Incentives and Knowledge Mismatch

Abstract

A large public bank B in an economy now under transition to liberalization, attempted reengineering its structure and business processes. B has a large branch-based structure to acquire local savings where banking processes add little value. Value is added at the head office through bankbased financial operations and through providing credit to industry. Appreciating that competition was sharpening; two successive chairmen and a few senior managers initiated change management. However, they could not choosefrom out of structure, business process, strategy and technology what was the driver of change and in what sequence of change would be the best outcome! A consultant was appointed. However, negotiations on change management between the stakeholders and the consultant resulted in tacit opportunistic alliance. An apparently loaded report on change resulted in minor changes. BPR failed because processes remained unrecognized and technology instead of hastening change turned out to be a new instrument of monitoring.