Effective Management of Strategic
The FDIC recognizes that it must effectively manage many critical strategic resources to successfully carry out the annual performance goals outlined in this plan and accomplish its mission. These resources must be aligned and deployed to the areas where they are most needed. An overview of planned 2012 initiatives to enhance the FDIC’s management of its key strategic resources is provided below.
Financial Resources Management
The FDIC does not use taxpayer funds. Its operational expenses are paid from the DIF, which is funded by deposit insurance assessments paid by insured financial institutions. The FDIC takes very seriously its fiduciary responsibilities to use these funds efficiently and cost-effectively to meet its mission responsibilities. To that end, the FDIC engages annually in a rigorous planning and budget formulation process to make sure that budgeted resources are properly aligned with workload projections and designated corporate priorities (see Exhibit B).
The FDIC’s self-discipline in managing its financial resources has been apparent over the past several years. From 2008 through 2010, the FDIC’s annual operating budget more than tripled and its authorized staffing level almost doubled in response to a rapid increase in the number of problem institutions and insured institution failures. However, the FDIC relied primarily on nonpermanent staff and contractor resources to address the dramatic uptick in its supervisory and resolutions workload, in order to facilitate future budget and staffing reductions when workload returned to more normal levels. In 2011, both the annual operating budget and staffing authorization were relatively stable as key workload indicators peaked and began to decline. But, in 2012, both the annual operating budget and authorized staffing level declined substantially. The annual operating budget fell by about 15 percent, and authorized staffing declined by about 6 percent.
In 2012, the FDIC will continue to carefully monitor both its supervision and receivership management workload and will take steps to promptly reduce expenses as underlying workload declines. A steady reduction in both contractor spending and nonpermanent staffing is projected in 2013 and future years as the health of the banking industry continues to improve and the residual workload from the recent financial crisis is completed.
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. More than one-quarter of the FDIC’s current permanent workforce is projected to retire over the next ten years. This will provide the FDIC a unique opportunity to reshape its permanent workforce to provide effective regulatory oversight to meet the emerging challenges of an increasingly complex U.S. financial system in the 21st century. In 2012, the FDIC will pursue several initiatives to manage its future permanent workforce while addressing immediate staffing needs.
Strategic Workforce Planning and Readiness
The Corporate Employee Program (CEP) is the primary vehicle used to fill new, entry-level positions in the FDIC’s core bank supervision and resolutions and receivership management functions. The CEP emphasizes the development of a more flexible workforce that is cross-trained in the Corporation’s core mission functions and can 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.
During the first phase of the CEP, newly hired Financial Institution Specialists (FISs) are exposed to each of the FDIC’s key business processes: deposit insurance, risk-management examinations, compliance examinations, and resolutions and receivership management. After the completion of the rotational phase of the program, they are assigned to a specific commissioning track. Upon successful completion of the rigorous three-year training program, they are commissioned as Financial Institution Examiners (FIEs) or Resolutions and Receiverships Specialists. The FDIC’s field examination and resolutions and receivership management workforces included 563 FISs and 237 FIEs at the end of 2011. The FDIC expects to hire an additional 120 FISs in 2012.
As part of its long-term workforce planning and development, the FDIC also has focused on hiring more mid-career and senior-level staff with advanced technical skills and developing advanced internal training curricula (discussed below). The primary focus of permanent, mid-, and senior-level hiring has been on risk management and compliance examination staff; analysts and other specialists with the skills needed to monitor and address the risks in the largest and most complex banks and bank holding companies; Ph.D. economists and others with advanced quantitative and risk-modeling skills; 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 2012, the FDIC will evaluate its recruiting and staffing activities for both entry-level and higher-graded positions to identify possible enhancements to promote increased diversity within the FDIC workforce, as required by Section 342 of DFA.
The highest employment priority for 2012 will be the completion of hiring to support the FDIC’s new responsibilities under DFA to plan for the possible orderly liquidation of large, systemically important bank holding companies and other financial companies. In 2011, CFI was established to monitor risks and plan for the resolution of the largest and most complex of these companies. Recruiting efforts were initiated to staff this new organization with the advanced and specialized skills and experience needed to carry out this critical, new mission function. In 2012, initial hiring will be completed to bring CFI up to its full authorized 2012 staffing level of 181 employees. The FDIC also will add staff in the existing Mid-Tier Bank Branch in the Division of Risk Management Supervision to monitor risks and review resolution plans for the remaining bank holding companies with more than $50 billion in assets that are subject to the requirements of DFA. In addition, new organizational entities will be established and staffed in the Legal Division and the Division of Resolutions and Receiverships to support CFI.
