Talent Management at ICICI Bank

The case discusses the talent management strategies at India-based financial banking institution, ICICI Bank
Ltd. (ICICI Bank). Since the 1980s, the bank had fostered a culture of nurturing young talent. This was a bid to
create a talent pool and develop a leadership pipeline at the bank. The process of empowering young people,
nurturing talent, and developing a leadership pipeline became part of the bank's culture and was carried
forward by former CEO and MD, KV Kamath (Kamath) and present CEO and MD, Chanda Kochhar
(Kochhar). Kamath was instrumental in grooming several people who later took up key positions at the bank.

He spotted people with leadership potential at the bank and moved them from one assignment to another and
mentored them to take up different leadership roles and serve the bank.

The success of the mentoring process led to the bank institutionalizing a formal leadership development process
that identified talented employees through a performance appraisal system after which they were assessed for
future leadership roles.

According to experts, ICICI Bank's focus on nurturing young talent reaped several benefits for the bank. While
the leadership grooming process helped it tackle the problem of attrition, it also enabled the bank move ahead of
others in the Indian banking sector. The bank's focus on nurturing young talent also helped ICICI Bank develop
businesses that accounted for half of ICICI Bank's profits. Industry observers felt that going forward, the
challenge for Kochhar would be to maintain the bank's momentum, continue international expansion, expand
product offerings, improve technological innovation, and continue to nurture young talent.

"Leadership is the ability to handle the job at the next level with comfort. Being able to perform your future role
in the present. It is especially important in an industry like ours where people are our most important asset, and
we depend on people for growth. When your business focuses on growth, grooming talent is crucial".

- Chanda Kochhar, Chairman and MD, ICICI Bank Ltd., in 2010.

"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, editor, Forbes India & George Smith Alexander, reporter at Bloomberg, in 2008.

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INTRODUCTION:

ICICI Bank Ltd. (ICICI Bank), the India-based financial banking institution, began a process of identifying and
nurturing talent in the 1980s. This practice paid rich dividends, with ICICI Bank becoming known as a
powerhouse of leadership talent. Ever since N Vaghul (Vaghul) became the chairman and MD of Industrial
Credit and Investment Corporation of India Limited (ICICI) in 1985, the bank had fostered a culture of
nurturing young talent. Vaghul brought in a fresh and different approach to working in the organization. He
involved younger people at the bank in big projects unlike CEOs of other organizations who preferred to pick
senior level managers.

This was a bid to develop a talent pool at the bank. Vaghul’s way of empowering young people, nurturing
talent, and developing a leadership pipeline became part of the bank’s culture and was carried forward by
former CEO and MD, KV Kamath (Kamath) and present CEO and MD, Chanda Kochhar (Kochhar).

Kamath who joined ICICI Bank as CEO and MD in 1996, created an incredible talent for spotting employees
with leadership potential. He was instrumental in grooming several people who later took up key positions at
the bank. Kamath nurtured people with potential leadership at the bank by moving them from one assignment to
another and making them take up different leadership roles and serving the bank. Commenting on Kamath’s
ability to nurture talent, Kalpana Morparia (Morparia), former joint managing director, ICICI Bank, said, "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."

Kamath’s vision was to enable ICICI Bank to surge ahead and capture a vital share of the market. He planned to
create leaders within the organization who could foresee opportunities ahead of others.

The mentoring process started with picking young employees who had joined the bank as management trainees
and giving them hard-to-achieve targets to test their potential. Employees passing the test were promoted to lead
senior-level positions.

The success of the mentoring process led to the bank institutionalizing a formal leadership development process
that identified talented employees through a performance appraisal system after which they were assessed for
future leadership roles.

Experts felt that the bank's successful transformation from a lending financial institution to a retail powerhouse
could be attributed to its mentoring and leadership development process.

Background Note
ICICI Bank was founded in 1994 as a subsidiary of an Indian financial institution, the Industrial Credit and
Investment Corporation of India Limited (ICICI). ICICI through its subsidiary, ICICI Bank, transformed itself
from a developmental financial institution offering services such as project finance into a diversified financial
services group offering an array of products and services directly as well as through subsidiaries and affiliates
such as ICICI Bank. In 1999, ICICI became the first bank or financial institution from Asia barring Japan to be
listed on the New York Stock Exchange.

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In 2000, ICICI and ICICI Bank merged to benefit the shareholders of ICICI Bank through a large capital base
and scale of operations.

In October 2001, the Board of Directors at ICICI and ICICI Bank approved the merger of ICICI with ICICI
Bank and two of ICICI's wholly-owned retail finance subsidiaries – ICICI Personal Financial Services Limited
and ICICI Capital Services Limited.

ICICI Bank made phenomenal progress in a short period under the leadership of Kamath, who joined ICICI Ltd.
as its managing director and CEO in its embryonic stage in 1996. It was at this time that the preliminary results
of the liberalization efforts that India had initiated in 1991 began to show.

