Rolling
                                        Culture and
                                                             f...
Agenda


    1.Company presentation
    2. How we started
    3. Four implementation projects
      1. Rolling forecasts
 ...
SpareBank 1 Gruppen AS – the structure
                                              SpareBank 1
       SpareBank 1     Sp...
The SpareBank 1 Alliance

     The SpareBank 1 Alliance, key figures (31.12.08)

    - 20 independent savings banks
      ...
The SpareBank 1 Alliance has a strong position in Norway
2008

                                Retail market – Number of c...
The SpareBank 1 Alliance
    Strategic Platform

                       • Maximizing shareholder value and value created f...
Agenda


    1. Company presentation
    2.How we started
    3. Four implementation projects
      1. Rolling forecasts
 ...
Change starts at the top of the organization

                           • Eldar Mathisen was hired as new
               ...
Analyzing the current situation
        - Project launched by top management

                                         • T...
Main conclusion




                    FORECAST
                                          • Universal tools, like the
   ...
Convincing the board of directors
 - “By separating processes you’re letting go of illusive control and
 gain actual contr...
Informing the organization
 Implementing Dynamic Management is a big step and it will take time




                      ...
Agenda


 1. Company presentation
 2. How we started
 3.Four implementation projects
     1. Rolling forecasts
     2. Ben...
Rolling
                                          forecasts
                    Culture and
                    organizati...
The budget column has not been replaced by
 rolling forecasts
                                                            ...
Rolling forecasts – process

     • Rolling 12 months forecast each quarter

     • Due to owners that still operate with ...
A one way process



                                     3

                                     2

                     ...
How should we follow up on a forecast?

                                            Q4
                                   ...
Action plans

 1. Does the forecast indicate that we will not reach our long-term goals?

 2. Analyze – can or should we t...
Rolling
                         Culture and
Benchmarking                                  forecasts
                     ...
League tables
                   F    A GD      Pts
 Man Utd           61 - 23   38   77
 Liverpool         66 - 26   40  ...
Reaching your long-term goal

               TARGET
Q1                              •   If your long-term
                ...
Reaching your long-term goal

               TARGET
Q4                              •   If your long-term
                ...
From plenty of goals, targets and activities to
            few and ambitious goals


                           Kunden op...
Breaking down a long-term goal


                                                                         The most
       ...
Rolling
                              Culture and
                                                      forecasts
        ...
New bonus and incentive program
 - Fixed maximum amount to all employees



 Group level:                               Ma...
Relative performance:
       Avoiding negotiation of short-term fixed targets and
       dysfunctional behavior to meet th...
Culture and
                                                    Rolling
                          organization
Culture and...
The devolved leadership principles of Beyond
 Budgeting as a starting point

1. Customers        Focus everyone on their c...
New management policy = three words




      Responsibility

       Involvement


     Business insight



31
Business insight

                         • Strategic information should be transparent

                         • Empha...
Involvement



                        •   Involve middle management and other
                            employees in de...
Responsibility

                      •   Delegate responsibility to employees

                      •   Processes for au...
Agenda


 1. Company presentation
 2. How we started
 3. Four implementation projects
     1. Rolling forecasts
     2. Be...
Some lessons we have learned

 1. Top management involvement is crucial

 2. External speakers are great motivators

 3. L...
Agenda


 1. Company presentation
 2. How we started
 3. Four implementation projects
     1. Rolling forecasts
     2. Be...
How can we create a uniform corporate
               governance?
                                                         ...
The Balanced Scorecard
 - Do we need it?


                          • Does it add value?

                          • If ...
The financial crisis
                  Index showing the value of subprime mortgages
                                     ...
Our ownership structure, the SpareBank 1
 Alliance, presents an extra challenge

                                         ...
quot;....a continuous journey of learning and adaptionquot;
                                    Jeremy Hope et.al, BBRT


...
Agenda


 1. Company presentation
 2. How we started
 3. Four implementation projects
     1. Rolling forecasts
     2. Be...
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Presentation and case on Beyond Budgeting in London April 29th 2009 by Sigurd Aune CFO SpareBank 1 Gruppen

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Beyond Budgeting Round Table (BBRT). Konserndirektør Sigurd Aune holdt en presentasjon i London om SpareBank 1 Gruppen og Beyond Budgeting.

