LB Manager Šimkus on ongoing transformation: I want to strengthen the governance of the organization

“There is no need for intermediate management chains for someone to inform someone else. Because it is not the bosses who dig the ditches, the people dig the ditches, ”said G. Šimkus in an interview with BNS.

According to him, the planned changes are related to his aspiration to turn the Bank of Lithuania into a modern, advanced and fearless organization.

“We are talking about improving governance, assigning responsibilities where decisions must be made,” explained G. Šimkus.

He spoke with BNS after the delfi.lt portal announced the planned changes.

– Perhaps you can briefly tell what is happening in the Bank of Lithuania, is a structural restructuring really being prepared?

– I prefer the word reload. I want to strengthen the governance of the organization, abandon the excessive hierarchy, because now we have three layers between the employee and the board. Our own structure is very uneven, there are independent divisions, independent departments, independent councils. So solutions travel from place to place to place.

Therefore, I want to empower managers, that is, localize decision making where managers plan, implement and execute activities, instead of delegating responsibility to someone else. I want to speed up decision making, empower leaders and give them space for leadership.

Now the situation is very strange. We have very hierarchical performance management and decentralized administration, which increases the burden on the organization itself. The plan is to merge the divisions in corporate affairs and divisions of strategy and administration, that is, to strengthen the bank’s access to strategic management and the achievement of strategic goals.

There would be a compliance and risk unit that, in the current global context, would allow us to respond responsibly and seriously to external threats, to assess our own risks. And consequently, implement all management practices through the operational units, thus reducing the administrative burden on the heads of the functional units. And even give the board room to deal with strategic rather than current affairs.

In technical terms, in my opinion, this is not that big of a change, as some services are called services, but they are really just departments. When a manager leads two people, I wonder if there really is leadership here. In this case, it is possible to do without these intermediate layers.

– If I understand correctly, is the new structure going to abandon the current services? Maybe you can tell me about it in detail?

– The structure remains practically unchanged. The service is only an intermediate level to transfer responsibility. In reality, the service itself does not perform any activities, and all the activities that have been, remain.

The Economic and Financial Stability Service, for example, is the head of three departments. The Director directs three directors: the Director of the Department of Economics, the Director of the Department of Financial Stability and the Director of the Department of Statistics. What is the purpose of leading the Director of Statistics? This is the person who is in charge of statistics and if I am talking about statistics I want to speak with the Director of Statistics, not with the Director of the Economic and Financial Stability Service, who will pass the information on to the Director of Statistics. . That extra layer (service – BNS) is unnecessary.

– Will the departments report directly to the Board of the Bank of Lithuania if they resign?

– There is no “subordination”. As services are now overseen by board members, they will continue to oversee those areas. Here there is no subordination, only tutoring activities. As it was, it will continue to be.

– What awaits the current heads of services?

– The situation is very different. There is a service the size of an apartment, but we call it service. It will just become a department.

– Can you specify which service you are talking about?

– Banking service, in charge of Jonas Kanapeckas. There are about 50 employees, as in other departments, so it will become a department. Clearly, there are two department directors in this service, so one of them will become the head of the department, and the other will be sought to find another position in accordance with the law.

Oh, let’s say there is no director in the Economic and Financial Stability Service, that position is being abolished. There was a selection for this position and no candidate was found, the current head of the service Aurelijus Dabušinskas is temporary and will return to his previous position. He himself had previously expressed such a wish for it to be temporary.

At the service of the organization, we separate the Information Technology Department, because this is a very important area due to the large number of projects that are being implemented. (…) The rest of the service: the Accounting and Service Administration departments will become divisions, we reduce the number of those heads.

The very important thing will be the Department of Strategy and Governance. This will be a very important part of running the bank, as well as risk and compliance that has been quite fragmented with us until now. So is the Communications Division, which now has department status.

– What awaits Ekaterina Govina, the divisions of the Superintendency of Supervision of the Financial Market and its director?

– The Financial Market Authority now has a Supervisory Committee with an advisory function only. I believe that its role must be strengthened and that the Vigilance Committee must have real decision-making power, because the decisions that are made in the service now are very important and should not depend on a single person.

