Introduction
Most companies must undergo a critical organizational change process in response to market dynamics to survive in the long term. Punjab National Bank (PNB) Housing Finance Limited is one such organization that embarked on a transformative journey. The requirement for a turnaround at the company was driven by internal and external issues threatening the entity’s sustained existence. This paper discusses the reasons for change at PNB, resistance sources, and strategies for dealing with it. It also provides suggestions for continuing the successful transformation of the organization.
Background of the Company
PNB, a subsidiary of Punjab National Bank since 1988, made a deal with Destimoney Corporation in 2009 to sell the latter a 49% stake. The Enterprises sold its shares to Quality Investment Holdings, owned by Carlyle Group, in 2015 (PNB Housing Finance Limited, 2020). The organization central offered housing loans and fixed deposits that catered to individuals and firms’ diverse housing requirements. With 47 branches in 38 cities and 17 states across India, it expanded at an incredible rate that surpassed average levels in the industry (PNB Housing Finance Limited, 2020). They were critical sales points while processing hubs and zonal offices supported other functions such as loan processing and credit appraisal.
Need for Transformation
Transformation in PNB Housing Finance Limited was necessary due to an amalgamation of internal and external issues that had led to stagnancy and potential insolvency. The company had been operating since 1988 but only acquired a market share of less than 0.4% with minimal growth. This stagnation is a red flag in a dynamically transforming financial services sector (Lewis, 2019). Its competitors were taking advantage of 1991 Indian liberalization measures, and the business was lagging.
The range of PNB’s loan products had hitherto been focused on low-ticket-size credits and targeted customers, thereby impairing the quality of its loan book. The company needed a better organization in terms of structure, such as who was supposed to be doing what. As a result, there needs to be more efficiency and clarity associated with misaligned reporting relationships (Lewis, 2019). Essential underwriting policies, standard operating procedures, and a performance management system should have been included in the cooperation.
Factors that Contributed to Resistance
The transformation process at PNB Housing Finance Limited faced resistance from several quarters. The organization’s brand image was a barrier to attracting the best workforce from the industry. The new management, coupled with their fears over pending changes and job security, which were held by the existing staff, generated apprehension (Hanelt et al., 2020). Both current and newly recruited personnel opposed the corporation due to its negative perception.
Old timers at the company and newcomers who were change-hungry, where this cultural clash created roadblocks. Operations were then disorganized, given the lack of standardized procedures, underwriting policies, and performance management systems. The transformation required that the employees were engaged and informed about why it was being done, hence the section of communication channels that would be effective (Mishra et al., 2021). The new leader is a change, and workers might resist it, especially when replacing a familiar one.
Overcoming Resistance
PNB dealt with resistance to a poor brand image and employees’ apprehension through active communication of its vision and transformation plan. The managers noted that the changes were to improve working conditions and ensure it grows. The vision of a five-year business plan, Project Kshitiy, was sold to personnel to inject hope and enthusiasm (Malhotra et al., 2020).
The organization selected the most resilient workers and made them agents of change to spearhead the process. PNB pioneered a formal performance management system and clear accountability structures. The business spent money on modern information technology systems and trained the employees to be relevant with the new machines (Hanelt et al., 2020). The firm developed solid communication structures such as holding town hall sessions and using Skype to establish an online-based feedback mechanism
How PNB Implemented Change
PNB’s top management undertook a well-designed and holistic change process, enabling several dimensional benefits for the firm. After a competitive global recruitment process, Sanjaya Gupta joined the company as the new Managing Director. Gupta was instrumental in leading the change for the first six months he spent using the culture and finding barriers(Elsan Mansaray, 2019).
The board of top management conducted 13 meetings from June 2010 to June 2011 to come up with Project Kshitiÿ, which is a five-year strategy. Senior executives held town hall meetings across branches, listened to employees’ concerns, and communicated the company’s values and changes. The senior management appreciated the significance of upskilling and giving staff cross-functional training to orient them toward new processes and policies (Elsan Mansaray, 2019). The culture of performance was enhanced by introducing a formal performance management system.
Evaluation of Issues
PNB encountered many challenges, which restricted its expansion and ability to compete. The company achieved an annual growth rate of only 7% since it was established in 1988, with less than 0.4% market (PNB Housing Finance Limited, 2020). The firm had small loans and needed help matching up with other industry players. In addition, there needs to be a clear organizational structure, which causes inefficiencies and confused reporting lines and results in organizational misperception.
Suggested Alternatives
In response to this, PNB might adopt several alternative strategies. Expanding its credit portfolio through a wide range of loan products, including bigger ticket-size loans, can enhance its lending quality and draw in more consumer segments. It is essential to involve all levels in promoting dialogue, training, advanced technology, and digital platforms that enhance workers’ interest and commitment towards transformation (Hanelt et al., 2020). Robust feedback mechanisms, excellent post-sales service, and customer-centeredness will improve client satisfaction and loyalty towards the brand in their respective countries.
Recommendations
I offer several significant interventions to help heighten the success of organizational transformation at PNB Housing Finance Limited. The organization should build an intense learning and development framework to equip the employees with skills and knowledge for success in the changing financial services industry (Oreg & Berson, 2019). A regular training program, both technical and soft skills-based, can ensure that the workforce is updated with the latest industry trends and maintains a culture of constant improvements.
A separate change management office can help consolidate the change management process. It would also act as a central point for change communication, ensuring the same message flows throughout the organization (Lewis, 2018). Organizations should continue spending more on IT solutions as the financial industry depends much on digital technology (Oreg & Berson, 2019). This involves improving the customer interface, automating processes, and strengthening data analytics to make accurate judgments.
Conclusion
In conclusion, the change journey of PNB Housing Finance Limited demonstrates that organizational change is essential to meeting complex challenges and remaining competitive in a dynamic sector. The approach has revived its prospects and made the firm a futuristic institution ready to address its interior problems and adapt to external market forces. By adhering to these recommendations, the firm can consolidate its position as a customer-focused, flexible, and sustainable entity in the housing finance industry prepared to tackle future challenges and prospects.
References
Elsan Mansaray, H. (2019). The role of leadership style in organizational change management: A literature review. Journal of Human Resource Management, 7(1), 18. Web.
Hanelt, A., Bohnsack, R., Marz, D., & Antunes Marante, C. (2020). A systematic review of the literature on digital transformation: Insights and implications for strategy and organizational change. Journal of Management Studies, 58(5), 1159–1197. Web.
Lewis, L. (2019). Organizational change. Creating Change through Strategic Communication. Web.
Malhotra, N., Zietsma, C., Morris, T., & Smets, M. (2020). Handling resistance to change when societal and workplace logics conflict. Administrative Science Quarterly, 66(2), 475–520. Web.
Mishra, P., Shukla, B., & Sujatha, R. (2021). Leadership and organizational change. Human Resource Management for Organisational Change, 66–69. Web.
Oreg, S., & Berson, Y. (2019). Leaders’ impact on organizational change: Bridging theoretical and methodological chasms. Academy of Management Annals, 13(1), 272–307. Web.
PNB Housing Finance Limited: (2020). PNB Housing Finance Limited: Toward successful transformation1 (1sted.). Ivey Business School Foundation.
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