The SpareBank 1 group’s road to a new corporate governance based on the principles of Beyond Budgeting.

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Presentation and case on Beyond Budgeting in London April 29th 2009 by Sigurd Aune CFO SpareBank 1 Gruppen

  1. 1. Rolling Culture and forecasts organization Dynamic Management Dynamic Tekst Management The SpareBank 1 group’s road to a new corporate governance based on the principles of Beyond Budgeting Benchmarking Bonus and and scorecards incentives Sigurd Aune, CFO BBRT, London 29 April 2009
  2. 2. Agenda 1.Company presentation 2. How we started 3. Four implementation projects 1. Rolling forecasts 2. Benchmarking and scorecards 3. Bonus and incentives 4. Culture and organization 4. What have we learned so far? 5. Challenges ahead 6. Contact information 2
  3. 3. SpareBank 1 Gruppen AS – the structure SpareBank 1 SpareBank 1 SpareBank 1 Sparebanken Samarbeidende LO Nord-Norge (19,89 %) SR-Bank SMN Hedmark Sparebanker (19,89 %) (9,29%) (19,89 %) (19,89 %) (11,14%) SpareBank 1 Gruppen AS SpareBank 1 SpareBank 1 ODIN Oslo Skadeforsikring Forvaltning Alliance Co-operation Programme (100%) (100%) (100%) SpareBank 1 SpareBank 1 SpareBank 1 Boligkreditt Medlemskort Livsforsikring Focus areas (100%) (100%) – Brand EiendomsMegler 1 – Technology BNbank – Competence Argo First – Common processes and use of best practices Securities Securities (Bank owned (75%) – Purchasing (24,5%) activities) Regional competence centers – Payment services: Trondheim SpareBank 1 – Credit: Stavanger Gruppen Finans Holding AS – Training: Tromsø (100%) SpareBank 1 Actor Fordrings- SpareBank 1 Factoring forvaltning LTO (100%) (100%) (100%) Verdigjenvinning (100%) 3
  4. 4. The SpareBank 1 Alliance The SpareBank 1 Alliance, key figures (31.12.08) - 20 independent savings banks - Including 7 exchange listed primary capital certificate banks - Co-ownership of two commercial banks (BNbank and Bank 1 Oslo) – Total assets: ca NOK 583 billion (incl. BNbank) – 352 branches across Norway – 378 distribution offices – Total no. of employees: ca 6,300 – Internet customers: ca 530,000 SpareBank 1-banks: SpareBank 1 Nord-Norge, SpareBank 1 SMN, SpareBank 1 SR-Bank, Sparebanken Hedmark, SpareBank 1 Ringerike, Rygge-Vaaler Sparebank, SpareBank 1 Hallingdal, SpareBank 1 Buskerud-Vestfold, SpareBank 1 Gran, SpareBank 1 Gudbrandsdal, SpareBank 1 Jevnaker Lunner, SpareBank 1 Nordvest, Halden SpareBank 1, Sparebanken Telemark, Modum SpareBank 1, SpareBank 1 Lom og Skjåk, SpareBank 1 Nøtterøy og Tønsberg, SpareBank 1 Volda Ørsta, SpareBank 1 Hardanger, SpareBank 1 Kvinnherad, Bank 1 Oslo and BNbank. Product companies in SpareBank 1 Gruppen AS: SpareBank 1 Livsforsikring, SpareBank 1 Skadeforsikring, ODIN Forvaltning, Argo Securities (75%), First Securities (24,5 %), SpareBank 1 Gruppen Finans Holding – a holding company for a subgroup consisting of SpareBank 1 Factoring, Actor Fordringsforvaltning, SpareBank 1 LTO and Verdigjenvinning. Other enterprises owned by the SpareBank 1-banks: SpareBank 1 Boligkreditt, BNbank and EiendomsMegler 1. 4
