Standard twinning project fiche

ANNEX C1¹

STANDARD TWINNING PROJECT FICHE

1. 
   Basic Information
   
   1. 
      Programme: IPA 2010
      
   2. 
      Twinning Number: SR/2010/IB/FI/01TWL
      
   3. 
      Title: Capacity Development of Human Resources in the National Bank of Serbia
      
   4. 
      Sector: Public Finance
      
   5. 
      Beneficiary country: Republic of Serbia
      
2. 
   Objectives
   
   1. 
      Overall Objective(s):
      

To contribute to improving the performance of the National Bank of Serbia in all the fields coming under its remit by fostering and improving human resources management policy and functions within the institution

2. 
   Project purpose:
   

To undertake concrete steps in reforming HRM policy and respective functions of the NBS leading towards better compliance with HRM standards and practices of EU central banks

3. 
   Contribution to National Development Plan/Cooperation agreement/Association Agreement/Action Plan
   

This project relates to Stabilisation and Association Agreement - Cooperation policies are contained in the Stabilisation and Association Agreement, particularly cooperation referred to in Article 114 of the Agreement, envisaging cooperation aimed at the development of an efficient and responsible state administration, notably the provision of support to the rule of law, appropriate functioning of state institutions to the benefit of Serbia’s overall population, and unimpeded development of relations between the EU and Serbia. Cooperation in this field will focus mainly on institutions building, the development and implementation of a transparent and unbiased system of employment, personnel management and promotions, continuous training and promotion of ethics

European Partnership - European partnership 2008, short-term priority: Invest further effort in implementation of state administration reform; ensure transparent employment and promotion of professionalism and responsibility; strengthen the European integration structures.

MIPD (2011-2013) - Section 3.2.3 determines within the Sector of the Public Administration Reform the objectives which will be supported by EU over next three years, especially the specific objectives such as improvement of the efficiency, effectiveness, transparency, commitment to non-discrimination and accountability of the public administration, as well as the rationalization of the administrative resources.

Multi-Annual Indicative Financial Framework for 2010–2012 - Section 2.component I – assistance in transition and institutions building, strengthening the public administration capacities and regulatory bodies.

This project is related to the National Programme for Integration of Serbia into the EU (NPI) under points: 2. Economic criteria -2.2. Ability to face pressure of competition with market forces within EU 2.2.1. Human resources-Employment and labour market-Labour market in the Republic of Serbia is, in addition to high, structural and long-term unemployment, marked by uneven workforce offer and demand, low mobility, high regional differences, surplus of employees in public and state-owned companies, obsolescence of knowledge and abilities of both employed and unemployed, which is a consequence of technological and economic stagnation of the society during the previous period. 3.Ability to take over the responsabilities of EU membership. - 3.2. Workforce mobility - 3.2.1. Access to labour market- In order to provide for full workforce mobility and ease the access to jobs and independent free professions, there is a legislation-innovating process going on in the education sector in the Republic of Serbia, that is supposed to provide for a process of acknowledging informal education and training and acquisition of specific knowledge and skills through a system of lifelong learning. 3.4. Free movement of capital -Institutions-National Bank of Serbia will be subject to capacity building in the area od capital movement regime and current payments through further employee training and different types of technical assistance, as well as the cooperation with central banks of surrounding countries and EU. 3.9. Financial Services - 3.9.1. Banking - Legislative activities planned for 2010. Also, one of the priorities of the National Bank of Serbia in 2010. stays strenghtening of institutional capacities and human resource abilities. 3.17. Financial and monetary policy- Planned activities in 2011 and 2012- Implementation of planned activities in this period has been determined by setting short-term priorities and increased cooperation with EU and its institutions, which implies a faster joining process for Serbia.

This project is in line with the Needs Assessment Document 2011-2013) - Public Administration Sector :

Priority1 – Enhanced professional development of the staff and institutional capacity of civil service at all levels

Measure 1.1 – Improvement and implementation of strategic documents, legislation and public policies regulating professionalization of civil service

Measure 1.3 - Improvement of the functioning of public administration bodies and strengthening of their capacities

3. 
   Description
   
   1. 
      Background and justification:
      

The Republic of Serbia’s strategic priority is to join the European Union (EU), a single market of goods, services, people and capital. This commitment implies transition towards a functional market economy, founded on stable and developed banking and financial sectors. Since a reliable and efficient central bank is the cornerstone of macroeconomic stability and therefore has an important role in the European integration process, the National Bank of Serbia (NBS) takes an active part in Republic of Serbia’s accession to the EU. Given the complexity of its activities and the challenges it faces, the NBS needs to invest additional efforts in promoting knowledge, skills and capacities in the field of human resources management. A responsible human resources management policy is a precondition for the NBS’s success in all of the fields coming under its remit.

