Draghi Joins Carney in Enlisting Consultants to Review ECBJeff Black and Alessandro Speciale
The European Central Bank has long made recommendations on how Europe’s economy could work better. Now it’s asking for some advice for itself.
As the institution’s to-do list lengthens to include new asset buying and bank supervision, President Mario Draghi has invited consulting firm Egon Zehnder to review its procedures to improve efficiency, three people familiar with the issue said. The study started this year with a staff survey and interviews with senior management, the people said, asking not to be identified as the issue isn’t public.
Sixteen years after its foundation as the central bank for the euro, the ECB’s duties have swollen far beyond pure monetary policy. Egon Zehnder’s review mirrors an exercise undertaken for Bank of England Governor Mark Carney by McKinsey & Co. in 2013, which fed into a three-year plan to fuse departments and improve coordination.
Egon Zehnder has presented preliminary findings from its “360-degree review” to the bank’s management on the issues it was asked to address, from organizational structure to leadership and mentoring, one of the people said. The process will continue in the next two months with further meetings to formulate concrete proposals for change, the person said, adding that the remit doesn’t include examining budget issues.
A spokesman for the ECB declined to comment. A spokesman for Egon Zehnder said it doesn’t comment on companies or individuals, irrespective of whether they are clients or not.
“It’s natural for an institution like the ECB to regularly review its processes, especially in times when its role changes so fundamentally,” said Niels Buenemann, a communications consultant who was an official at the central bank until this year and is still involved in one of its cultural projects. “In the present situation I think it’s fair to talk about ‘ECB 2.0,’ and it’s important to get someone with an outside view.”
During a financial crisis that almost splintered the single currency, the ECB became co-adjutant of bailouts from Spain to Ireland as part of the “troika” with the European Commission and the International Monetary Fund. It contributes to the global regulatory financial overhaul on panels including the Financial Stability Board, and has intervened in asset markets from government debt to securitized loans.
The biggest expansion of powers came into force this month as a new pillar of the ECB, the Single Supervisory Mechanism with about 1,000 new staff, took direct responsibility for monitoring the region’s biggest banks. When the region’s planned Single Resolution Mechanism for dealing with failing lenders starts work, the ECB will have a role in that, too.
The review is the first major exercise of its kind at the Frankfurt-based central bank since 2005, when the ECB created new functions within existing directorates and merged others. The institution previously hired Egon Zehnder in 2013, paying 2.1 million euros ($2.6 million) for recruitment services, according to a notice on the ECB website.
Buenemann was at the central bank during the last review under former president Jean-Claude Trichet and a prior one ordered by his predecessor, Wim Duisenberg, in 2002.
“In both cases the objective was similar: to maintain the dynamism of the organisation, as it moved from being a project to being a public authority with an enormous responsibility, and to avoid the creation of silo mentality and encrusted structures or too heavy bureaucracy,” he said.
Some staff across departments have collaborated to jointly respond to an e-mail sent as part of the Egon Zehnder survey that asked where organizational weaknesses lay, one of the people said. The review also aims to reduce the load of administrative work that has to be carried out by the ECB’s six-person Executive Board, the people said.
Some BOE employees described the U.K. central bank as “hierarchical” and “slow moving” in McKinsey’s 2013 survey, which was obtained by Bloomberg News. Pay and staff engagement were among factors that rankled workers most.