1. Enhancing corporate efficiency and effectiveness at the ECB Antonio J. Arrieta DG Human Resources, Budget and Organisation European Central Bank 4th Controlling Conference of International Public Organisations CERN, 31 May – 1 June 2010

2. 2 EXERCISES THE ECB’s PERFORMANCE MANAGEMENT FRAMEWORK TOOLS OBJECTIVES, TASKS AND STRUCTURE OF THE ECB Enhancing corporate efficiency and effectiveness at the ECB

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5. 5 ECB: Organigram

6. 6 The ECB in Motion exercise Timeline –Started: October 2003 –Completed: August 2004 Results –37 measures implemented (84%) –4 measures partially implemented (9%) –3 measures not implemented (7%) Measures implemented on –Staff empowerment; –Staff enabling and performance rewarding; and –Creating an open co-operative environment with a minimum of bureaucracy.

7. 7 The ECB in Motion exercise Empower staff Enable staff and reward performance Create an open co-operative environment with a minimum of bureaucracy FromToFromToFromTo Decisions insufficiently Delegated insufficient Accountabilit y Approval at lowest adequate level Management quality and skills perceived as under-developed Management quality and skills meet high standards Unclear responsibilities of and cooperation between business units Responsibilities and co-operation of business units clear Staff work is needlessly altered in detail Appreciate individual contributions Clear direction on goals, priorities, and performance missing Staff aware about goals, priorities, own objectives and expected results Limited access to existing information Easy and general access to existing information Inefficiency of existing rules, processes and design of forms Efficient rules, processes and design of forms Financial compensation ok but recognition not performance based Overall remuneration package reflects performance Weak vertical communication and use of appropriate communication tools Quick and sufficient vertical cascading down of information and interaction Few find the overall time spent at work appropriate Balance work and private life Disappointment over limited professional development opportunities Clear professional development opportunities that suit both ECB and staff member Silo mentality and lack of trust: no open and effective communication within and between areas ECB interest to prevail. Open and effective communication within and between business areas

8. 8 The Zero Based Budget exercise Timeline –Started: July 2004 –Completed: December 2005 Context –Reinforced focus on performance management; –Strategic reorientation, effectiveness and efficiency review; and –Demand for comprehensive (vs. incremental) assessment of resource requirements.

9. 9 The Zero Based Budget exercise ObjectivesAchievements  Assess the Effectiveness of all 15 BAs, (“Do we do the right things”?)  Assess the Efficiency with which these tasks are performed (“Do we do the things right”?)  Identify opportunities for improvement of Effectiveness and Efficiency (e.g., elimination of task redundancies, exploitation of cross-divisional synergies)  Identify opportunities for resource reallocation within and across BA + Increased transparency on volume and quality of ECB deliverables as well as on workload and productivity + Informal/implicit management evaluation - No formal analysis / understanding of customer requirements & satisfaction - Internal self-assessments without external benchmarks + Start of new era: Historical end of resource growth >10%; increased awareness of effectiveness & efficiency + Concrete decisions and improvements on selected BA-specific topics + Some significant ECB-wide improvements (DG- H, CPO, ORM, Jurist linguists, decentralised IT) - Only 3% FTE “savings” - No significant rebalancing of historical 50/50 mix between support and core functions

10. 10 Information Systems Strategic Review ObjectivesAchievements  Establishment of a business-driven IS strategy  Further assessment of business requirements:  Business demand and emerging IT trends.  IT governance, architecture and management processes.  Information security, business continuity and compliance.  Development, maintenance and operations.  Skills and sourcing.  Reviewed IS strategy governance and control framework.  Reviewed strategic IS plan, aligned with the projects portfolio.  New IS organisational structure. Timeline –Started: July 2008 –Completed: December 2009

11. 11 Organisational Development Projects (ODPs) An ODP is a structured organisational initiative for a given business unit, process or function Parameters –An ODP delivers an assessment and subsequent recommendations on a wide range of topics –DG-H jointly with relevant business area (BA), establishes a proposal for the high-level scope, the objectives and the modalities of the project –The ODP is conducted in 4 phases: Diagnosis analysis; Solution finding and design; Reporting and decision; Implementation

12. 12 Visum A DG/H Visum is a recommendation to the Executive Board, considering the impact of proposed activities on (financial and/or human) resources and organisation Parameters –Based on well prepared business cases –Focus on resources, organisational aspects and risks and makes recommendations to the Executive Board –Four eyes principle

13. 13 The ECB Corporate Performance Management Framework Set of instruments at the disposal of the EB and BA heads to provide the ECB with direction, to measure progress in achieving its objectives and to assess its functioning: –High level priorities for the medium term; –Strategic directions for each business area; –Operational objectives for each business area; –Annual budget objectives for each business area; –Key Performance Indicators; and –Annual work programmes for each business area.