In addition to its legally stipulated mandate of “achieving and maintaining price stability”, the NBS has over the past years been focusing on issues related to staff welfare and corporate social responsibility. In that regard, to promote and bring its operation into line with EU standards, the NBS places strong emphasis on human capital development. People being its key resource, the NBS intends to enhance, through its employment, education and motivation policy, the competence of its employees, their professionalism and efficiency by applying and monitoring general regulations and other labour-related regulations.

On 17 November 2006, the NBS established its Human Resources Department as an independent organisational unit, with the aim to systematically invest in modernising human capital. Located in the Head Office, the Human Resources Department, managed by its Director and coordinated by the Secretary General, is an organisational unit responsible for the provision of support services. It is structured in three Divisions: Employment Relations and Staffing Division, Pay and Benefits Division, and Training and Development Division. Its scope of activity is laid down in an internal general act on internal organisation and consists of human resources organisation, design and development of a human resources management strategy proposal, human resources planning and staffing policy implementation, development and implementation of a pay and benefits methodology and implementation of a staff training and development methodology.

Human Resources of the National Bank of Serbia was developed out of the former Personnel Department in 2006.The activities falling within the scope of the National Bank of Serbia were complex and challenging, requiring additional efforts in the further development of abilities, knowledge, and skills for human resources management and administration.The National Bank of Serbia as a specific institution, although not exposed to competitive market pressures, due to the responsibility it has for achieving its priority goals and functions, needs to be organised and managed on principles of contemporary management, while an accountable human resources management policy is a prerequisite for achievement of the Institution’s ultimate goals.

Since June 2011 Human Resources have been facing a challenge of a new regime of employment relations under the amended Law on the National Bank of Serbia and internal general acts (new job classification and organisation, jobs grouping, new job assessment system – base wage setting, part of the wage set on a performance basis).

A twinning light project will ensure highly trained staff in areas such as job analysis, talent management, career development, information technology tools, etc.

The basic goal of the Human Resources Department is to ensure and support an efficient, flexible and cost-effective organisation of highly educated, specialized and professional human resources. Strategic goals are as follows:

To promote planning of the number and structure of employed and contracted persons

The process of planning the number of employed and contracted persons based upon data collected by the Human Resources from organisational units in the process of developing the financial statement in its section that falls within the scope of activity of Human Resources is not based upon precise strategic priorities and operational goals or verified by the management. Taking into account the deficiencies identified in the current way of planning, unobjective planning of the required number of employed and contracted persons and low performance relative to the plan, according to the Human Resources it is necessary to improve the actual system of planning the number and structure of employed and contracted persons, and link it to development of the Financial Statement from the aspect of costs of wage, wage compensations and other emoluments. In addition to obvious benefits for the NBS and the budgetary aspect of its operations, the strategic human resources planning will, as an integral part of the strategic planning at the level of the NBS, establish the processes and procedures of human resources planning identifying actual and future human resource needs (from the point of view of the required number of staff, required educational profiles, etc.) and creating the link between the human resources management and strategic priorities of the Bank. On the basis of a developed organisation research methodology and a simple, systematic and well-documented human resource planning system, the expected result of human resources planning promotion is to translate the identified needs into the staffing plan, redundancy plan, horizontal and vertical mobility within the organisation, and to set up monitoring and control over the execution of the plans of organisational units.

• 
  To promote human resource tools to reach the optimal number of employees who are qualified, trained and motivated to carry out activities within the scope of the activities of a central bank in a successful and accountable manner.
  

The success of an institution such as the National Bank of Serbia is rooted in its staff.To have motivated staff equipped with state-of-the-art knowledge and skills, Human Resources seek to improve recruitment procedures and guidelines and following and adoption of staffing practices based upon good practices of central banks in the European Union.Therefore, the recruitment process should be shortened and its automatism improved on the basis of an electronic database used to collect and process data contained in job applications

Also, to this end, the National Bank of Serbia should introduce a uniform job analysis methodology, create a catalogue of occupations, and develop a functional link and software infrastructure to establish a network among job descriptions, procedures and job classification.

