Federal Deposit
Insurance Corporation

Effective Management of Strategic Resources

Introduction
The FDIC recognizes that it must effectively manage a number of critical strategic resources in order to successfully carry out its mission and realize the annual performance goals set forth for its three major programs. Strategic resource management facilitates the Corporation’s mission-critical activities and helps minimize risk to the DIF, while simultaneously aligning and deploying the Corporation’s resources to the areas where they are most needed. An overview of planned 2010 initiatives to enhance the Corporation’s management of its key strategic resources follows.

Human Capital Management

The FDIC’s most important resource is the “intellectual capital” that its employees bring to bear on the accomplishment of its mission. For that reason, the FDIC strives to attract, develop and retain a highly skilled, diverse and results-oriented workforce and to be regarded as a “best place to work,” especially among employers whose workforces consist primarily of financial professionals. Because as much as 40 percent of the FDIC’s current permanent workforce is projected to retire over the next 10 years, the FDIC will have a unique opportunity to reshape its permanent workforce to provide effective regulatory oversight to meet the challenges that are emerging in the increasingly complex U.S. financial system of the early 21st century. The current dislocations in the financial markets have forced the FDIC to augment its permanent workforce with a cadre of non-permanent employees to deal with the crisis at hand. In 2010, the FDIC will pursue a number of initiatives to continue to build its future permanent workforce while addressing its immediate staffing needs.

Strategic Workforce Planning and Readiness
In 2005, the FDIC adopted a fundamentally different strategy for entry-level staffing of its core mission occupations. This new strategy emphasized the development of a more mobile and flexible workforce that was cross-trained in the Corporation’s key mission functions and could be redeployed rapidly to address new workload priorities in response to unexpected external events or changing conditions in the banking industry and the broader economy. These principles were the foundation for the Corporate Employee Program (CEP), which has become the primary vehicle for filling new entry-level positions in the FDIC’s bank examination and resolutions and receivership functions.

During the first phase of the CEP training program, participants are provided with basic exposure to each of the FDIC’s key business processes: deposit insurance, risk-management examinations, compliance examinations, and resolutions/receivership management. After the completion of the rotational phase of the program, participants are assigned to a specific commissioning track. Upon successful completion of this multi-year training program, employees will have earned a commission in a primary area of specialization and a competency certification in one specialty outside of that primary area. Internal certification programs have been developed for deposit insurance claims, basic compliance examinations, Bank Secrecy Act/Anti-Money Laundering examinations, and franchise and asset marketing. In 2010, new certificate programs in the resolutions and receiverships disciplines will be piloted. The FDIC’s field examination workforce included approximately 513 Financial Institution Specialists (FIS) and 78 Financial Institution Examiners (FIE) at the end of 2009. These numbers are expected to increase to an estimated 559 FIS and 182 FIE by the end of 2010. Approximately 35 percent of the field examination workforce will be participating in or will have graduated from the CEP training program by that time.

As part of its workforce planning for the long term, the Corporation has also emphasized the addition of advanced technical skills to its workforce through increased mid-career hiring, the development of advanced internal training curricula (discussed below), and support for numerous other professional certification programs. The primary focus of permanent, mid-career hiring has been on mid-career risk management and compliance examiners who are able to have a more immediate impact on the FDIC’s current examination workload; Ph.D. economists and others with advanced quantitative and risk-modeling skills that are needed to assess risk in large insured institutions; consumer protection researchers and specialists; and attorneys with regulatory enforcement, consumer protection, and litigation backgrounds. New entry-level attorneys are hired through the Corporation’s Honors Attorney Program, which provides rotational experiences within the FDIC’s Legal Division similar to those in the CEP.

In order to ensure readiness in light of the current turmoil in financial markets and parts of the banking industry, the Corporation has temporarily re-employed a number of retired risk management and compliance examiners to assist with the increasing examination workload as well as the growing workload associated with coaching the large number of trainees in the CEP. The Corporation has also temporarily re-employed retired resolutions and receivership specialists, attorneys and other professionals to ensure that the FDIC can successfully address the current institution failure workload.

In 2009 and 2010, the FDIC has established three temporary satellite offices with total authorized staffing of 1,531. These offices are staffed almost entirely with resolutions and receiverships specialists and attorneys on non-permanent appointments to handle the increase in bank closings and follow-on activities. Non-permanent employees are also used to handle the temporary increase in supervision workload that has resulted from the substantial increase in the number of problem institutions. This includes loan review specialists, compliance analysts, and specialists in other supervision-related occupations to assist with the increased supervisory workload. The use of non-permanent appointments to meet the majority of the FDIC’s near-term resource needs will allow the FDIC to return its workforce to a more normal size once the crisis is over, without the disruptions that reductions in permanent staff would cause.

Succession Management
The FDIC faces additional challenges as many of its long-term, highly skilled employees move into retirement. To help address these succession management issues, the FDIC will pursue a number of initiatives that are designed to retain, where possible, the skills and knowledge of its current employees for a longer time period, while equipping a new generation of employees to assume the responsibilities of departing employees.