  5. 5. The SpareBank 1 Alliance has a strong position in Norway 2008 Retail market – Number of customers * Number of branches * 2,50 400 2,30 352 350 2,00 2,00 300 250 1,50 210 Million 189 200 1,00 0,85 150 0,75 125 0,55 100 0,50 55 42 0,21 50 26 0,10 0,00 0 DnB NOR SpareBank 1 Storebrand Terra-Grp. Nordea N. Danske/Fokus Handelsbanken SpareBank 1 DnB NOR Terra-Grp. Nordea N. Danske/Fokus Storebrand Handelsbanken N. N. Market shares Total assets (NOK billion) 1832 25,0 % 1800 20,3 % 1600 19,4 % 20,0 % 19,1 % 17,5 % 17,4 % 17,3 % 1400 16,4 % 15,9 % 15,4 % 15,4 % 14,6 % 1200 15,0 % 13,8 % 12,8 % 12,6 % NOK bn. 12,3 % 12,2 % 12,0 % 11,7 % 1000 10,2 % 10,0 % 10,0 % 9,9 % 9,8 % 9,8 % 10,0 % 800 583 549 600 5,0 % 382 400 198 190 172 200 0,0 % 2002 2004 2005 2006 2007 2008 0 DnB NOR SpareBank 1 Nordea N. Storebrand Fokus Bank *** Terra-Grp.** Handelsbanken N.*** Loans - retail market Loans - corporate market P&C insurance ODIN mutual funds * Numbers as of 2007 ** Numbers as of 3Q 2008 *** Estimate based on average lending growth 5 Sources: Accounting reports, Statistics Norway (SSB), Norwegian Financial Services Association (FNH), Norwegian Mutual Fund Association (VFF).
  6. 6. The SpareBank 1 Alliance Strategic Platform • Maximizing shareholder value and value created for the market regions Purpose covered by the banks by maintaining a regional structure of independent banks – through: Efficiency Local Market Focus Cornerstones • • As a group, the banks seek to increase Each bank continues to maintain its link their efficiency as compared to with its local community by: competitors by: - Keeping its own name and legal - Economies of scale identity - Mutually increasing critical core - Taking advantage of its proximity competencies to the local market - Sharing development investments ALLIANCE PROGRAMME SEPARATE LEGAL IDENTITIES COMMON SUPERBRAND 6
  7. 7. Agenda 1. Company presentation 2.How we started 3. Four implementation projects 1. Rolling forecasts 2. Benchmarking and scorecards 3. Bonus and incentives 4. Culture and organization 4. What have we learned so far? 5. Challenges ahead 6. Contact information 7
  8. 8. Change starts at the top of the organization • Eldar Mathisen was hired as new CEO starting June 2007 • He was acquainted with many of the Beyond Budgeting principles from his experience at Sandsvær Sparebank • Group economy invited external speakers to top management meetings; including Lennart Francke, Jan Bergstrand and Bjarte Bogsnes • Top management developed interest in the Beyond Budgeting principles 8
  9. 9. Analyzing the current situation - Project launched by top management • The trend had already been discovered – the budget was outdated by February 1200 1000 • The project’s main purpose was to 800 investigate a more dynamic model MNOK 600 for corporate governance 400 • It was important to see how 200 decisions could be made closer to 0 the customers 05 07 5 5 7 7 6 05 07 05 06 06 07 6 05 6 07 r. 0 r. 0 .0 .0 l.0 .0 .0 g. v. g. n. n. c. p. c. b. b. ct ct ay ar Ju Ap Ap Au No Au Ju Ju De Se De Fe Fe O O M M Budget Pre-tax profit • How could we as an organization be more ambitious? 9
  10. 10. Main conclusion FORECAST • Universal tools, like the (unbiased) GOAL budget, will never quite (desired cover the intended future) purposes satisfactory BONUS (incentive) RESOURCE ALLOCATION (best use of funds available) Budget 10
  11. 11. Convincing the board of directors - “By separating processes you’re letting go of illusive control and gain actual control and flexibility” ”Traditional” Step 1 - Separate Step 2 - Improve budget/plan • Front-loaded • Ambitious Goal • Relative if possible •Goal • Action-based •Forecast • Expected outcome – early warning Forecast •Resource • Both financial & non-financial allocation • Limited detail • No pre-allocation Resource • Projects - decision gates & criteria allocation • Operations - relative KPIs etc. • Monitoring - intervention if needed only ”Same number – ”Different numbers” conflicting purposes” 11
