Global Wealth Management & Business Banking

Cost discipline had been a key success factor for UBS in the phase following the merger of UBS and SBC in 1998. During that time, traditional targets helped management and staff to achieve the efficiency objectives defined for the post-merger integration. However, they rarely provided guidance on how to capture revenue opportunities – a feature that became important in the following cycle of Global Wealth Management & Business Banking’s development – the phase of growth and market expansion.

Arriving at these traditional target figures required an extensive process which was very thorough, but time-consuming for both managers and controllers. The three-year business plans as well as operational budgets with fixed targets were defined both “top down” and “bottom up”. The consequence of this approach was that it tended to stand in the way of inspiring employees to search for growth opportunities. That is why, in 2004 – as part of a program to foster a more entrepreneurial culture – UBS decided to do away with the annual budgeting process in its international wealth management and Swiss retail and corporate businesses.

The new process ensures clear strategic direction by a simplified top-level five-year business plan. It focuses on strategic projects and initiatives that support the priorities of the business. Operational leadership is supported by a five-quarter rolling forecast which allows senior management to react quickly to changes in the market environment and initiate corrective measures immediately, if required.

Entrepreneurial leadership involves decision-making, taking a commercial approach that balances income, cost and risk. This had a direct implication on the role of managers – and on the scope of their authorities. They decide on staffing levels for their units, on the skills required by their teams and on local marketing activities – and they are held accountable for them and, ultimately, for the unit’s performance. In other words, additional investments are expected to yield additional revenues. Employees also have more responsibility. Client advisors now formulate their own business goals, and decide how best to achieve them.

This type of decision-making requires enhanced transparency and granularity in management information. As budget figures – the traditional point of reference – are no longer available, current performance is measured against actual results achieved in the previous periods and benchmarked to the performance of a defined group of peers. This encourages managers, client advisors and other employees to identify best practices and, through an active exchange of ideas, ways to learn from each other. In this context, managers increasingly take the role of coaches who encourage and support their employees to exploit their full potential and fulfill their own ambitions.

The concept is innovative and has earned UBS recognition by specialist press as well as general media. Since this was not just an operational change in process, but rather a radical shift in corporate culture, it is difficult to measure its full bottom-line contribution. Experiences over the past year have been positive – and accompanied by the business’ strong financial performance.