How are business processes and their management linked with the institutional memory of institutions? Why is it so important to keep the focus on institutional memory, especially from the point of view of central banks? In this blog I will share my experience in finding answers to these questions.

How are business processes and their management linked with the institutional memory of institutions? Why is it so important to keep the focus on institutional memory, especially from the point of view of central banks? In this blog I will share my experience in finding answers to these questions. Let’s begin with the claim that all institutions are like living organisms, especially in a VUCA [1] world. The volatility, uncertainty, complexity and ambiguity of the context in which central banks accomplish their mission, tasks and strategic objectives lead more and more of them to implement different tools to enforce their governance and ensure efficient mechanisms for business continuity. This comes with the fact that central banks are specific institutions with specific attributions and very particular and complex processes, which require narrow and unique expertise. Efficient tools and mechanisms for capturing institutional memory are becoming ever more critical, considering the personnel flow and the necessity to continuously improve business processes and the decision-making framework.

At the National Bank of Moldova (NBM), we consider that an efficient system of business process management is a very important component of governance, which helps to enhance the efficiency of operating activities. The NBM is an institution focused on process performance. Efficient management of business processes helps the NBM to adapt to the requirements of the external environment, and to perform its tasks and achieve strategic objectives.

To understand how an efficient business process management system in an institution can be very important to consolidate institutional memory, it is necessary to explain what a business process management system represents. So, a business process management system is the totality of the business processes of an institution, accompanied by an integrated framework for the identification and implementation of certain rules, techniques and instruments to carry out process management activities, and clearly define the objectives, roles and responsibilities of the parties involved.

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At the NBM, business processes are described in a centralized way, based on a cross-cutting/transversal approach. This requires documenting and mapping the way all processes are carried out, including cartographic, textual and matrix representation of activities, input and output data, the information systems used, and the roles and responsibilities of the parties involved. To put it more simply, we record what, how and why we carry out our processes. All the elements of the process management system (cartographic maps and other descriptive documents) form a library/repository of process knowledge. Institutional memory is defined as the knowledge stored in the organization. So, we can say that the library of all the documents related to the process management system represents the captured and recorded memory of the institution. Hence, business process management documents are a very important component of the institution’s knowledge management system.

Having an efficiently implemented business process management in line with international standards, such as the Business Process Management and Notation [2], creates a common understanding of the documented information within the institution, and, as a result, leads to using a single language for the captured institutional memory.

Business process management is based on several principles that are crucial for capturing institutional memory, including the principle of involvement, which means that the recorded information includes data from all involved internal parties/stakeholders. Moreover, process management and optimization are participatory activities, raising employees’ awareness of the processes in which they are involved. They also give a clear picture of the interconnections between processes and information at every level and step in a process and ensure a high level of transparency and visibility over business processes from start to end.

In this context, we can say that identifying all the business processes in the institution is the first step to structure all the information related to its institutional memory. More than that, having an internal framework for business process management that describes standard information as well as particular details, such as deviations from standard process flows or the actions to be taken to ensure continuity in case of unexpected incidents, leads to creating a valuable repository of information in the institution. From our experience, we have noticed that there are some processes with low frequency. Having these processes identified and described means that employees already know how to act in such cases, and are well aware of their roles and the necessary steps to ensure efficient business continuity.

Is it difficult to establish a business process management system in an institution? For sure, it is not easy. But once you start this journey, along with the opportunity to capture your institutional memory other significant benefits will occur. At the National Bank of Moldova, we believe that our most important value is human capital. From my perspective, preserving all the knowledge, expertise and particularities of the processes, which often cannot be fully captured in the internal framework, should be one of the focuses of governance. An efficient business process management system is one of the most important prerequisites for the preservation of institutional memory, and thus also for the improvement of the operating activities, achievement of the strategic objectives, enhancement of the decision-making process, change management, and consolidation of the internal knowledge system.

[1] VUCA is an acronym based on the leadership theories of Warren Bennis and Burt Nanus to describe or reflect on the volatility, uncertainty, complexity and ambiguity of general conditions and situations (Wikipedia).

[2] Business Process Model and Notation (BPMN) is a graphical representation for specifying business processes in a business process model (Wikipedia).