14. 14 Performance management Which specific challenges is the BA facing? What are therefore the key objectives of the BA? How do we know that objectives are achieved? What are the medium to long term priorities of the Organisation? What is the particular focus of this year, within those priorities? Which specific outputs will be delivered by a BA and its divisions next year? With which workforce? Who will be responsible and accountable for delivering what when? How do individuals specifically contribute to ECB, function, BA and division objectives? ECB Business Areas & Divisions Individual staff Quantitative objectives Qualitative objectives Performance Appraisals Strategic Outlines MT Plan & Budget Work Programmes President’s Letter Key Performance Indicators (KPIs)

15. 15 20072008200920102011 ≤ 2006 STRATEGIC PLANNING PERFORMANCE MANAGEMENT BUDGET CYCLE STRATEGIC OUTLINES, KPIs and 2009 TARGETS STRATEGIC OUTLINES, KPIs and 2009 TARGETS PRESI- DENT’s LETTER STRATEGIC OUTLINES 2007 STRATEGIC OUTLINES 2007 PRESI- DENT’s LETTER STRATEGIC OUTLINES 2008 STRATEGIC OUTLINES 2008 2008 KPIs AND TARGETS STRATEGIC OUTLINES, KPIs and 2010 TARGETS STRATEGIC OUTLINES, KPIs and 2010 TARGETS ECB BUDGET 2006 YEAR-END EXERCISE 2007 MID YEAR REVIEW 2008 BUDGET 2007 KPIs AND TARGETS (enabling BAs) 2007 KPIs AND TARGETS (enabling BAs) ECB BUDGET 2005 YEAR-END EXERCISE 2006 MID YEAR REVIEW 2007 BUDGET ECB BUDGET 2007 YEAR-END EXERCISE 2008 MID YEAR REVIEW 2009 BUDGET ECB BUDGET 2008 YEAR-END EXERCISE 2009 MID YEAR REVIEW 2010 BUDGET ECB BUDGET 2009 YEAR-END EXERCISE 2010 MID YEAR REVIEW 2011 BUDGET Evolution of the ECB’s PMF STRATEGIC OUTLINES, KPIs and 2012 TARGETS and 2012 WORK PROGRAMMES of the BUSINESS AREAS STRATEGIC OUTLINES, KPIs and 2012 TARGETS and 2012 WORK PROGRAMMES of the BUSINESS AREAS ECB BUDGET 2010 YEAR-END EXERCISE 2011 MID YEAR REVIEW 2012 BUDGET 2011 WORK PROGRAMMES of the BUSINESS AREAS 2011 WORK PROGRAMMES of the BUSINESS AREAS STRATEGIC OUTLINES, KPIs and 2011 TARGETS STRATEGIC OUTLINES, KPIs and 2011 TARGETS

16. 16 The “BEE approach” Challenges & Objectives PROCESS OUTCOME (Impact on Customers/ Stakeholders) Results Performance BUDGET EFFICIENCY EFFECTIVENESS INPUT (Resources) OUTPUT (Products and services delivered)

17. 17 Efficiency and Effeciveness at the ECB’s PMF in 2010 54 Challenges for the 15 BAs 110 Objectives for the 15 BAs 181 KPIs (not including KPIs internal to the Business Areas) –107 on Efficiency and Effectiveness; –26 on Human Resources; –21 on Communication; –17 on Eurosystem issues; –5 on Financial Stability; –5 on Miscellaneous issues. Financial Stability 3% Eurosystem 9% Miscellaneous 3% Communication 12% Human Resources 14% 59% Efficiency and Effectiveness

18. 18 SMART targets to FABRIC KPIs Define FABRIC KPIs –Focused: on the objectives and in a limited number of KPIs for preventing information overload. –Appropriate and useful for the addressees of the information. –Balanced, providing an overall picture covering all relevant aspects of the objective and preventing perverse effects. –Robust enough to enable comparison over time. –Integrated in the organisation (budget cycle, personal performance management, etc) –Cost-effective, minimising administrative burden and keeping bureaucracy at minimum. Set SMART targets for the KPIs –Specific to the KPI/objective. –Measurable, always a numeric value (often, with a logical operator). –Achievable, setting realistic neither too low and not effective nor too high or demotivating. –Responsible, naming an operational owner and a managerial owner. –Time-bound, based on an exercise but with the medium-term perspective of the “optimal target”.

19. Thank you very much for your attention