To address these projections, FDIC leadership developed several multi-year programs to assess current and potential leadership strength, identify skill shortages, and shape measures to close whatever gaps are identified:

• Leadership Development Curriculum: The FDIC’s new curriculum provides a holistic approach to leadership development and supports the goals of the FDIC’s Culture Change Initiative. Enhancements to the curriculum include additional leadership courses for new employees and executives, a comprehensive program of electives integrated with an existing ladder of courses and offered to all employees, an additional focus on action learning, leaders as teachers, simulations, and a proactive approach to developing leaders.

• Knowledge Management Strategic Plan: In 2008, the FDIC drafted a multi-year knowledge management strategic plan focused on a broad spectrum of knowledge management needs and possible approaches. In 2010, FDIC leadership will review and refine the draft plan, discuss initial implementation options, and pilot certain strategies to support knowledge management.

• Video Instructional Design Project: In 2010, the FDIC will implement the Video Instructional Design Project. This project will capture video at closings and related activities to serve as a source for knowledge management by capturing task activity in the environment in which it occurs; using it to identify training needs and design training; incorporating it within handbooks or policy manuals as a way of describing the environment; and providing knowledge management support in designing and implementing the bank-closing simulation lab for future employees when there is less bank failure activity for on-the-job training.

Employee Engagement
Over the past several years, the FDIC and the U.S. Office of Personnel Management (OPM) have conducted annual employee surveys. These surveys have consistently identified major areas of strength as well as opportunities for improvement in employee engagement and satisfaction. These surveys have consistently demonstrated that FDIC employees enjoy their work, believe it is important, and get a sense of personal accomplishment from it. They also have a good understanding of the Corporation’s mission and strategic direction and know how their work fits into the FDIC’s goals and priorities.

Employees are also highly satisfied with their pay and benefits, as well as the FDIC’s family-friendly culture work-life balance programs, physical work environments, and training, technological and other resources. However, the surveys also revealed opportunities for improvement in internal communications, employee empowerment, and leadership. Accordingly, the FDIC began a multi-year initiative in 2008 to fundamentally remake its organizational culture to address these issues. Through the use of cross-organizational teams and a steering committee, the FDIC engaged employees in a process of identifying and implementing changes to improve communications, enhance employee engagement and involvement, and improve leadership behaviors and competencies. A culture change strategic plan was developed, identifying both short- and long- term goals and defining strategies and recommendations for improving the workplace culture.

The 2008 and 2009 employee survey results showed marked improvement in each of the three areas noted above, while maintaining or slightly improving on past areas of strength. A question and answer mailbox and quarterly all-employee teleconferences with the Chairman will continue in 2010 so that employees can provide input, make suggestions and ask questions.

The Culture Change Initiative entered a new phase in 2009 with the selection of a new Program Manager and the reconstitution of the Culture Change Council. The Internal Ombudsman Program provided another avenue for following up on employee issues. Many divisions and offices have worked on initiatives to address specific survey results aimed at enhancing communication, empowering employees, and helping leaders to become more effective. Information on these initiatives will be summarized and shared with employees in 2010. Best practices in public and private sector organizations on sustaining culture and organizational change were studied and will be summarized, with recommendations for sustaining the FDIC’s Cultural Change Initiative in 2010 and beyond.

Employee Learning and Growth
The FDIC provides employees with the technical training and leadership development necessary to meet the Corporation’s mission. In 2010, the Corporation will continue to develop innovative solutions to quickly prepare new and existing employees for the challenges ahead. By streamlining existing courses, promoting blended learning, and creating online, just-in-time toolkits, the Corporation allows FDIC employees to accomplish their work more efficiently and effectively.

The FDIC promotes the continuous learning and development of its employees and provides numerous internal and external resources to employees for professional development and training. In addition to internally developed and delivered programs, employees can access external training through the Professional Learning Account (PLA) program. The PLA program, which was made permanent in 2009, provides resources to pursue individual career development plans that employees and their supervisors create together.

The FDIC has also developed several training programs to equip employees with advanced technical skills. Many of these programs are in direct support of the FDIC ’s increased workload related to the financial crisis:

• In 2008, the Corporation began implementing the resolutions and receiverships commissioning programs. Eight trainees were assigned to this commissioning tract in 2009, and another 20 will be assigned to it in 2010.

• In 2010, the FDIC will continue to provide learning and development opportunities that better prepare its examiner workforce for the challenges ahead. The FDIC will add two new training courses to its compliance examiner commissioning program: Introduction to Compliance Examinations School (ICES) and Compliance Management School (CMS). ICES will provide an overview of consumer protection laws and regulations and an introduction to the principles of compliance risk management. At the CMS, students will conduct a complete mock examination from pre-examination planning to examination close-out. In addition, the FDIC will redevelop the Loan Analysis School in 2010 to broaden the training that risk management examiner trainees receive in several loan-related areas, while improving the methods used to deliver this content.

• In 2009, the FDIC designed and executed a multi-faceted training program for resolutions and receiverships staff dealing with agricultural loans. The Agricultural Loan Project provides employees with access to the information necessary to effectively manage and market agricultural loans. The project includes instructor-led training, multi-media presentations, and simulations. In 2010, this multi-pronged approach to developing knowledge and skills will be used to address additional emerging challenges, such as subsidiary management.

