Monitoring Organisation — Introduction
Category: Strategy Implementation
Necessity of a comprehensive and logical framework
To be efficient, the implementation of a new strategy has to be done in a framework detailing all the aspects of the monitoring. This framework is defined by the head-office, which then has to ensure that it is correctly used by the branches and the support functions.
Stress the importance of instructing staff for reporting purposes. Poor reporting has always caused great danger for banks. Also, poor reporting has often come from ill-implemented reporting structures and poor understanding from top management.
Different levels and needs of monitoring
The first step of the framework is to recognise that monitoring needs are not the same at all the levels of the banks. Details and frequency of the reporting, for instance, are not necessarily the same for the bank chief financial officer and for the commercial manager of a bank. A precise definition of the different needs and of the adequate monitoring tools for each of them is a prerequisite work.
Centralisation versus decentralisation
The bank, depending on its own business model, will allocate functions and responsibilities to, on one side, the head-office and, on the other side, the decentralised activities (branches, product lines).
Delegation of objectives and responsibilities
An efficient organisation will not exist without a clear definition and allocation of objectives and responsibilities. Managers need to know the range of their activities and responsibilities to work in an effective way. Ambiguities could induce an unproductive competition within the different activities, and no one feeling responsible in case of a problem.
Delegation of authorisations
Any type of activity, and especially the banking ones that could generate a high level of risk, has to be done within authorisations precisely established. These authorisations are determined by the head-office and then delegated to the different activities.
Procedures
Similarly, any activity has to be run following precise procedures, covering the whole range of process to be done (such as opening an account, doing the back-office operations, checking the clients accounts, following the risks, doing the reporting). These procedures will also be established at the head-office level, to keep a good level of homogeneity within the group.
Internal control and audit missions
Establishing a monitoring framework would be of no interest if it were not used fully and adequately within the whole bank. Internal control and audit departments are here to help the head-office and the branches to ensure that everything is in line with the framework and well under control.