  12. 12. Informing the organization Implementing Dynamic Management is a big step and it will take time • Video presentation to be able to reach all employees • Use of social media to allow feedback from the organization • The most important message we have communicated is: “Continue to do what you’ve always done until you’re being told otherwise” 12
  13. 13. Agenda 1. Company presentation 2. How we started 3.Four implementation projects 1. Rolling forecasts 2. Benchmarking and scorecards 3. Bonus and incentives 4. Culture and organization 4. What have we learned so far? 5. Challenges ahead 6. Contact information 13
  14. 14. Rolling forecasts Culture and organization Rolling forecasts Dynamic Tekst Brutally honest Management Bonus and Benchmarking incentives and scorecards
  15. 15. The budget column has not been replaced by rolling forecasts Change Year To Change Change February from last Date from YTD Rolling from last Figures in MNOK 2009 month 2009 2008 12 months 12 months SpareBank 1 Livsforsikring Additional provisions recognised as income in consolidated accounts ODIN Forvaltning SpareBank 1 Skadeforsikring Bank 1 Oslo EiendomsMegler 1 SpareBank 1 Medlemskort Argo Securities SpareBank 1 Gruppen Finans Holding Correction subsidiaries - pro forma IFRS Net result before tax from subsidiaries Total operating costs holding Net investment charges holding Gains from sale of companies holding Share of associated company Amortisation Pre-tax result Taxes Net result for the period Majority interest Minority interest 15
  16. 16. Rolling forecasts – process • Rolling 12 months forecast each quarter • Due to owners that still operate with a budget, the forecast made in October is 15 months Jan Apr Jul Oct Jan 16
  17. 17. A one way process 3 2 1 • Quick build-up – bottom-up • No immediate time to change, feedback, revision nor negotiation • The manager is responsible for the forecast when it is sent up one level • Forecasts should be built on information already available 17
  18. 18. How should we follow up on a forecast? Q4 Q3 Q2 Q1 ∑ 12 2009 2009 2009 2009 Q1 2009 months Q1 Q4 Q3 Q2 ∑ 12 2010 2009 2009 2009 Q2 2009 months • The forecast created in Q2 2009 should be compared with the forecast created in Q1 2009 • Why did the forecast change? – Why is the result different than what we predicted last quarter? – Have any of the assumptions changed? – What actions can we take – if any? 18
  19. 19. Action plans 1. Does the forecast indicate that we will not reach our long-term goals? 2. Analyze – can or should we take action? 3. If so – what kind of action should we take? 3a. Strategic decisions 3b. Continuous improvement – Meet new competition – Reducing department costs – Diversification – Efficiency improvements – Changes in company portfolio – Innovation – Organization structure – Etc. – Etc. 19
  20. 20. Rolling Culture and Benchmarking forecasts organization and scorecards Dynamic Tekst Daring to be ambitious Management Bonus and incentives Benchmarking and scorecards
