Sunil Mendis: Creating a challenging and stimulating work environment
New Year Message 2005 by Mr Sunil Mendis, Governor of the Central Bank of Sri Lanka, to all
employees of the Central Bank of Sri Lanka, Colombo, 1 January 2005.
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I issue this traditional New Year message at a time when the whole of Sri Lanka has been engulfed by
a national tragedy caused by "tsunamis" that hit the country on 26th December, 2004. I take this
opportunity to express our deepest condolence to the members of the families of bank employees who
have lost their lives and to our employees and their loved ones who have suffered by this calamity. At
the same time, I wish to share the sorrows of those employees who have lost their property. Words
are insufficient but hope that they would move forward from this tragedy.
With the magnitude of the disaster, there is no question that our nation needs to be rebuilt. Hence, as
employees of a state organization which is at the apex of the country's financial system, we have an
invaluable task to perform. In this context, I place my message before you with the plea that we take
part in the nation-building task by offering our maximum efforts. I have been greatly encouraged by the
positive response which all the employees have demonstrated towards the provision of relief to victims
and rebuilding of the nation.
You would recall that in my first message to you on assuming the office of the Governor of the Central
Bank on the 01st July 2004, I stated that I was deeply conscious of the great honour attached to my
appointment to this august post. Now, I address you with 6 months' experience at the helm of this
unique institution which is responsible for safeguarding the price stability and the country's banking
and payments system.
During the last decade, the staff of the Central Bank faced several traumatic events and challenging
situations. The Central Bank bomb blast, which took away the lives of 41 employees and caused
injuries to nearly 1000 employees, was the most traumatic event. However, I understand that even
those seriously injured joined the unaffected employees to offer their best efforts to the Bank and as a
consequence, the Bank was in a position to resume normal work without an interruption within a short
period of time. This reflects the resilience of our staff. Thereafter, the Bank was subject to a
modernization and restructuring scheme. A major feature of the restructuring process was the offering
of a Voluntary Retirement Scheme (VRS) for certain categories of the Staff at the end of 2001. Around
a third of our staff opted for the VRS and left the Bank. As a result, all of you were forced to
re-organize your work practices, automate certain functions and put extra effort to ensure that the
output of the Bank would not suffer as a consequence of the lower staff strengths. Although this would
have caused problems at the initial stage, I believe that you managed to cope admirably in the face of
this challenge.
As you are aware, the Central Bank's focus and functions have evolved over the years in response to
changes in the economic environment. In keeping with trends in Central Banking around the world, the
objectives of the Central Bank of Sri Lanka were streamlined by amending the Monetary Law Act
(MLA) in 2002 which defined the Bank's core objectives and freed it from the multiple objectives
originally assigned to it. Accordingly, the Central Bank now pursues the core objectives of economic
and price stability (through appropriate monetary policy) and financial system stability (mainly through
its role as a supervisor and regulator of the financial sector). The Central Bank accordingly will, over
time, devolve some of its other functions including agency functions to other institutions. However, it
still has a major role to play in the interim to build up capabilities of the institutions earmarked to take
over the functions performed by the Bank at present. Also, it is expected that there would be a further
outsourcing of administrative and ancillary functions of the Central Bank.
With the change in the MLA, the organizational structure of the Central Bank has undergone a major
transformation on a function-oriented basis to support its objectives and functions. The Departments of
the Bank were grouped into four major categories under the headings of price stability, financial
system stability, agency services, and corporate and support services. The two Deputy Governors
have been entrusted with the responsibility of overseeing the achievement of the two core functions.
The vacancies to the posts of Assistant Governors (AGs) have been filled and they have been
entrusted with line responsibilities with a view to building the 3rd and 4th layers of succession in the
Bank's managerial hierarchy.
Price Stability means maintaining a low inflation rate. Central banks are mandated to maintain price
stability as their main objective in order to create a conducive environment for long-term sustainable
economic growth by eliminating uncertainties, protecting the value of financial assets, enabling all
economic agents to take a long-term view of the economy and ensuring the well being of the general
public. Maintaining price stability during the course of 2005 will prove to be a very challenging task
given the surging oil prices, which may continue for some time during the year, and the enhancement
of demand pressure on the price level on account of wage increases in the government sector.
Therefore, the central bank would have to fine-tune its monetary policy measures to provide adequate
liquidity to support economic growth, while avoiding the build-up of inflation and inflationary
expectations.
