Results

Overview of 2012-15 Accomplishments

While the Federal Reserve's basic mission and functions reflected in the Federal Reserve Act have remained essentially unchanged, the 2007-09 financial crisis and resulting statutes, regulations, and policies altered how the Board operates. In the wake of the crisis, the Board committed to expand its interdisciplinary infrastructure to support its objectives in the supervision, regulation, and financial stability areas. The Board decided, among other things, to build a stronger infrastructure for enhanced monitoring of markets and institutions, develop new tools and standards for strengthening the financial sector, and integrate its many activities and data information throughout the organization. These enhancements directly supported the discharge of a number of responsibilities in the banking supervision and regulation areas related to specific provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act).

When the Board evaluated how best to meet these new responsibilities, it determined that the Board needed to focus on its people, data, and facilities and increase the effectiveness of collaboration and coordination across the organization. The Board also identified that changes in the approach to monetary policy, supervision, and financial stability were critical to respond to the post-crisis environment, develop regulations and policies, implement the provisions of new statutes, close cross-disciplinary knowledge gaps, and continue to promote the recovery of a fragile economy. In addition, the Board needed to increase the efficiency and effectiveness in its administrative processes. To accomplish this, the Board would make strategic investments in six overarching themes.

The Board also determined that additional staff would be necessary to accomplish the objectives in the strategic framework. The strategic framework identified 192 new positions to support supervision, monetary policy, and financial stability, along with the new Office of the Chief Data Officer (OCDO). The Board filled 94 percent of the approved strategic framework positions through December 31, 2015. Table 1 shows the total number of strategic positions approved and the four-year hiring results. Additional needs identified throughout the four-year period resulted in an increase in the number of positions beyond the strategic framework allocation.

Table 1. Strategic positions authorized for 2012-15 and filled through December 31, 2015

Position alignment	Approved for 2012-15	Total hired in 2012-15	Unfilled strategic positions as of 12/31/15
Strategic Theme 1: Supervision, Regulation, and Financial Stability	172	164	8
Strategic Theme 2: Data Governance	20	16	4
Total	192	180	12

Following is an overview of the accomplishments during the strategic framework's four-year performance period for each strategic theme; specific details for each year are available in the annual performance reports.³

Strategic Theme 1: Supervision, Regulation, and Financial Stability

Continue building a robust interdisciplinary infrastructure for supervision, regulation, and monitoring risks to financial stability.

Throughout the performance period, the Board took actions to meet its broader financial stability responsibilities and made significant progress in implementing the provisions of the Dodd-Frank Act. It made important organizational changes to support a macroprudential approach to supervision and regulation, including instituting processes for identifying and responding to sources of systemic risk and implementing a more robust monitoring system for financial markets and institutions.

The Board continued to produce high-quality economic research that provides the foundation for policy decisionmaking and an expanded view of the economy, financial stability, macrofinancial risk, supervision, financial markets, and the role of financial market utilities (FMUs). The Board also worked with other financial stability authorities, such as the Financial Stability Oversight Council (FSOC) and the Financial Stability Board, to identify and monitor threats to financial stability and to propose actions to mitigate them. Below are specific accomplishments under this theme.

• Built a robust policy infrastructure to support financial stability, including developing capital and liquidity requirements to strengthen the financial sector. Evaluated potential policy responses to financial interdependencies and potential emerging systemic risks, and assessed the economic effects of proposed macroprudential policies on financial institutions.
• Facilitated risk discussions and promoted integration of financial stability research and analysis into the supervisory planning process through the Large Institution Supervision Coordinating Committee (LISCC), the Financial Market Utilities Supervision Committee, and the Systemic Risk Integration Forum.
• Developed and prepared the quarterly Quantitative Surveillance Assessment of Financial Stability reports, which identify financial sector risks by performing surveillance and risk-monitoring assessments, and the annual Comprehensive Capital Analysis and Review (CCAR) report, which evaluates the capital adequacy of large, complex U.S. bank holding companies (BHCs).
• Reviewed policies to enhance supervision, applying current understanding of business drivers, new industry practices, and potential risk implications. Developed quantitative surveillance methods for identifying and evaluating changes in the use of leverage in the financial system.
• Issued Supervision and Regulation letters, which clarify supervisory expectations for recovery and resolution preparedness, and provide additional guidance regarding recovery planning and capital issues.