  21. 21. League tables F A GD Pts Man Utd 61 - 23 38 77 Liverpool 66 - 26 40 74 • How many football teams have a Chelsea 56 - 20 36 71 budget for the number of goals Arsenal 60 - 32 28 65 they will score in a given Aston Villa 50 - 44 6 55 season? Everton 48 - 36 12 53 Fulham 34 - 28 6 47 • What action does a team falling West Ham Utd 38 - 38 0 45 behind take? Manchester City 53 - 45 8 44 Tottenham 41 - 41 0 44 • How can you advance on the Wigan Athletic 31 - 38 -7 41 table next year? Stoke City 33 - 49 -16 39 Bolton 40 - 51 -11 38 • A league table with competitors Portshouth 35 - 50 -15 37 that are comparable will tell you Blackburn 37 - 55 -18 37 about your company’s real Sunderland 31 - 46 -15 35 performance Hull City 37 - 59 -22 34 Middlesbrough 25 - 49 -24 31 Newcastle 37 - 53 -16 30 WBA 33 - 63 -30 28 21
  22. 22. Reaching your long-term goal TARGET Q1 • If your long-term goal is to win your league, your short- term target is to score more goals than your opponent • There are a number of ways to reach your short-term target • It is therefore crucial to be able to make new plans when changes occur 22
  23. 23. Reaching your long-term goal TARGET Q4 • If your long-term goal is to win your league, your short- term target is to score more goals than your opponent • There are a number of ways to reach your short-term target • It is therefore crucial to be able to make new plans when changes occur 23
  24. 24. From plenty of goals, targets and activities to few and ambitious goals Kunden opplever trygghet, nærhet og en enklere hverdag. 3. God 1. Vekst i avkastning på 2. Vekst i andre 4. Redusert balanse risikojustert inntekter kostnadsprosent kapital (RORAC) 11. Engasjert og interessert i kundens behov 12. Profesjonell 10. Vi snakker 7. Til å stole på 13. Tar rådgivning samme språk relevante 8. 9. Lokal initiativ Tilgjengelighet i engasjert alle kanaler “You can't see the quot;Vi ser ikke skogen for støttespiller 6. Selge mer til 5. Flere kunder hver kunde (nye + beholde) forest for trærquot; bare the trees” 18. God samhandling 14. Økt 15. Flere mellom enhetene kundeaktivitet medarbeidere i salgsrettet 17. Vi har beste 16. Bedre innsikt i arbeid prosesser kundelønnsomhet 20. Tydelige 19. Frigjort tid til krav til kundearbeid rådgivere og ledere Nær og dyktig 21. Yter det ”lille 23. Økt 25. Lederne er ekstra” kundeorientering 22. Tar ansvar gode forbilder i støtte og linje for helheten 26. Engasjerte √ 24. Mer og læringsvillige OK kremmerånd/salgs medarbeidere kultur Må følges opp Må handles/besluttes 24
  25. 25. Breaking down a long-term goal The most GOAL successful bank Greatest TARGET Return on equity Largest growth in improvement in close to average loans and deposits cost/income ratio League table League table League table CHECK 2004 2005 2006 2007 Snitt 2004 2005 2006 2007 Snitt 2004 2005 2006 2007 Snitt Bank 1 Oslo 0 14,4 13,6 18 11,5 Bank 1 Oslo 68,9 74,5 59,9 73,4 69,2 Bank 1 Oslo 7,7 15,3 16,8 8,0 11,9 Hedmark 10,1 14,1 13,9 7,9 11,5 9,5 Hedmark 52,2 49 54,3 56 52,9 Hedmark 9,6 10,3 8,9 9,3 Møre 5,4 10,5 14,8 13,9 11,2 Møre 11,8 13,8 13,5 15,3 13,6 Møre 47 50,4 51,3 48,3 49,3 Sør 10,1 12,4 16,8 17 14,1 Sør 12,2 12,2 10,8 11,0 11,6 Sør 53,3 53,2 54,7 51,6 53,2 Øst 4,7 8,9 16,3 10,9 10,2 15,5 Øst 17,2 24,7 7,0 13,2 55,6 Øst 46,6 57,1 67,8 50,8 Pluss 16,7 17,4 17,6 16,7 17,1 11,7 Pluss 10,5 11,4 13,1 12,0 42,1 Pluss 46 43,3 39,3 39,7 Sogn & Fj. 9,4 11,7 15,1 25,8 15,5 Sogn & Fj. 11,5 11,3 11,2 12,8 11,7 53,9 Sogn & Fj. 52,9 56,1 56,5 50,1 Vestfold 17,7 13,9 11,4 11,3 13,6 Vestfold 12,1 14,2 12,6 11,1 12,5 54,7 Vestfold 54,1 53,5 55,8 55,2 Sandsvær 7,2 28,2 16,7 1,7 13,5 12,6 Sandsvær 13,6 15,8 10,5 10,4 53,8 Sandsvær 55,2 54,7 52,2 53,2 Snitt 9,0 14,6 15,1 13,7 Snitt 12,3 14,2 10,9 11,9 Snitt 52,9 54,6 54,6 53,1 SR-bank 11,8 13,7 25,4 13,4 16,1 SR-bank 19,5 25,5 22,6 16,1 20,9 SR-bank 47,8 45,7 49,9 53 49,1 Midt-Norge 5,3 33,4 16,8 11,4 16,7 Midt-Norge 18,8 22,9 23,6 15,8 20,3 Midt-Norge 48,5 50,1 49,7 52,2 50,1 Nord-Norge 14,8 20,2 22,8 14,6 18,1 Nord-Norge 3,3 9,9 11 8 8,1 Nord-Norge 52,9 51,6 49,2 55,2 52,2 25
