Strategic Planning at the Deutsche Bundesbank · Währungssystem Geldpolitik Bankenaufsicht Unbarer...
Transcript of Strategic Planning at the Deutsche Bundesbank · Währungssystem Geldpolitik Bankenaufsicht Unbarer...
Oliver Loch30 November 2010
Key aspects in Central Bank Governance
keyaspects
1. set of centralbank tasks
3. legislative and governmental issues
4. transparency, credibility, accountability
5. stakeholders
2. rules for decision making bodies
General remarks on strategic planning and strategic management
Strategic framework
Strategy development
Where are we now?
Agenda
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 effectivelywithout 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.
Strategic planning is designed to help ...
“It’s not seeing into the future that counts, but being prepared for it.”
... 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 resourcesand 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.
General remarks on strategic planning and strategic management
Strategic framework
Strategy development
Where are we now?
Agenda
• Mission Statement • Strategic Intents • Organisational Principles of the Eurosystem
• Strategic business line planning• Organisational planning
Operational controlling instruments• Cost accounting• Organisational analyses • Personnel assessment procedure
Goal and value planning
of the Eurosystem
Strategicmanagement
of Bundesbank
Operational management of Bundesbank
Bundesbank’s planning structure
PRINCIPLESDecentralisationGood GovernanceEffectiveness and efficiency in a spirit of cooperation and teamworkShared identity
OBJECTIVESCredibilityTrustTransparency, accountability und effective communication
INTENTIONSMaintenance of price stabilitySafeguard Financial stabilityPromotion of the European financial integration
Mission of the Eurosystem
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
Objectives of business
area 1
Objectives of business
area 2
Objectives of business
area x
Implementation
Monitoring
Vision/mission
Internal sourcesof information
External sources of information
General system of strategic planning
General remarks on strategic planning and strategic management
Strategic framework
Strategy development
First strategy cycle 2002 – 2007: structural reform
Strategy cycle 2008 – 2012: profile and consolidation
Where are we now?
Agenda
First strategic cycle 2002-2007 “structural reform” - Key Elements of Reorganisation -
Reorganisationof the
management levels
Organisational streamlining and restructuring of tasks
Consolidationof the range of services
Branch Strategy Streamlining the branch network
• change of branch network
• change of employees
• cost reduction per year
- 63 %- rd. 60%
- rd. 30%
end 2007
rd.
300 Mio. €
Results of structural reform 2002 - 2007
Consolidation process of the Bundesbank:
General remarks on strategic planning and strategic management
Strategic framework
Strategy development
First strategy cycle 2002 – 2007: structural reform
Strategy cycle 2008 – 2012: profile and consolidation
Where are we now?
Agenda
Stablefinancial and
monetarysystem
PRICESTABILITY
in the euro area
FunctioningofGerman creditand financial
servicesinstitutions
Deutsche Bundesbank
Safeguarding stability
Security and efficiency of payment and
settlementsystems
Efficientcash
supply andinfrastructure
Research / economic policy analysis
Cashmanagement
Financial andmonetarysystem
Monetarypolicy
Bankingsupervision
Paymentsystems
International cooperation / membership in international bodies
Stablefinancial and
monetarysystem
PRICESTABILITY
in the euro area
Functioning ofGerman creditand financial
servicesinstitutions
Deutsche Bundesbank
Safeguarding stability
Security and efficiency of payment and
settlementsystems
Efficientcash
supply andinfrastructure
Research / economic policy analysis
Cashmanagement
Financial andmonetarysystem
Monetarypolicy
Bankingsupervision
Paymentsystems
International cooperation / membership in international bodies
Five core business areas
Strategy development process
Decision by Executive Board
Specifiyingoperat. objectives, activities and indicators
Analysis of SWOT-results and specification of strat. objectives
Strategic evaluation based on SWOT analysis
SWOT-workshops with all 14 departments
Information gathering
High-level work-shops to analyse the SWOT-results, determine strategic intents and objectives, arrange objectives in strategy map
Specifying operational objectives
Working out strategic activities as well as indicators to controll the implementation of the strategy
Executive Board discussions and decisions
1 2 43
Analysis of
Strengths WeaknessesInternalperspective
ThreatsOpportunitiesExternalperspective
SWOT analysis
Strategy development process
Decision by Executive Board
Specifiyingoperat. objectives, activities and indicators
Analysis of SWOT-results and specification of strat. objectives
Strategic evaluation based on SWOT analysis
SWOT-workshops with all 14 departments
Information gathering
High-level work-shops to analyse the SWOT-results, determine strategic intents and objectives, arrange objectives in strategy map
Specifying operational objectives
Working out strategic activities as well as indicators to controll the implementation of the strategy
Executive Board discussions and decisions
1 2 43
Low priority Selective attention
Only important in thecase of deviations(exceptional report,diagnostic element)
The few decisive objectives on which the success of the strategy depends
Would accomplishing the objective really
represent a decisive step towards long-
term success of the Bank?