• Finalized rules and provided guidance to strengthen the financial system, including

  • finalizing the U.S. regulatory capital rule and Regulation HH risk-management standards for designated FMUs;
  • issuing final regulations implementing the "Volcker rule";
  • publishing the final rule on risk-based capital surcharges for systemically important BHCs;
  • issuing final rules establishing enhanced prudential standards for large BHCs, including intermediate holding company requirements for the U.S. operations of foreign banks;
  • issuing the final U.S. liquidity coverage ratio rule; and
  • issuing final rules on stress-testing requirements for certain BHCs, state member banks, and savings and loan holding companies.

• Worked with other federal agencies and international authorities to strengthen supervision rules, including

  • developing and piloting new risk-based examination planning procedures, to include implementing a rigorous risk-based tool, for financial market infrastructures;
  • implementing the provisions of the Dodd-Frank Act requiring minimum margin requirements on uncleared swaps and conducting examinations with the U.S. Commodity Futures Trading Commission and the U.S. Securities and Exchange Commission (SEC) related to oversight activities for FMUs designated as systemically important by the FSOC.

• Solicited and received public comments on numerous proposed rules, policies, and reporting requirements, such as the rules on enhanced prudential standards and early remediation requirements under sections 165 and 166 of the Dodd-Frank Act; the small BHCs policy statement reporting requirements; and a rule to strengthen the capital positions of the largest, most systemically important U.S. BHCs.
• Completed the public meetings related to the Economic Growth and Regulatory Paperwork Reduction Act of 1996 review with the intent to identify outdated, unnecessary, or unduly burdensome regulations and consider how to reduce regulatory burden on insured depository institutions while ensuring their safety and soundness. An interagency report to the Congress is planned for 2016.
• Co-sponsored with the Conference of State Bank Supervisors, the Community Banking in the 21st Century Research and Policy Conference, the third annual community banking research and policy conference focused on community banking.

Strategic Theme 2: Data Governance

Redesign data governance and management processes to enhance the Board's data environment.

At the onset of the performance period, the Board committed to make strategic investments to meet the growing need for data to accomplish its mission. The number of data sets needed to fulfill that mission has increased, and the data sets have become more complex; Board divisions often use a single data source in a variety of ways. To address these demands, the Board created the OCDO, hired its first chief data officer, developed the office's mission, scope, and organizational structure, and outlined the OCDO's service portfolio in the areas of data governance, data architecture, data management, and program management. This structure allows the Board to acquire data and manage data budgets while facilitating coordination across data communities at the Board. The OCDO is establishing a more cohesive approach to address growing Boardwide data needs and is ensuring the flexibility required for this growing demand. During the four-year performance period, the OCDO accomplished a number of goals listed below.

• Established the Board Data Council composed of key stakeholders who provide strategic guidance to the OCDO and support the OCDO's work on data governance and data management.
• Created the Board's first enterprisewide data strategy and the associated roadmap and objectives.
• Undertook projects to catalog key data assets and enhanced a Boardwide taxonomy in support of search and discoverability efforts.
• Delivered the Federal Reserve System Data Inventory Workgroup white paper summarizing enhanced data transparency.
• Began work on several significant enterprisewide data management projects, including the Enterprise Data Inventory and the Data Management Business Services projects, which focus on improving discoverability of data assets for economic data and financial institution data.
• Focused on activities to enhance communication about data accountability.

Strategic Theme 3: Facilities Infrastructure

Establish a modern, safe work environment that emphasizes the need to maintain data quality and integrity and the importance of enhanced collaboration within the organization and with the public.

During the strategic planning process, the Board identified the need for significant investment in two multiyear capital projects, which were key enablers of the other strategic themes: relocation and modernization of the Board's data center and renovation of the Martin Building. The increased quantity of data demanded by the economic and supervision functions generated significant growth in the supporting technology infrastructure, including storage, space, cooling, and power requirements. This growth exceeded the capacity of the existing data center, necessitating relocation to an alternate site. The Board also recognized that the lack of significant renovation to the Martin Building facility since its construction in 1974 had led to an outdated, inefficient building that was not meeting the needs of the Board. Renovation of the facility allows the Board to address security, energy efficiency, and physical plant capacity, as well as provide much-needed meeting and conference facilities.