  26. 26. Rolling Culture and forecasts organization Bonus and incentives Dynamic Tekst Linked to ambitious goals Management and league tables Benchmarking Bonus and and scorecards incentives
  27. 27. New bonus and incentive program - Fixed maximum amount to all employees Group level: Maximum • Profit sharing • Based on a certain return on equity NOK 16,000 Company level: • Relative performance • Position in league of ambitious goals NOK 34,000 Maximum amount NOK 50,000 27
  28. 28. Relative performance: Avoiding negotiation of short-term fixed targets and dysfunctional behavior to meet the numbers • Bonus is dependent on Example: relative performance in league tables The most GOAL successful bank • The league tables are Greatest TARGET Return on equity Largest growth in improvement in close to average loans and deposits cost/income ratio connected to the long- term goals to avoid League table League table League table CHECK 2004 2005 2006 2007 Snitt 2004 2005 2006 2007 Snitt 2004 2005 2006 2007 Snitt 11,5 Bank 1 Oslo 0 14,4 13,6 18 69,2 11,9 Bank 1 Oslo 68,9 74,5 59,9 73,4 Bank 1 Oslo 7,7 15,3 16,8 8,0 11,5 Hedmark 10,1 14,1 13,9 7,9 52,9 9,5 Hedmark 52,2 49 54,3 56 Hedmark 9,6 10,3 8,9 9,3 short-term focus 11,2 Møre 5,4 10,5 14,8 13,9 13,6 49,3 Møre 11,8 13,8 13,5 15,3 Møre 47 50,4 51,3 48,3 14,1 11,6 Sør 10,1 12,4 16,8 17 53,2 Sør 12,2 12,2 10,8 11,0 Sør 53,3 53,2 54,7 51,6 Øst 4,7 8,9 16,3 10,9 10,2 15,5 55,6 Øst 17,2 24,7 7,0 13,2 Øst 46,6 57,1 67,8 50,8 17,1 11,7 Pluss 16,7 17,4 17,6 16,7 42,1 Pluss 10,5 11,4 13,1 12,0 Pluss 46 43,3 39,3 39,7 Sogn & Fj. 9,4 11,7 15,1 25,8 15,5 11,7 53,9 Sogn & Fj. 11,5 11,3 11,2 12,8 Sogn & Fj. 52,9 56,1 56,5 50,1 13,6 12,5 Vestfold 17,7 13,9 11,4 11,3 Vestfold 12,1 14,2 12,6 11,1 54,7 Vestfold 54,1 53,5 55,8 55,2 12,6 13,5 Sandsvær 13,6 15,8 10,5 10,4 Sandsvær 7,2 28,2 16,7 1,7 53,8 Sandsvær 55,2 54,7 52,2 53,2 Snitt 9,0 14,6 15,1 13,7 Snitt 12,3 14,2 10,9 11,9 Snitt 52,9 54,6 54,6 53,1 SR-bank 19,5 25,5 22,6 16,1 20,9 SR-bank 11,8 13,7 25,4 13,4 16,1 SR-bank 47,8 45,7 49,9 53 49,1 • The target connected to Midt-Norge 18,8 22,9 23,6 15,8 20,3 Midt-Norge 5,3 33,4 16,8 11,4 16,7 Midt-Norge 48,5 50,1 49,7 52,2 50,1 Nord-Norge 14,8 20,2 22,8 14,6 18,1 Nord-Norge 3,3 9,9 11 8 8,1 Nord-Norge 52,9 51,6 49,2 55,2 52,2 AVERAGE the ambitious goal may change if necessary in 60 % 77 % 95 % 75 % order to be the most successful bank Bonus: 34,000 * 77 % = 26,000 28
  29. 29. Culture and Rolling organization Culture and forecasts organization Dynamic Tekst The only implementation Management project still active Benchmarking Bonus and and scorecards incentives
  30. 30. The devolved leadership principles of Beyond Budgeting as a starting point 1. Customers Focus everyone on their customers, not on hierarchical relationships 2. Organization Organize as a lean network of accounting teams, not as centralized functions 3. Autonomy Give teams the freedom and capability to act; don’t micro- manage them 4. Responsibility Create a high responsibility culture at every level, not just at the top 5. Transparency Promote open information for self management; don’t restrict it hierarchically 6. Governance Adopt a few clear values, goals and boundaries, not detailed regulations 30