Strategic relevance
Is extra effort necessary to accomplish or defend the objective in the face of resistance?
Strategic need for action
Analysis of SWOT results and specification of objectives - strategic filter
Strategy map
Safeguarding stability
Addr
esse
esFi
nanc
es
Systematically reinforce influence at international levels
Proc
esse
s
Efficient cash supply and
infrastructure
Ensure targeted resource management
Pote
ntia
litie
s
Price stability in the euro
area
Stability and functioning of credit and financial services
institutions in Germany
Security and efficiency of payment and
settlement systems
Stable financial and monetary
system
Continuouslycombat
bureaucracy
Network knowledge Bank-
wide to exploit synergies
Optimise operational
cost-efficiency
Intensify research and
analysis
Tailor supply of services more
closely to demand
Communicate clearly internally and externally
Publicly comment on economic
topics
Offer attractive, performance-
oriented employment conditions
Embrace and actively manage change
process
Foster adequate pool of
knowledge and know-how
Strategy development process
Decision by Executive Board
Specifiyingoperat. objectives, activities and indicators
Analysis of SWOT-results and specification of strat. objectives
Strategic evaluation based on SWOT analysis
SWOT-workshops with all 14 departments
Information gathering
High-level work-shops to analyse the SWOT-results, determine strategic intents and objectives, arrange objectives in strategy map
Specifying operational objectives
Working out strategic activities as well as indicators to controll the implementation of the strategy
Executive Board discussions and decisions
1 2 43
Specifying “operational objectives” –these are subordinated objectives which describe the means to achieve a main objective.
Strategy takes a step forward becoming real.
Stärken(Strengths)
Stärken(Strengths)
Schwächen(Weaknesses)
Schwächen(Weaknesses)
InternePerspektive
Risiken(Threats)Risiken
(Threats)Chancen
(Opportunities)Chancen
(Opportunities)ExternePerspektive
Analyse der
Refining strategic objectives
Safeguarding stability
Add
ress
ees
Fina
nce
Proc
esse
s
Cash Management
Pote
ntia
ls
Monetary policy Banking supervision
Cashless payments
Financial and monetary system
Safeguarding stability
Add
ress
ees
Fina
nce
Proc
esse
s
Cash Management
Pote
ntia
ls
Monetary policy Banking supervision
Cashless payments
Financial and monetary system
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
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.
