The elephant can dance: O P Bhatt

The SBI chairman, who “gets paid less than his driver”, tells DNA Money how transformation took place in the banking behemoth

HYDERABAD:  
“I am letting you in on a secret. Please don’t tell this to anybody. Among all the Fortune 500 CEOs, I’m the least paid. I get Rs 26,000 ($522) per month. Even my driver gets more than I do.”
—Om Prakash Bhatt, CMD, State Bank of India

While Bhatt may only be partially right (Rs 26,000 should be his basic pay; he also gets an annual bonus as do all other SBI MDs based on the performance of not just SBI+State Bank of Saurashtra, but also the other 6 associates), the point is there to take: Private sector peers K V Kamath of ICICI Bank and Aditya Puri of HDFC Bank have compensation in excess of Rs 10 lakh a month.

Yet, the transformation of SBI shows money cannot motivate beyond a point.
The bank, which had an unbroken record of generating profits continuously for 200 years till two years back, was losing out to the aggressive private sector and foreign banks.

“We used to have over 35% market share at one point. This had fallen to around 15% at the time I took over (on July 1, 2006). Our brand value had declined. There were glitches in the core banking solution. We had lost respect and when it came to deposits and advances, we were not the first choice of anybody.” Cut to now. SBI today has a 16.11% share of the banking system’s deposits after touching a low of 14.81% in March 2007. Ditto advances. And profits have outperformed the broader market. From being No. 14 in terms of market capitalisation in India when Bhatt took over, the bank is now No. 5. In 2007, SBI entered the Fortune 500 list at No. 380.

How did a stodgy state-owned institution become a dynamic bank?
“I am not a management guru and this is something that even I don’t fully understand. But what I do understand is that something good has happened,” said Bhatt, during a presentation on the transformation of SBI, at the first international conference on ‘Igniting the Genius Within’ at the Indian School of Business, Hyderabad, on Saturday.
It wasn’t easy.

“When I became the chairman, there were half a dozen or dozen others who could have become the chairman. As luck would have it, I became the chairman, though some of them may have been more competent than I . And this is the team I had to lead.”

“But I could see the need for transformation. I took 25 of the top people into an offsite at Aamby Valley, near Pune. This had never happened in the history of SBI. I first made a presentation for two hours on the state of the bank in the context of the country and the economy. I told them that we all sitting in the room were responsible for what has gone wrong. And we alone could bring the bank out of this morass. This set the context for the discussion,” said Bhatt.

As expected, it wasn’t easy. “On the first day there was a fair amount of scepticism, but by next afternoon it started to change. By the third day, there was a lot of energy and commitment within the group,” said Bhatt.

Whatever was being discussed was being documented as well. This led to the making of a document called the ‘State Of The Nation’. And this became the basis for transforming SBI. It was communicated to SBI’s 14,000-odd branch managers across India.

“Initially our fourteen deputy managing directors had volunteered to travel around the country explaining the document. But when the time came, some of them were reluctant. They said they were pressed for time. But since I pushed them, they went. And the feedback we got was surprising. The branch managers asked why we didn’t tell them all this before. They said they weren’t aware that the bank was in such a shape,” said Bhatt.

The next point on the plan was to get working on the unions. “I  had a four-day session with the 30-32 union leaders. The same thing happened in that case as well. They had not realised the state the bank was in. At the end of it, they made a document, which urged people across the bank to get to work.

One of the points that the document made was ‘If you have to sit late, to work for a customer, do that, because all your lives you have been going home early’.” Along the way, Bhatt realised that something as simple as ‘shaking hands’ and listening to his employees did a lot to their morale.

“I went to a branch. I shook hands with one of the counter clerks and I realised that the guy had high fever.  So I asked him why he had come to office. ‘Sir aap aaye hain’, he replied. I realised that without doing anything I’d given him something.”

An in-house programme called Parivartan was launched. “It took 6-7 months for us to develop it. We launched it across the country and covered all our employees in 120 days. We have around 60 training centres across India. I stopped all other training.

Typically, what happened earlier was that three people in a branch of 30 were sent for training. They came back wanting to do new things, but their colleagues didn’t allow them to. So this time what we did was, if a branch had 30 people, we sent all of them together for training. It was carpet bombing,” said Bhatt.

What happened next was simply magical. “They don’t ask for overtime. They sit in office late. They may not be able to help customers all the time. But at least they try.”
How the bank went about making a new vision statement, said Bhatt, was very interesting.

“We have always had a vision statement. But even I, as the chairman of the bank, did not know it. In fact, it used to be a trick question for the candidates we used to interview. And none of them knew it.

Even the guys who were asking the questions did not know it. So we employed a professional agency to come up with a new vision statement. But somehow we did not like what they came up with.

So what we did was send out a questionnaire to our 200,000 employees asking them to craft a vision, mission and a value statement for the bank. We got 141,000 responses. We distilled that and came up with a simple vision: My SBI. My Customer First. My SBI First In Customer Satisfaction. It is a very simple vision statement and something our employees can identify with.”

Bhatt has a masters in English, unlike his peers in new generation private sector bank, who are MBAs at the very least.

“I am not an MBA. And this is my first job. One of my management trainees has made this presentation and that is why it looks like an MBA presentation and not a SBI presentation,” Bhatt said. “Our staff is one of the best in the world. But they were like Hanuman, who never realised the immense strength he had. He had to be told about his strength. The same logic worked with our staff too.”

Would the transformation have been easier in if SBI was a private sector bank? “I don’t have a clear answer to that because I have never worked for the private sector. Don’t misinterpret me, but in private sector there is a mercenarisation of the workforce. What we have done is different...”
k_vivek@dnaindia.net

(The correspondent was in Hyderabad at the invitation of  Indian School of Business)