In the changing environment, ICICI transformed itself from a traditional development finance institution to a
customer-centric private-sector bank. It was not just merely a growth story of a corporate but the success of a
clearly envisaged leadership strategy adopted by Kamath for the growth and development of the bank
leveraging human capital and technology. In January 2002, the merger was approved by shareholders of ICICI
and ICICI Bank. In March 2002, the merger was approved by the Gujarat High Court and in April 2002 by the
High Court of Judicature at Mumbai and the Reserve Bank of India. Subsequently, ICICI Group's finance and
banking operations - wholesale as well as retail - were integrated into a single entity. It was reported that
Kamath's ability to sense potential in the retail business ahead of others and inspire his people to go for it was a
major contributor to ICICI's success. From 2001 to 2006, ICICI Bank bagged The Asian Banker's ‘Best Retail
Bank in India' award.

Over the years, ICICI Bank adopted smart initiatives in the rapidly growing financial sector of India and created
a state-of-the-art banking infrastructure in its branches across India. The main strengths of ICICI Bank were its
talent pool, complete product suite, large capital base, extensive customer relationship, strong brand franchise,
technology-enabled distribution architecture, and universal banking presence. Though ICICI Bank was mainly
involved in retail banking, it ventured into other products such as insurance, corporate banking, venture capital,
etc.

In 2007, ICICI Bank created history by raising US$ 5 billion in the largest-ever public offering in India and
emerged as a valuable financial organization. In 2009, Kamath stepped down from the post of CEO and MD of
ICICI Bank in favor of Kochhar.

For the FY ended March 31, 2012, ICICI Bank had assets worth US$ 83.6 billion, which made it the second
largest bank in India.

Nurturing Talent in its Initial Years

ICICI had a history of identifying and nurturing young talent right from the time SS Nadkarni (Nadkarni) was
chairman of ICICI. Kamath himself was picked by Nadkarni soon after he joined ICICI in 1971 after
completing his post graduation from the Indian Institute of Management, Ahmedabad. Commenting on
Nadkarni's way of nurturing talent, Kamath, said, "He taught me initial skills; he had this ability to test you by
giving increasingly complex assignments. If you had any intelligence you quickly made out that he was actually
testing you to see if you are fit enough to go on to the next rung.".

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Mentoring - The Kamath Way

One of the first things Kamath felt he had to do on returning to ICICI after an eight-year stint with the Asian
Development Bank in 1995 was to create a talent pool in a bid to transform the government promoted project
finance institution into a universal bank. During this time, the bank also faced the problem of young employees
leaving the bank for better options. This prompted Kamath to devise the parking lot theory...

A Formal Leadership Development Process

Soon after ICICI’s merger with ICICI Bank in 2000, Morparia and ICICI HR head K Ramkumar (Ramkumar)
felt that the bank should make the transition to a formal system of leadership development rather than
depending on Kamath’s personal genius. This, they felt, was required as the bank was scaling up from a 1,000
member organization to a strong team of 7000 employees. Moreover, they felt that the previous process of
grooming leaders which had been heavily dependent on the board member’s contribution had started looking
obsolete...

Talent Screening and Assessment

As a first step of the formal leadership development process, the bank institutionalized a talent screening
process. With the number of employees rising and the bank expanding to various national and international
markets, a talent screening had to be put in place, the bank felt. Since the selection of potential leaders was done
by the bank, the process started with creating a list of talent which was empanelled as leadership talent. For
instance, out of 15000 odd-mangers, the bank chose 2000 people as leadership talent...

Grooming Successors

The bank also used the leadership development process to groom successors at the bank. Moreover, succession
planning was essential as all the topnotch people such as Lalita Gupte and Morparia were retiring in October
2006 and in 2007, respectively...

Other Initiatives
While the formal leadership development system identified and nurtured young professionals at the bank, ICICI
Bank also took some initiatives to nurture leaders at the senior management levels. For instance, in 2003, ICICI
Bank came up with a new leadership program called ‘Mentoring the Mentors’ for professionals at the senior
management level. The program aimed to hone the mentoring abilities of professionals. The bank also identified
some corporate professionals from companies across other sectors for this initiative. These professionals
conducted sessions on effective mentoring for the senior management level at the bank...

Results

According to experts, ICICI Bank’s focus on nurturing young leaders helped the bank move ahead of others in
the Indian banking sector. Moreover, they felt that the leadership development process had also helped the bank
survive through the crisis. For instance, in mid-2008, the global economic environment became very
challenging due to the global financial crisis. ICICI Bank also faced the heat due to its heavy global exposure.
Moreover, a rumor that began in Gujarat that ICICI Bank would go bankrupt spread like wildfire...
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Looking Ahead

Experts felt that though ICICI Bank had a depth of talent, it also faced the risk of becoming a poacher’s
paradise. According to Kochhar, "When an organization grows at 35-40 per cent per annum for 10 years and
adds 10 new businesses during that period, young professionals get the kind of exposure they would not have
got anywhere else. We have groomed people to build and run businesses like insurance, securities, and retail. So
if other players are looking to grow who would they pick? The best person would be someone who has already
run the business."...

Issues:

1) Critically analyze talent management strategies at ICICI Bank.

2) Understand the mentoring process adopted by Kamath to groom young employees at the bank.
3) Understand the need to set up a formal leadership development process at the bank.
4) Understand the issues and challenges faced by the mentors while mentoring employees.