• 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
Indicators for achieving objectives
Strategy development process
Decision by Executive Board
Specifiyingoperat. objectives, activities and indicators
Analysis of SWOT-results and specification of strat. objectives
Strategic evaluation based on SWOT analysis
SWOT-workshops with all 14 departments
Information gathering
High-level work-shops to analyse the SWOT-results, determine strategic intents and objectives, arrange objectives in strategy map
Specifying operational objectives
Working out strategic activities as well as indicators to controll the implementation of the strategy
Executive Board discussions and decisions
1 2 43
Strategy 2012
Guiding ideas
raising the Bank´s profile
continuing the consolidation process
Guiding ideas of new strategy
The aim is…… „to raise the Bundesbank’s profile as a stability-oriented, independentinstitution both in Germany and within the European System of CentralBanks.“ (annual report)
Core business area “operational objectives”Monetary Policy Intensifying research in monetary policy
Conducting more operational tasks for ESCB in relevant business areas
Financial and Monetary System Intensifying economic research High profile in international academic debates
Banking Supervision Extending analysis instruments (eg stress testing) Further development of regulatory framework
Payment Systems Promoting European integration process Leading position in liquidity provision and transfer
Cash Management Bundesbank will remain in cash cycle Bundesbank strives for a 50% share in banknote
processing Promoting ESCB recycling framework
Refining strategic objectives – Examples for further oper. objectives
Strategy development… raising the bank’ s profile
Perspective: Addressees
Strategic objective:
Example for strategic objectives, operational objectives and activities
Price stability in the Euro area
Description of objectiveOur primary objective is to maintain price stability.The President of the Deutsche Bundesbank is a member of the GoverningCouncil of the European Central Bank (ECB) and takes part in themonetary policy decision-making of the Eurosystem. The Bundesbankalso contributes to monetary policy with in-depth academic analyses ofmacroeconomic developments and sound research results. Another of theBundesbank’s functions is to advise the Federal Government.Furthermore, the Bundesbank ensures that the monetary policy measuresagreed are implemented in what is the largest economy in the EuropeanUnion. It explains the aims of the single monetary policy of the Eurosystemto the German public and thereby promotes awareness of the need forprice stability.
Strategic objective:
Example for strategic objectives, operational objectives and activities
Price stability in the Euro area
Operational objectives (development goals) – Example –
The Bundesbank plays a key role in the implementation of monetary policyfor the euro area and therefore aims to take on joint operational tasks. Itwill also contribute to the further development of efficient instruments andmanagement procedures in this context.
Activities – Example –
Assessment of collateral without market price (no ABS) for the Eurosystem (Valuation hub).
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 2012.
•Safeguarding attractive conditions of employment
Refining strategic objectives – further decisions on “operational objectives” by the Executive Board
Strategy development… continuing the consolidation process
Number of core staff (excluding trainees)
12.133 11.50210.391 9.800
14.346
10.97213.194
14.817
9.000
0
5.000
10.000
15.000
20.000
End of2001
End of2002
End of2003
End of2004
End of2005
End of2006
End of2007
Target2008
... Target end of2012
… continuing the consolidation process
General remarks on strategic planning and strategic management
Strategic framework
Strategy development
Where are we now?
Agenda
Strategic orientation
vision, strategy
Deutsche Bundesbank
Stabilität sichern
Forschung / wirtschaftspolitische Analyse
Stabiles Finanz- und Währungs-
system
PREIS-STABILITÄT
im Euro-Raum
Funktionsfähigkeitder deutschen
Kredit- und Finanzdienst-
leistungsinstitute
Sicherheit und Effizienz von
Zahlungsverkehrs-und Abwicklungs-
systemen
Effiziente Bargeld-
versorgung und– infrastruktur
Bargeld Finanz- undWährungssystem Geldpolitik Bankenaufsicht Unbarer
Zahlungsverkehr
Internationale Kooperation / Mitgliedschaft in internationalen Gremien
Deutsche Bundesbank
Stabilität sichern
Forschung / wirtschaftspolitische Analyse
Stabiles Finanz- und Währungs-
system
PREIS-STABILITÄT
im Euro-Raum
Funktionsfähigkeitder deutschen
Kredit- und Finanzdienst-
leistungsinstitute
Sicherheit und Effizienz von
Zahlungsverkehrs-und Abwicklungs-
systemen
Effiziente Bargeld-
versorgung und– infrastruktur
Bargeld Finanz- undWährungssystem Geldpolitik Bankenaufsicht Unbarer
Zahlungsverkehr
Internationale Kooperation / Mitgliedschaft in internationalen Gremien
Specify measures/ tasks/activities to
achieve the objectives
1. Step 2. Step 3. Step 4. Step 5.Step
Determine indicators and target values
Specification of strategic objectives,
operational objectives and strategy map
Stabilität sichern
Ad
ress
aten
Fina
nzen
Einfluss auf internationaler und auf ESZB-Ebene gezielt stärken
Pro
zess
e
Effiziente Bargeldversorgu
ng und -infrastruktur
Aufgabenadäquate Ressourcensteuerung
sicherstellen
Pot
enzi
ale
Preisstabilität im Euro-Raum
Stabilität u. Funktionsfähigkeit der Kredit- u.
