Organization of administrative and economic activities in the Banks: behind the scenes

Author: Yanina Gavizha

The work of administrative units of the bank is similar to an old joke: when the mother constantly cleans the house – it is not noticed … it only becomes visible when she stops cleaning.

The same situation is with the administrative and economic activities of banks. While everything is well-coordinated and without failures – business units may not even suspect what a huge amount of work behind this all costs. But only somewhere the chair has broken or not in time have been replaced a broken light bulb – all complain about the ineffectively established work of the “manager” or even the entire administrative department.

Let’s figure out how really it is difficult to organize the work of AEA and support of their effective management.

Take stationery on your desk, for example. At first glance, everything is simple: administrator got it for you according to your application or oral request. But if the situation is considered by the employees of administrator department, it looks quite different.

When such applications are received (and there may be thousands of them), the algorithm of action is the following:

  1. To collect applications from the Bank’s employees and consolidate them;
  2. To classify for necessary categories: office paper, small stationery, goods for cash desks, etc.
  3. To make a technical specification for goods, their assortment; to agree the budget with the financial service of the bank;
  4. To organize a tender for supplier selection (it is good if one supplier covers all the needs for the necessary office supplies, but there can be several of them);
  5. To conduct the contest in several stages, to determine and approve the winner;
  6. To conclude an agreement with the supplier, covering a lot of work (development of agreement template, coordination with all interested parties of the bank, checking the budget, etc.);
  7. To pay for office supplies order in accordance with the terms of the contract and the requirements of internal accounting;
  8. To arrange the delivery to the right place and time; to organize a place for storage of spare stationery;
  9. To split the entire order for applications from employees and spread to workplaces;
  10. To сlose accounts receivable with proper documents;
  11. If the supplier is selected for a long time – with the frequency specified in the contract, place orders for office supplies delivery and return to paragraph 7

Such example can be cited with all AEA business processes that surround you: transport organization, business trips; repair works in the office; tea / coffee at waiting and meeting rooms.

But, as practice shows, it is not so difficult to do all these algorithm actions. It is much more difficult to build rules for departments interaction, correctly determine the functional and workload of the administrative department, distribute the limits of decision-making and authority, eliminate excessive bureaucracy.

Correctly chosen strategy of AEA management and business processes are established, in the further they start to work as a clock mechanism: accurately and without interruption.

In different practices, during AEA organizations there is an approach and management models.

The model of full centralization of AEA functions; management and control are assigned to one admin. department, which in turn provides all business units and branches of the bank.

Decentralized management model. Banks create support centers or administrative departments which provide the employees with everything they need; seek suppliers, conclude contracts with them, make payments through the branches accountancy.

Matrix management model: some functions are assigned to the administrative department in the Head Office and a part is given to local branches. As a rule, with such model, process regulation, limit management and control are concentrated in one of administrative departments and implementation of common rules and regulations are distributed in the departments of administrative support of branches.

There is also a fourth model – transfer of administrative and economic activities for outsourcing of core companies. This option is chosen by banks, who do not want to spend time for AEC organizing, to keep non-dedicated staff (quartermasters, estimates, drivers, energy, etc.) and focus their management only on business units.

One cannot speak of the approaches from the first day works closely together or on the contrary it constantly fails. Each strategy is good and effective when it is inherent the AEA monitoring, “work on mistakes” and continuous increase of process effectiveness.

Yanina Gavizha

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