As for the head of the service, each person is necessary and important for the Bank of Lithuania, these new roles will appear in the context of our transformation. We also have a discussion about our strategic aspirations, we are talking about specialized centers that would specifically seek a strategic change, we are going to dedicate resources there, and new positions will be offered at the bank, including to Ekaterina.

However, I do not want to emphasize people and surnames, because that way we will get caught each time we want to be more efficient, because there are people in all positions. If I want to pursue innovative and modern governance, so must the governance and structure of the bank. The structure is not an objective, it is only a tool for efficient bank management, where decisions move faster, communication is faster and more direct. These days, people want to participate in decision making.

– The Financial Market Supervisory Authority also has sections on Prevention and Digitization of Money Laundering and Advanced Analysis. Maybe you are going to strengthen them and turn them into departments?

– Digitization is one of the attributes of a modern organization, but I don’t understand why digitization should be relevant for only one service. I set a goal of linking digitization goals across the institution. If this department is in a service or department, then it only works for him. There are people in that department who are dedicated to digitization, so once the changes are implemented, they will work for the entire bank. Advanced analytics is also very good, but there are people who work on specific problems, with credit risk. There is a credit risk department, so you travel there.

The money laundering prevention department is very important, but it is one of the risks that falls on one of those departments. Therefore, that department will travel to one of the departments, the Department of Financial Services and Market Supervision.

– When did you have the idea to restructure the Bank of Lithuania? Did you already have those plans when you ran for the post of Chairman of the Board of the Bank of Lithuania?

– I have worked at the Bank of Lithuania for many years, I myself have been the director of one of the services, therefore, that management experience and the understanding that we can do better have accumulated over many years. When I became a board member last September, I raised these issues at a board meeting. There was a discussion, but then there was no such appetite, and the term of the then chairman of the board was coming to an end. I felt there was interest, but no decisions were made.

When I became chairman of the board, one of my goals was to modernize and optimize the organization. We are going to reduce the number of managers by almost a fifth, at this stage because we are not talking about reducing the number of employees, but then streamlining activities should lead to that. I make the managerial changes that I think are necessary. There was also a discussion with the board members, both individually and at the board meeting. A week ago, we started reporting to department heads for feedback. Today we informed the employees of the Bank of Lithuania about the planned changes and coordination with the union is still pending.

I think we are really trying to involve everyone in terms of communication, but I understand that it is not possible to consult the entire bank. I am very concerned that when it comes to change and more effective performance management, we return to the question of what will happen to one person or another. Organizational change always touches a person, I understand it with a lot of empathy, but this time it is not aimed at forgiving someone or anything like that.

– So far, you have not spoken publicly about the intentions to restructure the Bank of Lithuania.

– Do I have to show those plans in public?

– In my opinion, it would have been logical to mention this when you stood on the Seimas committees as a candidate for chairman of the Board of Directors of the Bank of Lithuania.

– At that time, I did not even think that I would come to restructure the Bank of Lithuania, because that is not the goal in itself. I am talking about a modern and advanced Bank of Lithuania and governance, which includes not only the organizational structure, but also the definition of management competencies, cooperation, assumption of responsibilities, faster and more efficient organization of activities. These are all part of the steps we must take to move forward.

– Did Simonas Krėpšta’s membership on the Board of the Bank of Lithuania have any impact on the planned changes?

– No, the debate on this started earlier.

– Are the planned changes coordinated with the Seimas committees or the Presidency?

– No, because that is my responsibility as a bank manager.

– Will the structure of the Bank of Lithuania become similar to the structures of other central banks in the euro area after the implementation of these changes, or will it be exceptional?

– Thanks to the change, we will become more like other central banks. (…) If we talk about trends in the governance of central banking, the hierarchy that contracts, the flattening of the structures is what is happening now. This is the direction of modern management because people, especially young people, want to participate and take responsibility. We want to invest in those people who bring new winds, and if we push them somewhere through that excessive hierarchy, they abandon us. If we look at what proportion of people in the Bank of Lithuania changes the most, it would be young people.

– How long will this transformation take?

– There is coordination with the union, because there is not only a business chain but also a human one. The plan is to have a new structure on November 1.

– Thank you for the interview.