Financial Stability means ensuring the effective functioning of the financial system and avoiding
banking, currency and payment crises. The stability of the financial system is essential for the
attainment and maintenance of price stability, building confidence of the public in the financial system,
mobilizing savings and allocating them to the most productive uses. For this purpose, it is necessary to
ensure a stable macro-economic environment, an effective regulatory framework, organized financial
markets, sound financial institutions and a safe and robust payment infrastructure. In order to
strengthen the supervisory mechanism on banks and non-bank financial institutions, action has been
initiated to establish a closer dialogue with auditors and senior management of such financial
institutions.
With regard to work practices, during my first few months, I have instituted certain changes which I feel
would serve not only to reduce the stress on the senior management but also to create a stimulating
and challenging environment for work for all the categories of employees.
The Central Bank is a prestigious institution, which is considered a model employer and is therefore, in
a position to recruit the cream of talent passing out of universities and professional bodies. The
number and quality of aspirants for Central Bank employment reflect this. Over the years, it has built
up a reservoir of professional talent, which has been used by the Government and by international
agencies and foreign banks for the performance of both advisory and operational functions. Young
central bankers have served with distinction both in Sri Lanka and abroad in various capacities. Their
talents need to be further enhanced and they should be entrusted with responsibilities commensurate
with their abilities. Therefore, I feel that there is considerable scope for further delegation of
responsibilities in the Central Bank. As mentioned in my very first message I believe that our staff
must be empowered to reach their optimum capacity which would enable them to give of their
best. Through the process of empowerment staff in the bank would be able to play a major role in the
banks operations.
To make the best use of the available talent, it is necessary to institute a continuous process of
appraisal, training and development. The Department of Human Resource Development has
already collected a vast amount of data on the preferred career paths of officers, job descriptions
pertaining to various posts, and goal statements of the various Departments of the Central Bank. They
also have information on the existing skill deficiencies. Therefore, they are now in a position to identify
the officers whose abilities and potential match each job. In this process, it may not always be possible
to place officers in their preferred career paths given the training and experience already acquired by
such officers. The Training Department would have to provide the requisite training to address skill
deficiencies on an urgent basis. Training should also be a continuous process of skill development to
meet global and technical challenges as well as those emanating within the Sri Lankan economy. In
order to create a learning culture, it is necessary for the employees to take the initiative to enhance
their knowledge and skills through self-study and also through participating in relevant seminars,
workshops etc. In the future the Training Department would provide all assistance and even sponsor
such events. The Training Department is also in the process of preparing a more comprehensive
training plan for the entire Bank based on training needs information furnished by each Department. I
should also mention that I have already advised the Training Department to take steps to ensure
greater transparency in the training policy of the Bank.
Once duties are delegated and personnel empowered, it is up to the persons entrusted with such
duties to take up the responsibilities thrust on them and strive for excellence when performing such
duties. A fair and just performance appraisal scheme will be put in place to evaluate the effectiveness
of performance. The aim of the performance evaluation scheme, the reward scheme and the
promotion scheme would be to ensure that the best and brightest are promoted and rewarded. The
management also intends to implement a Bank-wide job rotation scheme in the New Year.
Another factor that needs to be reminded is that most tasks in the Central Bank are the outcome of
teamwork. I have found instances where teamwork has been poor with only a few persons doing the
bulk of work. It is necessary to build positive team relationships within the Bank and encourage
co-operation between individuals and functional areas to achieve team goals. One of the intentions of
sending the senior and middle management of the Central Bank on "Outward Bound" leadership
training programmes was to promote the team building capabilities among the management and to
expose the participating officers to situations which require strategic planning on a team level. I am
sure those who participated in the "Outward Bound" programmes would agree that they have gained
new insights on working as teams through their participation. We intend to send staff at all levels on
such programmes in the future.
I also wish to request all Trade Unions of the Bank to extend their fullest co-operation to the
management to create a stimulating work environment in which employees would be able to
advance in knowledge and acquire the necessary skills to meet challenges and effectively fulfill their
responsibilities thereby transforming the Bank into a center for excellence with enhanced productivity
and staffed with competent professionals. Towards this end, I would encourage the staff to have better
exposure to the developments in the real sector. I have also reiterated the importance of dealing
with the employees in a fair and equitable manner. The management on its part is ready to
listen to the employee grievances and problems but I would encourage you to also make
innovative suggestions to address these grievances and solve problems. At the same time, I
wish to emphasize the importance of displaying your loyalty and commitment to this institution at all
times.
Finally, I wish that all of you would get the strength and determination to overcome all the bottlenecks
and hindrances before you in the New Year.