Strategic Planning at the Deutsche Bundesbank

Transcription

1 Strategic Planning at the Deutsche Bundesbank

2 Key aspects in Central Bank Governance 1. set of central bank tasks key aspects 5. stakeholders 2. rules for decision making bodies 4. transparency, credibility, accountability 3. legislative and governmental issues 30 November 2010 Oliver Loch

3 Agenda General remarks on strategic planning and strategic management Strategic framework Strategy development Where are we now?

4 Why is a strategy important? Strategy helps to raise the external profile of the Bank and to clarify and consolidate the Bank s role. In the ESCB the Bundesbank must be clear as to which tasks it wishes to take on. Without strategy there is no planning certainty for third parties (eg cash strategy). Financial and staff resources could not be employed effectively without a strategy; strategy enables the Bank to concentrate on its core competencies. Long-term strategic positions allow individual measures to be evaluated, taking the wider picture into account in terms of technical issues and time frame and, therefore, enable goal-oriented decisions to be taken.

5 Strategic planning is designed to help anticipate future trends regarding markets, competitors, technologies, customers etc... identify success factors for the future and successful strategic patterns... develop a common realistic picture of the organisation s own resources and options... make effects of anticipated developments on organisation transparent!... determine activities to achieve success in the future.... implement the selected activities. acting instead of reacting, shaping instead of administrating. It s not seeing into the future that counts, but being prepared for it.

7 Objectives of a central bank?! Fulfilment of tasks Cost effectiveness Risk mitigation

8 Bundesbank s planning structure Mission Statement Strategic Intents Organisational Principles of the Eurosystem Goal and value planning of the Eurosystem Strategic business line planning Organisational planning Strategic management of Bundesbank Operational controlling instruments Cost accounting Organisational analyses Personnel assessment procedure Operational management of Bundesbank

9 Mission of the Eurosystem INTENTIONS Maintenance of price stability Safeguard Financial stability Promotion of the European financial integration OBJECTIVES Credibility Trust Transparency, accountability und effective communication PRINCIPLES Decentralisation Good Governance Effectiveness and efficiency in a spirit of cooperation and teamwork Shared identity

10 General system of strategic planning Vision/ mission Internal sources of information External sources of information Objectives of business area 1 Objectives of business area 2 S Y S T E M O F O V E R A L L O B J E C T I V E S Planning Implementation Objectives of business area x Monitoring

11 Agenda General remarks on strategic planning and strategic management Strategic framework Strategy development First strategy cycle : structural reform Strategy cycle : profile and consolidation Where are we now?

12 First strategic cycle structural reform - Key Elements of Reorganisation - Reorganisation of the management levels Organisational streamlining and restructuring of tasks Consolidation of the range of services Branch Strategy Streamlining the branch network

13 Results of structural reform Consolidation process of the Bundesbank: change of branch network - 63 % end rd. 60% change of employees - rd. 30% cost reduction per year rd. 300 Mio.

14 Agenda General remarks on strategic planning and strategic management Strategic framework Strategy development First strategy cycle : structural reform Strategy cycle : profile and consolidation Where are we now?

15 Five core business areas Deutsche Bundesbank Safeguarding stability Cash management Financial and monetary system Monetary policy Banking supervision Payment systems Efficient cash supply and infrastructure Stable financial and monetary system PRICE STABILITY in the euro area Functioningofof German credit and financial services institutions Security and efficiency of payment and settlement systems International cooperation / membership in international bodies Research / economic policy analysis

16 Strategy development process Strategic Analysis of Specifiying SWOT-results and operat. objectives, evaluation based specification of activities and on SWOT analysis strat. objectives indicators High-level workshops Specifying with all 14 to analyse operational departments the SWOT-results, objectives SWOT-workshops Information gathering determine strategic intents and objectives, arrange objectives in strategy map Working out strategic activities as well as indicators to controll the implementation of the strategy Decision by Executive Board Executive Board discussions and decisions

17 SWOT analysis Internal perspective Strengths Weaknesses Analysis of External perspective Opportunities Threats

19 Analysis of SWOT results and specification of objectives - strategic filter Strategic relevance Would accomplishing the objective really represent a decisive step towards longterm success of the Bank? Only important in the case of deviations (exceptional report, diagnostic element) The few decisive objectives on which the success of the strategy depends Low priority Selective attention Strategic need for action Is extra effort necessary to accomplish or defend the objective in the face of resistance?