The FDIC faces potential future succession management challenges as many of its long-term, highly skilled employees retire. Over the last several years, retirement projections have been developed for each division and office, and over-hiring programs have been implemented for those organizations and functional areas with the highest projected vulnerability to retirements. In addition, the FDIC has undertaken an initiative to document best practices and lessons learned from bank closing activity. This information is important to ensure corporate readiness as experienced employees retire and the temporary positions created to support bank closing activity expire. It was collected in 2011 through seminars, one-on-on interviews, and recordings of closing activity, and will be analyzed in 2012. The FDIC will use that information along with ongoing job task analyses of multiple resolutions and receiverships functions to identify the future skills necessary to conduct bank resolutions. It also will be used to help identify and develop future training and learning opportunities to maintain employee skills when there is less bank failure activity to provide on-the-job training opportunities to new employees.
A Culture of Workplace Excellence
Over the past several years, the FDIC and the U.S. Office of Personnel Management have conducted annual employee surveys. Based on the results of the 2011 survey, the FDIC was recognized in late 2011 as the “Best Place to Work” among large departments and agencies in the federal government by the Partnership for Public Service (the FDIC was previously ranked 3rd in the 2010 survey and 24th in the 2007 survey). These surveys identified major areas of strength as well as opportunities for improvement in employee satisfaction and engagement. They have consistently demonstrated that FDIC employees have an excellent understanding of the FDIC’s mission and strategic direction and know how their work fits into the organization’s goals and priorities. They enjoy their work, believe it is important, and get a sense of personal accomplishment from it. Employees are also highly satisfied with their pay and benefits, as well as the FDIC’s family-friendly work-life balance programs, physical work environments, and training, technological, and other resources.
Much of the improvement in the survey results can be attributed to the Culture Change initiative that was pursued by the FDIC from 2008 through 2011. In 2012, the FDIC will focus on maintaining and enhancing the positive organizational and workplace changes that were achieved under that initiative and will strive to promote an ongoing commitment to workplace excellence at all levels within the organization. National and division/office councils will continue to assess the data from annual employee surveys and other sources and to identify additional opportunities to strengthen the existing commitment to workplace excellence.
Employee Learning and Development
The FDIC provides employees with skills-based training and learning and development opportunities to help achieve its mission through its Corporate University, Professional Learning Accounts program, and external training resources. In 2012, the FDIC’s Corporate University will continue to offer innovative solutions to prepare both current and new employees for the challenges ahead by developing new courses, adopting blended learning strategies, and creating more online resources.
The FDIC provides its examination workforce with the technical knowledge and skills necessary to examine and supervise financial institutions for safety and soundness and consumer protection. Course reviews and revisions are completed annually, and a review of the entire pre-commission curriculum for compliance examinations will be conducted in 2012. This curriculum mapping exercise will identify areas where revisions to the curriculum could be made to better align with on-the-job benchmarks.
The FDIC also will continue to develop online and in-person simulations to enhance employee skills related to the resolution of failed institutions. Online simulations provide employees with on-demand access to training that allows them to maintain and enhance their skills without having to wait for, or travel to attend, instructor-led courses. In 2012, the FDIC will conduct one tabletop exercise and one simulation to help identify those issues that may be most problematic during a bank failure.
In addition to technical training, the FDIC is focused on developing employees as leaders at all levels of the organization with a comprehensive leadership development curriculum that consists of core courses, electives, and several additional enrichment activities. Development of the core leadership curriculum was completed in 2011, and new electives and enrichments activities will be added in future years to promote leadership at all levels of the organization. The FDIC will continue to use all of its learning programs as opportunities to strengthen its organizational culture, build key competencies, and reinforce its corporate values.
Management of Information
Information Technology (IT) is a critical resource in fulfilling the FDIC’s mission. IT resources include a broad range of hardware and software assets, such as desktop computers, laptops, network infrastructure, the business application portfolio, and the FDIC’s public website (www.fdic.gov).