  31. 31. New management policy = three words Responsibility Involvement Business insight 31
  32. 32. Business insight • Strategic information should be transparent • Emphasis on developing skills • Stimulate knowledge and understanding of business models, competitive conditions, value drivers, etc. • Discussion of strategic questions on lower Responsibility management levels Involvement Business insight 32
  33. 33. Involvement • Involve middle management and other employees in decision-making processes • Employees should be involved on higher levels in the organization Responsibility Involvement Business insight 33
  34. 34. Responsibility • Delegate responsibility to employees • Processes for authorization and freedom of action must be developed as a foundation • When you have the business insight, involvement and responsibility should come naturally Responsibility Involvement Business insight 34
  35. 35. Agenda 1. Company presentation 2. How we started 3. Four implementation projects 1. Rolling forecasts 2. Benchmarking and scorecards 3. Bonus and incentives 4. Culture and organization 4.What have we learned so far? 5. Challenges ahead 6. Contact information 35
  36. 36. Some lessons we have learned 1. Top management involvement is crucial 2. External speakers are great motivators 3. Look for best practice companies in all business sectors, not just your own 4. You don’t need to buy a new business intelligence system before you start 5. Communication: “Continue to do what you’ve always done until you’re being told otherwise” 6. Implementation projects have final dates 36
  37. 37. Agenda 1. Company presentation 2. How we started 3. Four implementation projects 1. Rolling forecasts 2. Benchmarking and scorecards 3. Bonus and incentives 4. Culture and organization 4. What have we learned so far? 5.Challenges ahead 6. Contact information 37
  38. 38. How can we create a uniform corporate governance? Action plans How should we follow up on a forecast? 1. Does the forecast indicate that we will not reach our long-term goals? Q4 Q3 Q2 Q1 ∑ 12 2009 2009 2009 2009 Q1 2009 months 2. Analyze – can or should we take action? Q4 Q1 Q3 Q2 3. If so – what kind of action should we take? ∑ 12 2010 2009 2009 2009 Q2 2009 months 3a. Strategic decisions 3b. Continuous improvement • The forecast created in Q2 2009 should be compared with the forecast created in Q1 2009 – Meet new competition – Reducing department costs – Diversification – Efficiency improvements • Why did the forecast change? – Changes in company portfolio – Innovation – Why is the result different than what we predicted last quarter? – Organization structure – Etc. – Have any of the assumptions changed? – Etc. – What actions can we take – if none? New management policy = three words The most GOAL successful bank Greatest TARGET Return on equity Largest growth in improvement in close to average loans and deposits cost/income ratio Responsibility League table League table League table CHECK Involvement 2004 2005 2006 2007 Snitt 2004 2005 2006 2007 Snitt 2004 2005 2006 2007 Snitt 11,5 69,2 11,9 Bank 1 Oslo 7,7 15,3 16,8 8,0 Bank 1 Oslo 0 14,4 13,6 18 Bank 1 Oslo 68,9 74,5 59,9 73,4 11,5 52,9 9,5 Hedmark 10,1 14,1 13,9 7,9 Hedmark 52,2 49 54,3 56 Hedmark 9,6 10,3 8,9 9,3 13,6 11,2 49,3 Møre 5,4 10,5 14,8 13,9 Møre 47 50,4 51,3 48,3 Møre 11,8 13,8 13,5 15,3 14,1 11,6 53,2 Sør 12,2 12,2 10,8 11,0 Sør 10,1 12,4 16,8 17 Sør 53,3 53,2 54,7 51,6 10,2 55,6 15,5 Øst 4,7 8,9 16,3 10,9 Øst 17,2 24,7 7,0 13,2 Øst 46,6 57,1 