20 Strategy map Addressees Price stability in the euro area Stable financial and monetary system Systematically reinforce influence at international levels Safeguarding stability Stability and functioning of credit and financial services institutions in Germany Efficient cash supply and infrastructure Communicate clearly internally and externally Security and efficiency of payment and settlement systems Publicly comment on economic topics Processes Continuously combat bureaucracy Tailor supply of services more closely to demand Network knowledge Bankwide to exploit synergies Finances Optimise operational cost-efficiency Ensure targeted resource management Potentialities Offer attractive, performanceoriented employment conditions Embrace and actively manage change process Foster adequate pool of knowledge and know-how Intensify research and analysis

22 Refining strategic objectives Interne Perspektive Stärken (Strengths) Schwächen (Weaknesses) Analyse der Externe Perspektive Chancen (Opportunities) Risiken (Threats) Addressees Cash Management Safeguarding stability Financial and Banking Monetary policy monetary system supervision Cashless payments Specifying operational objectives these are subordinated objectives which describe the means to achieve a main objective. Strategy takes a step forward becoming real. Potentials Finance Processes

23 Specify measures/ tasks/activities to achieve the objectives Compilation of previous results in objective sheets Name of objective description of the objective operational objectives current measures / tasks / activities to achieve the strategic objective new measures / tasks / acitivities indicators

24 Indicators for achieving objectives Indicators What we cannot measure, we cannot manage. What we cannot manage, we must leave to chance. Serious planning and management to achieve objectives would not be possible. Specifying objectives only makes sense if progress can be tracked by indicators.

25 Indicators for achieving objectives For each strategic objective at least one indicator Mixture of qualitative indicators (internal or external assessment) and quantitative indicators (e. g. from business statistics) Traffic light approach for management reporting purposes Idea: Management is steering the Bank by means of a controlling-cockpit

27 Guiding ideas of new strategy Strategy 2012 Guiding ideas raising the Bank s profile continuing the consolidation process The aim is to raise the Bundesbank s profile as a stability-oriented, independent institution both in Germany and within the European System of Central Banks. (annual report)

28 Strategy development raising the bank s profile Refining strategic objectives Examples for further oper. objectives Core business area Monetary Policy Financial and Monetary System Banking Supervision Payment Systems Cash Management operational objectives Intensifying research in monetary policy Conducting more operational tasks for ESCB in relevant business areas Intensifying economic research High profile in international academic debates Extending analysis instruments (eg stress testing) Further development of regulatory framework Promoting European integration process Leading position in liquidity provision and transfer Bundesbank will remain in cash cycle Bundesbank strives for a 50% share in banknote processing Promoting ESCB recycling framework

29 Example for strategic objectives, operational objectives and activities Perspective: Addressees Strategic objective: Price stability in the Euro area Description of objective Our primary objective is to maintain price stability. The President of the Deutsche Bundesbank is a member of the Governing Council of the European Central Bank (ECB) and takes part in the monetary policy decision-making of the Eurosystem. The Bundesbank also contributes to monetary policy with in-depth academic analyses of macroeconomic developments and sound research results. Another of the Bundesbank s functions is to advise the Federal Government. Furthermore, the Bundesbank ensures that the monetary policy measures agreed are implemented in what is the largest economy in the European Union. It explains the aims of the single monetary policy of the Eurosystem to the German public and thereby promotes awareness of the need for price stability.

30 Example for strategic objectives, operational objectives and activities Strategic objective: Price stability in the Euro area Operational objectives (development goals) Example The Bundesbank plays a key role in the implementation of monetary policy for the euro area and therefore aims to take on joint operational tasks. It will also contribute to the further development of efficient instruments and management procedures in this context. Activities Example Assessment of collateral without market price (no ABS) for the Eurosystem (Valuation hub).

