Is the BoE making significant cultural advances post Stockton and McKinsey?

Scott Hamilton at Bloomberg, using a Freedom of Information Request, extracted the results of a staff survey conducted by McKinsey during its high-profile strategic review earlier this year.  [And see my earlier blog on the firework display at Carney’s Mais lecture].

A few remarks.

It’s instructive that the survey results had to be extracted using an FOI request, involving, as Scott reports ‘a seven-month effort’.  The strategic review is meant to be part of a plan  to modernise the Bank and make itself more easily subject to internal challenge.  How odd that in the same process, it makes external challenge and scrutiny difficult, and makes itself look decidedly old-fashioned and defensive by forcing an FOI request for something like this.  The survey [or the report on it] notes that:  “The bank could benefit from a more open, transparent and consultative style of leadership receptive to challenge.”   Quite!  Starting with episodes like this.

Scott reports that ‘the BOE has taken steps to reduce bureaucracy and increase staff engagement.’  Really?  I’d like to know more about those steps.  And how they are bearing fruit.  And I’d offer a few comments.

i)  The Bank has increased the number of Deputy Governors and introduced an extra layer of management in the form of the new ‘Director’ grade, sitting between Head of Division and Executive Director.  How does this help to ‘reduce bureaucracy’?  Arguably, the new ‘One Bank’ vision, which is an application of matrix-management, will require more, not less bureaucracy.  Small units lower down the bank now have to serve more energetically multiple customers at the top of it;  and those multiple customers have to spend more time orchestrating the ‘oneness’ of their demands.  The price of greater oneness might be more, not less bureacracy.

ii) I’d forecast that trying to generate assertiveness and challenge will take a long time to bear fruit.  This lack of assertiveness had at least two causes that I don’t see changing quickly.  One was that on the monetary policy side of the Bank, the chief clients, the MPC, got the amount of assertiveness that it wanted.  A few personalities on the Committee were interested in having their views challenged or changed.  But many weren’t.  But even those that were in principle open to the idea in practice didn’t want it.  It was more important to try to choreograph a resolution of debates between Committee members.  And the last thing they wanted were hand-grenades thrown from the staff.  Moreover, staff knew this, and knew that if they threw those grenades it would ‘politicise’ them as taking sides, making it harder for them to do their job in the future.  (Many of us have received, or been made aware of, incendiary emails from the dissident MPC member of the day accusing us of bias.)  A second cause of the lack of assertiveness and challenge was the relentless incentives placed on those who want to get promoted to change jobs frequently.  Doing this looked good as you could show you had done many different things.  And it gave you a chance to cultivate multiple senior sponsors at the top, and increase the chance that you would get a shot at a promotion when a vacancy arose.  But these incentives mitigated against staying put and accumulating the expertise necessary to mount a credible challenge to MPC members, who were typically people with decades of experience in the field.  I don’t see ‘assertiveness’ bearing fruit quickly because both of these factors seem endemic, and very hard to change.  Moreover, if there is any truth to the reputation that Carney carries around with him, of someone being an effective and ruthless operator in getting his own way [eg in making sure policy is doveish] he will not be a wholly positive factor in enabling the challenge that the Mckinsey review called for.

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