67,8 50,8 11,7 17,1 42,1 Pluss 16,7 17,4 17,6 16,7 Pluss 46 43,3 39,3 39,7 Pluss 10,5 11,4 13,1 12,0 11,7 15,5 53,9 Sogn & Fj. 11,5 11,3 11,2 12,8 Sogn & Fj. 9,4 11,7 15,1 25,8 Sogn & Fj. 52,9 56,1 56,5 50,1 Business insight 13,6 12,5 Vestfold 17,7 13,9 11,4 11,3 54,7 Vestfold 12,1 14,2 12,6 11,1 Vestfold 54,1 53,5 55,8 55,2 12,6 13,5 Sandsvær 7,2 28,2 16,7 1,7 53,8 Sandsvær 13,6 15,8 10,5 10,4 Sandsvær 55,2 54,7 52,2 53,2 Snitt 12,3 14,2 10,9 11,9 Snitt 9,0 14,6 15,1 13,7 Snitt 52,9 54,6 54,6 53,1 SR-bank 11,8 13,7 25,4 13,4 16,1 SR-bank 19,5 25,5 22,6 16,1 20,9 SR-bank 47,8 45,7 49,9 53 49,1 Midt-Norge 18,8 22,9 23,6 15,8 20,3 Midt-Norge 5,3 33,4 16,8 11,4 16,7 Midt-Norge 48,5 50,1 49,7 52,2 50,1 Nord-Norge 14,8 20,2 22,8 14,6 18,1 Nord-Norge 3,3 9,9 11 8 8,1 Nord-Norge 52,9 51,6 49,2 55,2 52,2 38
  39. 39. The Balanced Scorecard - Do we need it? • Does it add value? • If so, which parameters should we focus on? – Only value drivers? – Critical result indicators? • What should replace the old budget and fixed targets? • Should we combine it with league tables? • What about staff functions? 39
  40. 40. The financial crisis Index showing the value of subprime mortgages • A cost reduction program has been initiated by our owners • How can such a central initiative Index be combined with delegation of responsibility? • Will it undermine our new corporate governance? Delinquency rates, all banks, real estate loans, residential World, Standard & Poors 1200, Index, Market Cap, USD USD (thousand billions) thousand billions Percent 40
  41. 41. Our ownership structure, the SpareBank 1 Alliance, presents an extra challenge • Some owners budget while SpareBank 1 Gruppen AS – the structure others operate with rolling SpareBank 1 SpareBank 1 SpareBank 1 Sparebanken Samarbeidende LO Nord-Norge (19,89 %) SR-Bank SMN Hedmark Sparebanker (19,89 %) (9,29%) (19,89 %) (19,89 %) (11,14%) forecasts SpareBank 1 Gruppen AS • They are used to the illusive SpareBank 1 SpareBank 1 ODIN Oslo Skadeforsikring Forvaltning Alliance Co-operation Programme (100%) (100%) (100%) control that the budget has SpareBank 1 SpareBank 1 SpareBank 1 represented, when following Boligkreditt Medlemskort Livsforsikring Focus areas (100%) (100%) – Brand EiendomsMegler 1 – Technology BNbank – Competence up on SpareBank 1 Gruppen’s Argo First – Common processes and use of best practices Securities Securities (Bank owned (75%) – Purchasing (24,5%) activities) Regional competence centers results – Payment services: Trondheim SpareBank 1 – Credit: Stavanger Gruppen Finans Holding AS – Training: Tromsø (100%) SpareBank 1 Actor Fordrings- SpareBank 1 • For the several product Factoring forvaltning LTO (100%) (100%) (100%) companies, it is difficult to find Verdigjenvinning (100%) relative targets and league tables 41
  42. 42. quot;....a continuous journey of learning and adaptionquot; Jeremy Hope et.al, BBRT 42
  43. 43. Agenda 1. Company presentation 2. How we started 3. Four implementation projects 1. Rolling forecasts 2. Benchmarking and scorecards 3. Bonus and incentives 4. Culture and organization 4. What have we learned so far? 5. Challenges ahead 6.Contact information 43
  44. 44. Embed or share this presentation Contact information: Dynamisk.Styring@SpareBank1.no Visit us at: www.sparebank1gruppen.no www.slideshare.net/SpareBank1 www.flickr.com/photos/sparebank1 www.youtube.com/user/Sparebank1Norge http://pengeroglivet.blogs.com 44

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