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Annual Report 2004 : Part 1: Institutional Effectiveness
Human Resources and BudgetThe President approved the new HR strategy following external independent studies, internal assessments, and consultations with the Board of Directors, Management, and staff. The new strategy is an integral part of ADB's overall strategic framework and is positioned to support ADB's other strategic initiatives including LTSF, PRS, MfDR, the knowledge management framework, and ISTS II. It identifies 20 actions. Implementation commenced in 2004 and will continue in 2005 with the delivery of several initiatives. An ADB-wide competency framework was completed and serves as the foundation for the design and improvement of all HR systems at ADB. The framework consists of five core competencies (i.e., client orientation, achieving results, working together, learning and knowledge sharing, and application of technical knowledge and skills) and three managerial competencies (i.e., managing staff, leadership and strategic thinking, and inspiring trust and integrity). A review of ADB's recruitment and selection process was also completed and recommendations have been outlined. The planning and design phase is now under way concentrating on integrating the competency framework, identifying options for reducing time to hire, improving applicant management, and removing unnecessary variations. Mainstreaming gender into the HR policies and processes continued during 2004. The launching of the Women's Education Network, new gender-based training programs, and meetings with senior staff to discuss gender equality were the highlights for the Gender Action Program II. The working group focusing on local staff gender issues finalized its action plan for implementation in 2005. Training and development programs were reviewed in 2004 to ensure alignment with business processes, new initiatives, and future developments. Leadership and training programs were strengthened to support the implementation of the HR strategy. OAS staff received training on developing measurements for reducing variation and waste in business processes. An extensively revamped project team leadership program was launched. The development of a learning strategy based on the competency framework and the business needs of ADB was completed and released for managers and staff to use with the new performance management system's learning and development plan. Initial steps were taken to strengthen the evaluation of learning within the organization. The planning and design phase of the new performance management system was completed for implementation in early 2005. The new system is based on the competency framework and includes the definition of job families, job profiles, required experience and qualifications for each job, output indicators, and learning plans. Benchmarking research of comparable organizations was completed on legal and policy development issues, on disciplinary measures and procedures, on administrative review and appeal procedures, on recruitment and appointment, and on separation. The key findings were included as part of the review of existing policies and processes. At the end of 2004, ADB had a staff of 2,394 coming from 53 of its 63 member countries. The total comprised 860 professional staff members 1 and 1,534 local staff members,2 of which 388 staff members 3 or about 16.2% are located in the field offices. During the year, there were 85 appointments and 61 departures of professional staff members, while 128 local staff members joined ADB, and 69 left. The number of women professional staff members increased from 241 or 28.8% at the end of 2003, to 255 or 29.8% of total professional staff at the end of 2004. CompensationConsistent with ADB's market-driven compensation system, a 4.3% weighted average increase in professional staff salaries was approved in 2004 (effective 1 January 2005). For local staff at headquarters, the salary survey for 2004 resulted in a 9.1% weighted average salary increase effective 1 January 2004. An overall weighted average salary increase of 8.3% for local staff in 21 field offices was also implemented. A comprehensive review of professional staff salaries and benefits is under way, expected to be completed by July 2005. The compensation and benefits package of local staff in the field offices was monitored and revised as necessary. A major review of the terms and conditions of assignment of professional staff in the field offices was undertaken and changes were implemented effective 22 November 2004. Group life, accidental death and disability, and worker's compensation insurance plans were renewed for another 3 years at existing terms and conditions. The pension and discretionary benefits self-service feature of the HR management information system was rolled out in mid-2004, providing staff online access to their own retirement and discretionary benefits based on assumed retirement dates and salary increases. Internal Administrative BudgetActual internal administrative expenses (IAE) for 2004 amounted to $275.0 million, a savings of $4.5 million against the original budget of $279.5 million. The savings mainly came from lower-than-expected expenses related to the Thirty-Seventh Annual Meeting and not using the 1% general contingency. Under the budget category operational expenses, there were overruns in the budget items for consultants and relocation, mainly due to the need to absorb resource requirements for some initiatives under the reform agenda that were not anticipated at the time the 2004 budget was prepared, and because of higher-than-anticipated inter-office movements of staff. These overruns were offset by savings in salaries due to a favorable exchange rate and slower-than-expected recruitment, particularly in the earlier part of the year, and less business travel. The IAE budget for 2005 amounts to $299.8 million including a general contingency of 1% (summarized in Appendix 8). The increase over the 2004 revised estimate is 7.3% consisting of a net volume increase of 2.5% and an overall price increase of 4.8%. Major cost drivers for 2005 include implementation of various initiatives under MfDR and the reform agenda, establishment of new and expanded RMs, an expanded accountability mechanism and strengthened anticorruption capability, the cost for expanded use of trust funds, increased contributions to the staff retirement plan and rising costs of medical insurance, and depreciation associated with critical IT upgrades. Budgetary resources in 2005 will fund a prioritized work program including (i) support to lending operations and enhanced portfolio supervision at regional departments; (ii) expanded private sector operations; (iii) MfDR and the reform agenda (including implementation of the new HR strategy); (iv) knowledge management initiatives and a review of several policies and strategies; (v) increased delegation of project implementation and other functions to RMs; (vi) strengthened anticorruption initiatives; and (vii) more evaluation of private sector operations and broader evaluations at policy as well as at sector and country assistance program levels. In addition to IAE, the 2005 budget also includes an annual capital budget of $3.85 million, mainly to fund cyclical capital expenditures for headquarters facilities and IT equipment, and to meet replacement and acquisition requirements of field offices. The overall annual capital budget for 2005 is decreased by $1.0 million as compared with the $4.85 million allocation in 2004.
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