The Corporation launched a new learning management system, FDICLearn, in 2009. This system allows employees to easily find courses, take online training, register for classroom instruction, check their enrollments, and view their transcripts. In 2010, the Corporation will expand the use of FDICLearn to include increased functionality and reporting capabilities. In addition, the FDIC will continue to use all of its learning programs as opportunities to strengthen its organizational culture, build key competencies, and promote the importance of its corporate values.

Financial Resources Management
The FDIC’s operational expenses are largely paid from the investment earnings on the DIF and the assessments paid by insured financial institutions. The Corporation takes very seriously its fiduciary responsibilities to use these funds in an efficient and cost-effective manner to meet its mission responsibilities. To that end, the Corporation engages annually in a rigorous planning and budget formulation process to ensure that budgeted resources reflect and are properly aligned with workload projections and designated corporate priorities.

The FDIC’s 2010 Corporate Operating Budget totals $3.99 billion. This increase of more than $1.66 billion over 2009 spending is needed to adequately respond to the current turmoil in the banking industry and maintain stability in the banking system. The increase is largely attributable to continuing work associated with recent bank failures and the provision of contingency funding for the possible continuation of an elevated number of bank failures in 2010.

Support for Expansion of FDIC Workforce and Bank Resolution Activity
The rapid expansion of the FDIC workforce and bank resolution activity has strained the technical resources of the Corporation. The IT program continues to respond to challenges associated with data storage capacity, network bandwidth requirements, increasing volume of service requests, and related items. Additional staff and contractors will be brought on board in 2010 to support the increased demand for IT resources. This will include engineers, helpdesk operators, and regional/field office support. Improvements to bandwidth capacity will be made to support increased network traffic. The performance and operational capacity of business applications that support bank resolution activities will be improved and increased. Additional resources will be hired to provide IT support for bank closings in 2010, with more resources hired to handle these requests. IT support will be provided for the opening of the Midwest Temporary Satellite Office (MWTSO) located in the Chicago, Illinois, area as well as for build-outs in existing FDIC office sites. Support includes the installation of infrastructure equipment (such as routers, switches and network printers) and the provision of computers to the office staff.

Advancing the IT Strategy
Delivering core IT services in accordance with target service levels and providing bank closing support are the highest priorities in 2010 for the IT program. As time and resources permit, the FDIC will continue to execute the IT strategic plan and respond to other FDIC business needs. Work in 2010 will continue with implementing the target enterprise architecture and addressing potential technology obsolescence in the business application portfolio. Upgrades will be made to database management systems and reporting software.

Application systems will be developed and maintained based on the Lines of Business (LOB) model, which aligns IT resources with FDIC divisions and offices. Work will also continue on the application modernization strategy, where roadmaps are developed for addressing business application replacement and consolidation. Following previously developed roadmaps, development efforts for bank examination system replacements will continue.

Information Security and Corporate Privacy Programs
The FDIC’s Information Security and Privacy Programs recognize the strategic value of the FDIC’s data and information systems and strive to create an environment for the protection of these assets. External stakeholders, including financial institutions, the general public, and the FDIC community (employees and contractors), must have confidence that FDIC data and information systems are protected. In 2010, the operational focus of the programs will be to sustain a high-performing environment by ensuring the reliability, availability, confidentiality, and integrity of the Corporation’s information and data assets. The FDIC will continue to establish policies and implement procedures that provide the highest possible level of protection of sensitive information, while allowing the Corporation to carry out its mission effectively.

Enterprise Risk Management
As an integral part of its stewardship of the DIF, the FDIC maintains a comprehensive risk management and internal control program, which is designed to promote continuous improvements in efficiency, effectiveness, control, and risk-focusing of internal operations throughout the Corporation. The Office of Enterprise Risk Management (OERM) oversees this program by providing guidance and assistance to all divisions and offices on issues such as internal controls, system security, privacy, operational effectiveness and efficiency, post-project reviews, and audit follow-up. In addition to continuing those efforts, OERM will focus in 2010 on key corporate issues, including the six Program Management Office organizations, control testing, and continuous improvements to the FDIC’s core business functions.

Contract Management Oversight
The FDIC’s total contract expenditures are expected to exceed $2 billion during 2010, a roughly seven-fold level of growth compared to pre-crisis contract spending and more than double the amount spent in 2009. This continuing growth necessitates further enhancements of the new management controls established during 2009 to ensure that that the Corporation is receiving appropriate service and value for the contract dollars it spends, and that all related operations are free from errors and abuse. During 2009, all contracting processes were mapped, and management confirmed the reasonableness of internal controls throughout those processes. In 2010, the Corporation’s contract management efforts will focus on contract transaction sampling, invoice reviews, and improved metrics and performance data to support management decisions.

One key challenge for the year will be to ensure that sufficient numbers of oversight managers and technical monitors are available to provide the necessary controls for day-to-day contract oversight responsibilities. The Corporation will also direct increased attention to outreach efforts to minority- and women-owned businesses and law firms to ensure that they have the opportunity to participate in FDIC contracting and asset sales opportunities
.