assessment is done by the board of directors. For the rest, the HR department constitutes seven to nine member skip-level talent panels drawn from across the organisation. So in effect, a senior GM can assess a deputy general manager (DGM), but not a general manager. Only people who are assessed as leadership talent can be part of the panel. "Our belief is that it takes a leadership talent to cite a leadership talent," says Mr Ramkumar. Decisions have to be arrived at by consensus. In effect, the panel is a leaderless group. An HR person tables the name of the person, and also presents the data. At least two people in the panel should have known the person, other than his direct boss. “Our belief is that if you are a talent, you can't be somebody who is hidden somewhere.”

These people are then asked to list out their experience of the person. Armed with data, the panel takes the call on the role that a potential leader can play. Is he good enough to be a regional head or head of a national business? If it is the pack of 25 odd people at the top level, the panel has to figure out just how many would make it to the board.

Then the question of timeframe. If the panel decides that an assistant general manager is likely to make it to the national head's role in the next one to two years, he is classified as ‘A’ category talent. If he is likely to make the cut in 3 to 4 years, he is classified as a ‘B’ category talent and ‘C’ category, if it is within 5-6 years. This forms the basis for making appointments when national-level roles arise. Last year, about 400 managers in ICICI Bank were empanelled as category A talent—and they enjoyed the first strike at a new role.

The national head for home finance role is expected to come up for grabs soon. The directors will take a call on whom to pick based on a shortlist provided from the A-listers. The directors will use the 360-degree appraisals data which provides data on how the organisation perceives the individual combined with the profile and comments from the talent panel on the person's domain knowledge.

So is the system foolproof? “Mistakes do happen. As long as it is 10-15% of cases, it is fine. What we promise is that errors are possible, but biases are not,” said Mr Ramkumar. It is this elaborate process that Chatterjee went through before landing the UK job. Today, at 39 years, after a successful stint in UK, he is managing both the corporate and international business for the bank, Chatterjee is responsible for nearly 90% of the bank's profits. Yet, he didn't need to catch just Mr Kamath's eye to become a leader, because the entire senior management of the bank was tracking him any way.

HOW TO GROOMLEADERS, ICICI STYLE

Take very deliberate, calculated decisions: Why did the directors take a very calculated decision—and a very risky one at that—to send Sanjoy Chatterjee, then all of 34, to head its subsidiary in UK? "We wanted some of the top performers to be internationalised. In the same way, Rajiv Sabharwal was given early exposure to rural—again, a very deliberate decision,” says Mr Ramkumar.

Train people to take the heat: Dealing with stress and pressure are part of life at ICICI. The high performance culture starts at the board meetings itself, where executive directors are grilled by the entire board. And for most newcomers, this can be an unnerving experience. ICICI has now started simulated training for potential board members which gives them a real sense of an actual setting.

Don't worry about going wrong on the calls you take:

In judgement calls, the risk of going wrong cannot be eliminated. In case a person fails, there is no witch-hunting. It's treated as a part of the training cost. Multiple cycles are given to the guy before I jump to the conclusion whether to persist with him. The cut-loss call is also taken aggressively.

Perspective building is key: At the highest level, more than building skills, the focus is to expanding perspective. At ICICI, Harvard and McKinsey will conduct a new program for senior leaders. With the help of films and case studies, participants get a more holistic understanding of the social, political and economic situation in Africa, Latin America and China—key geographies that will prove crucial in the bank's international foray.

The buck stops here, literally: Having an elaborate process for leadership development sounds impressive, but how do you tie in accountability for results? If the bank is forced to hire frequently from outside for its senior leadership roles, it is seen as a signal that the process isn't working. And that's not good news for Mr Ramkumar, who has 50% weightage for leadership development in computing his annual bonus. The stakes are high for Mr Kamath and Ms Kochar too, who have a 25% weightage.

source : http://epaper.timesofindia.com
 
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