Finanzdienstleistungsinstitute in Deutschland
Sicherheit u. Effizienz v. Zahlungsverkehrs-
u. Abwicklungs-systemen
Stabiles Finanz-und
Währungssystem
Bürokratieabbau langfristig sicherstellen
Wissensvernetzte Bank zur Hebung
von Synergien
Wirtschaftlichkeit der
Leistungserstellung optimieren
Forschung und Analyse stärken
Nachfrage-steuerung von
Support-leistungen stärken
Klare Kommunikation nach Innen und Außen
Kostenorientierte Preisge-staltung bei Dienstleis-
tungen, die keine hoheit-lichen Aufgaben betreffen
u. die zum Teil auch v. Dritten erbracht werden
Zu wirtschaftlichen Themen Stellung
nehmen
Leistungsorientierung und attraktive
Beschäftigungsbe-dingungen
Veränderungsprozess annehmen und aktiv
gestalten
Anforderungs-gerechte
Qualifikation aufrecht erhalten
Stabilität sichern
Ad
ress
aten
Fina
nzen
Einfluss auf internationaler und auf ESZB-Ebene gezielt stärken
Pro
zess
e
Effiziente Bargeldversorgu
ng und -infrastruktur
Aufgabenadäquate Ressourcensteuerung
sicherstellen
Pot
enzi
ale
Preisstabilität im Euro-Raum
Stabilität u. Funktionsfähigkeit der Kredit- u.
Finanzdienstleistungsinstitute in Deutschland
Sicherheit u. Effizienz v. Zahlungsverkehrs-
u. Abwicklungs-systemen
Stabiles Finanz-und
Währungssystem
Bürokratieabbau langfristig sicherstellen
Wissensvernetzte Bank zur Hebung
von Synergien
Wirtschaftlichkeit der
Leistungserstellung optimieren
Forschung und Analyse stärken
Nachfrage-steuerung von
Support-leistungen stärken
Klare Kommunikation nach Innen und Außen
Kostenorientierte Preisge-staltung bei Dienstleis-
tungen, die keine hoheit-lichen Aufgaben betreffen
u. die zum Teil auch v. Dritten erbracht werden
Zu wirtschaftlichen Themen Stellung
nehmen
Leistungsorientierung und attraktive
Beschäftigungsbe-dingungen
Veränderungsprozess annehmen und aktiv
gestalten
Anforderungs-gerechte
Qualifikation aufrecht erhalten
Decision by Executive Board
and rolling planning process
Where are we now?
External communication:
Where are we now? – external communication
five pillars of theBundesbank to safeguardstability:
public
Internal communication:
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
Regional OfficesService Centresseminar
events:“Animating
Strategy 2012 ” Branches
Where are we now?
February/MarchBudget/performance analysis for preceding period
August – DecemberOperational planning for forthcoming year (incl. planning of needed financial and personal resources)
Integration of strategic and operational
management in annual
planning process
Connecting the strategy with the operational management systems
Where are we now?
April - JuneNEW: Strategy-Review: Evaluation of success of defined operational measures regarding strategic goals, if necessary strategy update
Role of strategic planning unit
The strategic planning unit …
• … supports Executive Board in planning the strategy for the Bundesbank andin reaching organisational objectives
• … clearly communicates strategy and objectives internally and externally
• … makes efficiency analysis to safeguard and improve quality andminimise 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 forforthcoming year
Using our reports as a basis, Executive Board decides on long-termorientation of the Bundesbank.
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