By the end of the strategic framework period, the Board relocated its Data Center, and the new facility was fully operational. The project was completed ahead of schedule and under budget. Key events met during the planning period are listed below.

• Completed construction of the new facility.
• Installed and migrated equipment, systems, and data.
• Employed industry standards for resource optimization.

Work on the renovation of the Martin Building began in 2012. Delays have been encountered during the design process, requiring the Board to adjust the original schedule. The Board met several key milestones as listed below.

• Obtained approval from the U.S. Commission on Fine Arts and the National Capital Planning Commission on the overall design of the renovation project.
• Completed a no-impact study on the historic Mall by the State Historic Preservation Office.
• Completed the environmental study under the National Environmental Policy Act.
• Received budget approval for the project, including funding for temporary personnel relocation space, the Data Center Relocation project, and visitors and conference centers.
• Completed build-out of additional lease space and relocated staff from the Martin Building.

In addition to these two large capital projects, the Board continued to make improvements to its other facilities. Key events are listed below.

• Completed construction efforts on the majority of the office space at the New York Avenue Building, upgrading critical infrastructure and providing additional offices for employees by reconfiguring space for more efficient use.
• Completed significant improvements to the mechanical systems in the Eccles Building, including an update that expands the uninterruptible power supply system and enhancements for data services.
• Performed ongoing infrastructure enhancements and surveillance system upgrades in the Eccles Building, which will ensure continual service delivery during the Martin Building Renovation project.

Strategic Theme 4: Maximizing the Value of Human Capital

Create a work environment built on market-oriented compensation, a performance- and talent-focused culture, as well as support for academic and personal achievement that allows the Board to attract and retain top diverse talent, while fostering a culture of inclusion and maximizing performance.

The Board evaluated its talent management process to ensure effective recruitment, development, and retention practices to attract and retain top diverse talent now and in the future. During this period, the Board identified, developed, and implemented several new talent management programs. Throughout the strategic framework period, the Board made the necessary investments in people, including recognizing the importance of its long-standing efforts to promote equal employment opportunity and diversity. Key accomplishments are listed below.

• Evaluated the existing performance management program and identified gaps in the program. Based on the findings, the Board implemented a new performance management program that focused on employee performance, accountability, and competencies and that standardized and simplified the evaluation process. In 2013, several divisions piloted the program, and by year-end 2015, the Board implemented the new performance management program. Human Resources (HR) created learning materials, such as Conversations at the Core and Partnering for Success, and held training sessions for staff and management.
• Updated policies related to academic assistance, adverse action, leave for professional development, provisional employment, and vacant-position posting.
• Held succession-planning discussions with senior management, focusing on division directors, deputy directors, and critical officers throughout the organization.
• Conducted a market pay analysis and reviewed the Board's compensation structure relative to available market data. Redesigned the compensation program to align more with industry standards.
• Conducted a Boardwide engagement survey in 2014. Compiled the results and discussed a report of the findings with the Board's senior management and Board members. Shared results with staff and developed an action plan to address the findings.
• Implemented a Diversity Scorecard to assist divisions in pursuing a comprehensive and strategic focus on diversity and inclusion as a key metric. The scorecard establishes accountability for the setting of diversity objectives and for actions by divisions to achieve those objectives. The scorecard objectives cover four performance areas: Leadership Engagement, Talent Acquisition, Talent Management, and Supplier Diversity.
• Issued a final interagency policy statement in the Federal Register that establishes joint standards for assessing the diversity policies and practices of the entities regulated by the Board, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Consumer Financial Protection Bureau, and the SEC.

Strategic Theme 5: Management Processes

Strengthen management processes to enable effective implementation of strategic themes, increase operating efficiencies, and reduce administrative burden.

The Board reviewed a number of administrative processes during this period and identified several changes to ensure that the Board operated in a more efficient and effective manner. This review provided the Board's senior leadership with a comprehensive overview of significant processes, the gaps in these processes, and potential solutions to address these gaps. The Board also reviewed the strategic planning process used during the formation of this plan and developed a new collaborative process to assist with the drafting of the Strategic Plan 2016-19.⁴ Key accomplishments are listed below.