For the past four years, the FDIC has substantially expanded its IT infrastructure and operational resources to support workforce expansion and increased bank resolution activity. As bank resolution activity and the size of the temporary FDIC workforce begin to decrease, efforts will continue to address the FDIC’s aging business application portfolio and potential technology obsolescence while supporting the implementation of various provisions of DFA. The FDIC also will continue to improve its IT processes and procedures to enhance responsiveness and streamline application delivery. In addition, the IT program will continue to respond to challenges associated with data storage capacity, network bandwidth requirements, and an increasing volume of service requests. Data storage requirements have continued to increase because of the large increase in data volume attributable to bank closings and resolution processing. Data storage capacity, as well as performance and operational capacity of business applications, will continue to be monitored and adjusted as necessary during the year. The disaster recover data center relocation will be completed, and infrastructure services will be provided for upcoming office closings and moves. A continuing focus of the 2012 IT program will be the provision of tools and services to improve data analysis and reporting.
Implementation of DFA
The IT program will provide continuing support for the implementation of DFA in 2012. This support may include changing existing application systems, deploying new application systems, and supplying new FDIC organizational entities and their employees with technology assets. Regulatory changes mandated by DFA will require changes to existing applications that calculate assessments and perform other business functions. DFA also increases the FDIC’s data management requirements, since substantial amount of financial data must now be collected from other agencies and private entities. Finally, IT program staff will continue to work with CFI in 2012 to define requirements for new applications or databases to support its resolution planning for large, systemically important companies.
Advancing the IT Strategy
Work in 2012 will continue on the multi-year effort to implement the FDIC’s target enterprise architecture and address potential technology obsolescence in the business application portfolio. The FDIC’s application modernization strategy relies on roadmaps that have been developed with client organizations to guide business application replacement and consolidation. In 2012, the first phase of ETS will be implemented, replacing with a more efficient and enhanced loan review and analysis capability the existing ALERT system now used by field examination staff. Development will continue on the second phase of that project, to replace the GENESYS examination report system, and work on the modernization of assessment-related applications will begin. In addition, planning will begin on the modernization of other major systems that support the risk management and compliance examination processes. The FDIC also will continue to upgrade business applications to modernize database management systems and reporting software.
Information Security and Corporate Privacy Programs
The FDIC's Information Security and Privacy Programs protect the FDIC's data and information systems and strive to create an environment that protects 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 2012, the operational focus of these programs will be on ensuring the reliability, availability, confidentiality, and integrity of the FDIC's information and data assets. Work will continue on establishing a Security Operations Center that provides 24-7 security monitoring and planning for and implementing various tools to improve threat detection and reduce threat exposure. The FDIC will continue to establish policies and implement procedures that provide the highest possible level of protection of sensitive information while allowing the organization to effectively carry out its mission.
Management Controls and Contract Management
As an integral part of its stewardship of the DIF, the FDIC maintains a comprehensive risk management and internal controls program that is designed to improve the efficiency, effectiveness, control, and risk-focus of internal operations. Staff with the FDIC’s internal controls program advise and assist with issues such as risk management, internal controls, system security, privacy, operational effectiveness and efficiency, post-project reviews, and audit follow-up. During 2012, the focus will be on continuous improvements to the FDIC’s core business functions, with particular emphasis on loss-share operations, contract management oversight, new responsibilities associated with DFA, closing of temporary satellite offices, and system development issues.
The FDIC’s contract expenditures rose dramatically from 2009 through 2011, primarily to support the resolutions and receivership management function. This growth required the FDIC to expand its contract oversight management capabilities and implement enhanced management controls and reporting to make sure that appropriate services were received for the funds spent on contracting. Over the past year, the FDIC implemented additional monitoring tools, including an executive dashboard with metrics that provide visibility into key risks; oversight resources segmented by category and activity, complexity, and resource requirement; and more contract oversight resources. Also, the service support level of key IT systems supporting contracting was upgraded.
In 2012, the FDIC will continue to conduct transaction sampling and invoice reviews and to enhance the management information that is available on contracting. In addition, the FDIC will evaluate its business and legal services contracting programs to identify possible enhancements to promote increased participation by minority-and women-owned businesses and law firms, as required by Section 342 of DFA. The FDIC also will develop procedures to determine whether FDIC contractors and subcontractors have made good faith efforts to include women and minorities in their workforces, as required by Section 342.