The strategic approach to professional capacity building and strengthening of staff should be promoted, including procedures for development of the annual training plan, and the criteria for priority setting and allocation of resources should be defined. In this context, there should be active cooperation and task delegation between line managers and Human resources. The expected results include training needs identified on the basis of objectively analysed existing and required knowledge and skills from the aspect of actual and future organisational development needs and plans. Thus, the identified training needs will facilitate the planning and delivery of training curricula in support of the strategic goals of the Bank.

Strategic approach to career guidance should be developed simultaneously with a talent management function, bearing in mind better utilisation of internal capacities of the staff, maintenance of qualitative human potentials, strengthening motivation for additional effort, ensuring succession, reducing fluctuations and absenteeism, and positioning of the National Bank of Serbia as a desirable employer.

Currently, it is a strategic requirement of critical importance to find an organisational design that will enable utilization of all the potentials of the staff and motivate the overall organisation to work in a complex and dynamic environment. Consequently, Human Resources will have an active role in promotion of managerial conceptual skills (strategic planning, decision-making, leadership, change management, corporative culture, etc.) to maximally prepare managers for a competent response to strategic requirements and future challenges. The established benefit system for the staff needs formalization (those parts that have not yet been formalized), including the system of material and non-material rewards, while the staff performance assessment should be upgraded to the performance management system based upon clear and accurate principles.

Practice has shown that different factors have different influences on the level of motivation of the staff. As the level of motivation has direct impact on both performance and fluctuation, key factors that influence motivation in the NBS should be identified and used for planned and systematic motivation management.

In addition to the mentioned results, a human resource management system based upon thus established procedures should:

• 
  Link organisational and individual goals in order to establish connection between individual performances and implementation of the strategy of the National Bank of Serbia
  
• 
  Document valid and useful information that will facilitate decision–making on: staff training and development, compensations, benefits and advantages,
  
• 
  promotion, retirement, staff retention, recognition of excellent staff, recognition of underperformers, dismissal, etc.
  
• 
  Provide clear information on organisational and managerial expectations, and feedback to the staff on performance in areas needing improvement
  
• 
  Ensure continual improvement of the staff performances
  

• 
  To develop a functional model of human resources management
  

The application of the new internal general acts on job classification and organisation in the National Bank of Serbia has shown that there is room for a system-based solution that will link the scope of activity of organisational units, operational processes, resulting activities and tasks and activities and tasks contained in job descriptions of the job classification. Also, more accurate and delineated concepts of function, process, activity and task are expected, on the basis of which the organisational units will define their operational processes and thus form the basis upon which processes and instructions will be developed.

Furthermore, the project would focus particularly on Basel II requirements relating to the operational risk in terms of human resources management, such as:

• 
  Employee relations (strikes and other forms of industrial activities by employees or agents, or employees or agents’ activities leading to serious disruption of work processes or increased client dissatisfaction)
  
• 
  Diversity and discrimination (lack of harmonisation with regulations and guidelines relating to diversity and/or discrimination against employees or agents)
  
• 
  Recruitment and training (all aspects of recruitment, verification of references, appointment, entering into employment and staff training)
  
• 
  Rewards, costs and wages (staff rewards, including bonuses, commissions and increase/decrease in rewards and physical wage production processes)
  
• 
  Staff grading and termination of employment (staff evaluation, managing promotions, retirements and termination of employment)
  

2. 
   Linked activities (other international and national initiatives):
   

EU funded projects:

The project “Strengthening of the Institutional Capacities of the National Bank of Serbia” approved from the EU Instrument for Pre-Accession Assistance (IPA) for 2008. The project involves experts from the ECB and 21 NCBs, and envisages the implementation of recommendations of ESCB experts presented in the Needs Analysis Report. The implementation of this two-year project which covers 11 different areas of NBS operations began on 1 February 2011.

3. 
   Results:
   

The expected results are the following:

Result 1: Human Resources Management Strategy defined in accordance with up-to-date HRM policies of Central Banks and accompanying concrete operational tools aimed at maximising the speed and degree of Strategy implementation developed.

