“Beyond Budgeting” - Juergen Daum

The Organizational Structure
Customers
•
•
Focus
Focus
on
on
customer,
customer,
not
not
on
on
products
products
•
•
All
All
customers
customers
“belong”
“belong”
to
to
a
a
specific
specific
branch
branch
•
•
Customer
Customer
profitability
profitability
is
is
permanently
permanently
monitored
monitored
567 Branch
Managers
•
•
Decision-making
Decision-making
about
about
customers,
customers,
solutions,
solutions,
and
and
prices
prices
•
•
Responsibility
Responsibility
for
for
branch
branch
personnel
personnel
and
and
results
results
•
•
Their
Their
principal
principal
key
key
figure
figure
is
is
cost/income
cost/income
10 Regional
Managers
CEO
Product, Companies,
Treasury, IT, etc.
•
•
Decision-making
Decision-making
about
about
regional
regional
strategy
strategy
(such
(such
as
as
concerning
concerning
the
the
opening
opening
and
and
closure
closure
of
of
branches)
branches)
•
•
Responsibility
Responsibility
for
for
support
support
units
units
•
•
Their
Their
aim
aim
is
is
to
to
beat
beat
the
the
overall
overall
ROE
ROE
of
of
the
the
bank
bank
and
and
that
that
of
of
the
the
other
other
regions
regions
•
•
Definition
Definition
of
of
the
the
values
values
and
and
principles
principles
of
of
the
the
company
company
•
•
Development
Development
of
of
an
an
environment
environment
of
of
top-down
top-down
challenges
challenges
and
and
local
local
stretch
stretch
targets
targets
•
•
Measurement
Measurement
of
of
the
the
bank’s
bank’s
ROE
ROE
compared
compared
to
to
that
that
of
of
other
other
Scandinavian
Scandinavian
banks
banks
• Streamlined HQ (300 employees in 2000, compared to 1500 in 1970)
• Ratio of 0.5 HQ employees per branch (compared to average of 5
employees per branch among the bank’s competitors)
© SAP AG 2002, SAP HR & Financial Kongress 2002, D7 23
The Management and Controlling System at
Svenska Handelsbanken
•No formal strategy process
•No year plan or budgets
1. Clear values form the framework
•Budgeting replaced by an accounting
and information system
2. Management process on informal basis: Top managers meet in monthly
meetings without an agenda, discussions are based on the profit center figures.
Aim: To exchange information and ideas and to discuss possible measures to correct
negative trends
3. Performance measurement and incentive system: Performance is always
measured in relation to the competition. Measurement involves few key figures:
ROE (group), ROE + cost / income (region), cost / income + result per employee
(branch). Annual competition at regional level for the branch with best results.
Capital is allocated to the regions annually on the basis of the performance of each
region. Branch performance constantly monitored, involving all employees. Bonuses
are not awarded to individual employees, but are determined instead on the basis of
group performance.
© SAP AG 2002, SAP HR & Financial Kongress 2002, D7 24
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