31 Strategy development continuing the consolidation process Refining strategic objectives further decisions on operational objectives by the Executive Board Staff reduced to 9,000 employees by end-2012 No further closures of branches until 2010 In 2009, review of branch network based on economic criteria. If necessary - consolidation of branch network between 2010 and Safeguarding attractive conditions of employment

32 continuing the consolidation process Number of core staff (excluding trainees) End of 2001 End of 2002 End of 2003 End of 2004 End of 2005 End of 2006 End of 2007 Target Target end of 2012

34 Achieving the objectives Where are we now? What are the next steps to reach our objectives?

35 Where are we now? 1. Step 2. Step 3. Step 4. Step 5.Step Strategic orientation vision, strategy Specification of strategic objectives, operational objectives and strategy map Determine indicators and target values Specify measures/ tasks/activities to achieve the objectives Decision by Executive Board and rolling planning process Bargeld Deutsche Bundesbank Stabilität sichern Finanz- und Unbarer Währungssystem Geldpolitik Bankenaufsicht Zahlungsverkehr Adressaten Preisstabilität im Stabiles Finanz- Euro-Raum und Währungssystem Einfluss auf internationaler und auf ESZB-Ebene gezielt stärken Stabilität sichern Stabilität u. Funktionsfähigkeit Effiziente der Kredit- u. Bargeldversorgu Finanzdienstleistungsinstitute ng und - in Deutschland infrastruktur Klare Kommunikation nach Innen und Außen Sicherheit u. Effizienz v. Zahlungsverkehrsu. Abwicklungssystemen Zu wirtschaftlichen Themen Stellung nehmen Funktionsfähigkeit Sicherheit und PREIS- der deutschen Effizienz von STABILITÄT Kredit- und Zahlungsverkehrs- im Euro-Raum Finanzdienstund Abwicklungsleistungsinstitutsystemen Effiziente Bargeldversorgung und infrastruktur Stabiles Finanz- und Währungssystem Finanzen Prozesse Bürokratieabb au langfristig sicherstellen Nachfragesteuerung von Supportleistungen stärken Wirtschaftlichkeit der Leistungserstellun g optimieren Wissensvernetzte Bank zur Hebung von Synergien Kostenorientierte Preisge- Aufgabenadäquate staltung bei Dienstleis- Ressourcensteuerung tungen, die keine hoheit- sicherstellen lichen Aufgaben betreffen u. die zum Teil auch v. Dritten erbracht werden Internationale Kooperation / Mitgliedschaft in internationalen Gremien Forschung / wirtschaftspolitische Analyse Potenziale Veränderungsprozess annehmen und aktiv gestalten Leistungsorientieru ng und attraktive Beschäftigungsbedingungen Anforderungsgerechte Qualifikation aufrecht erhalten Forschung und Analyse stärken

36 Where are we now? external communication External communication: five pillars of the Bundesbank to safeguard stability: public

37 Where are we now? Internal communication: Regional Offices Service Centres seminar events: Animating Strategy 2012 Branches Training for management personnel of regional offices (incl. service centres) and branches for locally implementation of Strategy 2012 Aims: Et al. improved comprehension of the strategy, preparation for strategy implementation

38 Where are we now? Connecting the strategy with the operational management systems August December Operational planning for forthcoming year (incl. planning of needed financial and personal resources) Integration of strategic and operational management in annual planning process February/March Budget/performance analysis for preceding period April - June NEW: Strategy-Review: Evaluation of success of defined operational measures regarding strategic goals, if necessary strategy update

39 Role of strategic planning unit The strategic planning unit supports Executive Board in planning the strategy for the Bundesbank and in reaching organisational objectives clearly communicates strategy and objectives internally and externally makes efficiency analysis to safeguard and improve quality and minimise risks reports on essential bank projects to Executive Board coordinates all kinds of organisational issues reviews planned operational measures for preceding period (budget/performance analysis) and reports on operational planning for forthcoming year Using our reports as a basis, Executive Board decides on long-term orientation of the Bundesbank.

40 Conclusions Creation of a strategic management system is important for central banks Development of strategic and operational controlling instruments is ongoing task Close integration between strategic definitions/further developments and strategy implementation essential for successful management