Indicators:

• 
  Developed methodology for preparation of the Human Resources Management Strategy in the first three months upon the commencement of the Project
  
• 
  Options of the human resources planning system agreed in the first three months upon the commencement of the Project
  
• 
  Draft of the Human Resources Management Strategy produced by the end of the fifth month upon the commencement of the Project
  
• 
  Proposal of a functional model that links the scope of organizational units, functions performed in the certain organizational unit and individual job descriptions and job performers (tasks-general and typical) drafted
  
• 
  Proposal of methodology for recognition of business processes drafted
  
• 
  Methodology of evaluating jobs as a basis for calculation of the basic salary coefficients drafted and tested on a selected sample
  
• 
  Action Plan for the implementation of the HRM Strategy prepared by the end of the Project implementation
  

Result 2: Improved mechanisms and procedures for the human resources assessment, recruitment and employment.

Indicators:

• 
  Assessment paper prepared on the effectiveness, advantages and disadvantages in the current system of internal and external vacancy advertising in the first half of Project implementation;
  
• 
  Comparative analysis drafted on the effectiveness, advantages and disadvantages of the methodology and procedures applied by the human resources assessment centre in the first half of Project implementation
  
• 
  Prepared guidelines and accordingly draft of improved procedures of the issue of internal and external vacancy notices by the end of the project implementation
  
• 
  Prepared guidelines and accordingly draft of improved procedures for the human resources assessment centre including aspects of operational risk management by the end of the project implementation
  

Result 3: Prepared annual staff training plan and programme and improved training evaluation process.

Indicators:

• 
  Drafted proposal for improvement of the methodology for staff TNA and the respective training evaluation methodology in the first half of the project implementation
  
• 
  Drafted proposal for improvement of the procedures for trainings’ preparation and for planning of allocation of financial and other resources for carrying out of trainings in the first half of the project implementation
  
• 
  Prepared training catalogue containing up-to-date training modules suitable for NBS’s staff and possible external trainees’ groups by the end of Project implementation
  
• 
  Produced proposal of annual training plan and program for the year following the year in which the present Project is completed
  

Result 4: Developed strategic approach to staff career management, established talent management function and efficient procedures and guidelines in the field of staff performance evaluation, benefits and material and non-material staff rewards in line with international practice

Indicators:

• 
  Drafted proposal for improved procedures and guidelines for staff career management (aimed at developing the system of career guidance and counselling)
  
• 
  Methodology paper for introducing talent management functions drafted by the end of the Project implementation
  

• 
  Assessment paper prepared on the effectiveness, advantages and disadvantages in the current system staff grading and drafted proposal for improvement of criteria and other elements of grading methodology
  
• 
  Drafted recommendations for improving the system of rewards, stimulations and benefits aimed at better staff motivation by the end of the Project implementation
  

Result 5: Improved software infrastructure for the needs of Human Resources Management

Indicators:

• 
  Assessment carried out on the scope and quality of information contained in the existing database in the first half of Project implementation
  
• 
  Software improvements proposed and documented to support better quality and reliability of staff information and reporting requirements
  

4. 
   Activities:
   

From the point of view of the Beneficiary, as a minimum, the following activities would have to take place per each of expected results:

Activities related to Result 1:

Activity 1.1.: Preparation of adequate methodology and draft Human Resources Management Strategy and Action Plan through analysing the experiences of other central banks relating to the policies and creation of documents regulating strategic planning, guiding principles/policies and operational implementation of Human Resources Management

Activity 1.2: Development of functional model that links the scope of organizational units, functions performed in the certain organizational unit and individual job descriptions and job performers (tasks-general and typical) by incorporating practices of European central banks in the area of human resources controlling

Activity 1.3: Preparation of other supporting tools to complement HRM Strategy and Action Plan such as methodology for recognition of business processes and methodology for evaluating jobs as a basis for calculation of the basic salary coefficients

Note: Activities related to Result 1 will be implemented through inputs of experts from the Partner Administration team and in tight cooperation with the administration in the Beneficiary country (Republic of Serbia). The working modalities would encompass joint discussions, presentations, workshops, on-the-job drafting exercises, drafting documents etc. Within the scope of activities envisaged under this Result, it is expected that in average 9 persons from HRM Department of the NBS will participate and a translator might be engaged as per need.