How many is too many?
Aside from the question of compatibility of specific functions, there may be in practice some optimum number of functions that should be assigned to an organisation. On the one hand, the larger the number of functions, the more chance for conflict between objectives and for competition for senior management attention. On the other hand, the narrower the range of functions, the fewer the complementarities and the smaller the range of people and skills and consequent opportunities for cross fertilisation.
To illustrate the considerations favouring a narrow set of functions, some commentators on the first 10 years’ operation of the Monetary Policy Committee (MPC) in the United Kingdom suggest that its success was in some measure attributable to the fact that it had a single function, and the singularity allowed considerable clarity on
42 BIS (2008b).
2 the objective. And in a 1995 BIS survey (BIS (1995)) of the driving forces behind change in central bank activities, a number of respondents noted that a growing
consensus on the need to ensure price stability had been a significant element in spurring changes to organisational structures. The Reserve Bank of Australia, the Austrian National Bank, the Swiss National Bank and the Bank of England all specifically cited a sharper focus on core functions as a prime reason for institutional reforms. In a more recent BIS survey (BIS (2000)) the clarification of roles and greater accountability continued to be prominent driving forces for a reduction in the number of functions, along with progress in computer technology and the need for better internal communications.
Diversity is, nonetheless, often beneficial. Different perspectives and different experiences can add value to an endeavour that is significantly dependent on the application of good judgment.