• Established a Strategic Performance Office with responsibility for monitoring and reporting on the Board's progress in achieving its strategic objectives.
• Drafted, finalized, and approved the Strategic Plan 2016-19, published in October 2015.
• Identified opportunities to reduce redundancies and enhance operational efficiencies in key administrative policies.
• Focused on the Board's responsibility as a trusted steward of public funds by implementing a multiyear expense-forecasting system.
• Formed the Investment Review Board to review all significant operating and capital projects prior to budget approval and to monitor them throughout their project life.

Strategic Theme 6: Cost Reduction and Budgetary Growth

Establish a cost-reduction approach and a budgetary growth target that maintains an effective and efficient use of financial resources.

As the Board's responsibilities grew from the Dodd-Frank Act, the Board began looking for ways to reduce costs to help offset some of the new resources required by its additional responsibilities. The Board identified areas for evaluation and instituted a cost-evaluation process. As a result, the Board implemented several cost-management initiatives during the strategic framework period, which are listed below.

• Implemented an automated variance tool to provide information to division administrative staff regarding expenditures versus operating plan budget.
• Developed and implemented a monthly Boardwide budget review process.
• Centralized and streamlined tracking and reporting for Boardwide capital and strategic projects, including initiating collaborative meetings among divisions to build consensus and achieve common goals.
• Implemented new automation tools to develop the 2015 capital budget and cost-estimation expenses for new initiatives.
• Negotiated favorable service contracts including a new five-year contract for off-site mail services, resulting in $1 million in savings from the previous annual contracted price.
• Outsourced travel expense reimbursement processing, saving more than $200,000 per year.
• Reviewed key administrative processes to identify opportunities for reducing redundancy and enhance operational efficiency. Reduced contractor expenses and leased equipment charges through negotiations or elimination of redundant services, including the cancellation of several leased pieces of equipment in the Print Shop that provided redundant services.

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Overview of 2015 Accomplishments

In 2015, the Board continued its work to improve the stability of the financial sector by engaging in activities that strengthen regulatory and supervisory policies, monitoring risks to the economy, and implementing provisions of the Dodd-Frank Act. The Board published the final rule of the risk-based capital surcharges for systemically important BHCs, released guidance to examiners and banking institutions on capital planning expectations, and completed the 2014 CCAR. Board members and staff gave speeches; spoke at conferences; and published research on topics such as the U.S. and global economy, monetary policy, financial stability and risks, the banking and financial system, and supervision and regulation.⁵ The Board solicited and received public comments on several proposals, including the Dodd-Frank Act implementation efforts and the small BHCs reporting requirements; completed the quarterly Quantitative Surveillance Assessment of Financial Stability reports; and transmitted to the Congress, as required by the Dodd-Frank Act, the Government Administered General-Use Prepaid Cards report.

The Board also advanced the enterprise management of data and data governance. The OCDO delivered the enterprise data governance strategy as well as the associated roadmap and objectives. Work continued on several key projects, including the Information Collection Clearance Automation project, the Enterprise Data Inventory (EDI) Lite project, and the Taxonomy Lite project. Throughout the year, work focused on stewardship activities that enhance enterprise communication and data accountability and improve understanding of data management roles and responsibilities.

The Board continued its work to upgrade the infrastructure of its facilities. Notable actions included completion of renovations at the New York Avenue Building and improvements to the mechanical systems in the Eccles Building. The Board finished the leasehold improvements for temporary personnel relocation space as part of the Martin Building Renovation project. The Board successfully relocated the Data Center ahead of schedule and under budget.

The Board finished its rollout of the new performance management program and provided training sessions and learning material for staff and management. It also implemented a compensation structure more aligned with market practices and initiated succession planning.

Beginning in 2014 and continuing in 2015, the Board engaged in a collaborative project focused on developing the next strategic plan. The project involved senior officers and staff and included individuals from every area of the organization, resulting in a plan that represents all employees. The Board published the Strategic Plan 2016-19 on its public website in October 2015. Work also focused on the Board's responsibility as a trusted steward of public funds, including the implementation of a multiyear expense-forecasting system to inform future budget development. Senior management and Board members received quarterly performance and financial reports.

The remainder of this report lists the six strategic themes, the objectives for each theme, and the corresponding results that took place in 2015.

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References

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