The Matrix System at Work - Independent Evaluation Group - World ...

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CHAPTER 5 INSTITUTIONAL ISSUES AND ORGANIZATIONAL STRUCTURE Box 5.3. IFC’s 2013 Change Initiative IFC introduced organizational changes in 2011 intended to strengthen development impact, financial sustainability, client satisfaction, talent management, and people development, and to use global knowledge in a decentralized environment. The new system adopts more specific development goals for driving financially sustainable growth and maximizing development impact where IFC has a comparative advantage; strengthens alignment of the performance management system to the corporate strategy and budget cycle; and restructures the investment departments to clarify roles and accountabilities. These changes were supported by a communication strategy, milestones, and a monitoring system. The revised organizational structure divides IFC into: • Global Industry Groups made up of Global Industry Departments responsible for managing global clients and partnerships, developing sector strategies, linking advisory and investment services, and developing global knowledge networks. • Regional Client Service Groups composed of Regional Departments and Regional Industry Departments. Regional Departments are responsible for managing country strategies, business development, and client relationship. Regional Industry Departments are responsible for portfolio and transaction management, providing functional specialization, and improving responsiveness, efficiency, and risk management. The new business process and incentives system include: • A revised budgeting process with vice presidents more involved in the planning phase to determine budget envelopes that are later allocated at the department level. Technical staff are mapped to global or regional industry units and the budget is negotiated and allocated directly to each of the three departments (Global Industry, Regional, and Regional Industry) based on an agreed investment program and staff requirements from each department. • Staff incentives aligned with strategic goals. Managers’ objectives are adjusted to focus on development and financial results, client orientation, people management and development, and contribution to corporate initiatives with achievement of both quantifiable and qualitative development objectives included in performance measurement and compensation. In addition, IFC will continue its system of performance rewards linked to project outcomes and more frequent promotions enabled by a higher number of grade levels for staff. Source: IFC Road Map FY11-13- Maximizing Impact, Unlocking Our Potential (IFC 2010), FY11 Business Plan and Budget (IFC 2010); and IFC’s FY12 Business Plan & Budget (IFC 2011), IFC 2013 Change Initiative- an update at an informal meeting with the Board of Directors (IFC 2010) 5.43 Budgetary arrangements under the matrix system were singled out by staff as well as country and sector managers as a major impediment to the Bank’s efficiency. The imbalance in budgetary authority between country units and sector units leads to a short-term focus driven by lending delivery and fiscal year deadlines rather than strategic selectivity that balances short-term needs with business development to prepare for future risks or policy opportunities. The matrix was 97
CHAPTER 5 INSTITUTIONAL ISSUES AND ORGANIZATIONAL STRUCTURE supposed to reduce the focus on lending in favor of a better balance with quality and knowledge, but it has not done so. OVERALL RESOURCES FOR FRONTLINE DELIVERY 5.44 Greater transparency on overheads would increase accountability and encourage efficiencies. Out of concern for the decline in frontline resources prior to the introduction of the matrix, management had committed, as part of the Strategic Compact, to an increase in frontline expenditures to 60 percent of the budget (Phillips 2009: 38). The first indicator on organizational effectiveness and modernization in the corporate scorecard issued at the end of FY11 (World Bank for Results 2011) states that 61 percent of the World Bank’s resources (Bank budget plus BETFs) are spent on “client services”. However, this definition of client services includes trust fund resources (9 percent), as well as resource mobilization and management (5 percent), primarily for trust fund management and treasury functions. 75 Adjusting for these two, the amount spent on client services drops to 47 percent of the Bank’s budget. “Client services” covers a broad range of other expenditure items with differing levels of separation from the end product delivery to the client. These include country services (making up 32 percent of Bank budget), sector and global services (12 percent), other operational support (2 percent), and administrative support to products and programs (1 percent) s. Expenditure on country services is 32 percent of the Bank’s budget, or one in three dollars, for direct costs of lending and non-lending products delivered to country clients. BUDGET EXPENDITURES WITHIN THE REGIONS 5.45 Over the FY02-10 period, the regional sector units are receiving a decreasing share of regional resources, largely due to the growth of regional functions. While the Regions continue to utilize two-thirds of overall Bank resources, within the Regions, the units responsible for operational delivery and quality are under increasing budget pressure. Based on end-of-year expenditures, the share of regional Bank budget resources expended by regional sector units, which are directly responsible for product delivery, declined by 5 percent, receiving a 61 percent share ($724 million in 2010 constant dollars) in FY10 compared to a 66 percent share ($681 million) in FY02 (see Figure 5.1). 76 Under the matrix system all the technical staff, including those based in country offices, are mapped to and paid for by the sector units, and these charges include their overheads (sustaining costs). CMUs share of regional Bank budget, decreased slightly from a 23 percent share ($231 million) in FY02 to a 21 percent share ($246 million) in FY10 but with decentralization of sector staff, paid for by the sector units, that side of the matrix is relatively well endowed. The remainder of the Regions’ Bank budget expenditures went to regional functions, which grew from $117 million in FY02 to $213 million in FY10 (see Appendix L). 98
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The Matrix System at Work An Evalua
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©2012 Independent Evaluation Group
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Costs of Country and Sector Strateg
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Table 3.6. Total Cross-Support Sold
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Abbreviations AAA AFR ARDE ARPP BET
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Glossary Term Anchor sector directo
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GLOSSARY Practice managers (PM) Reg
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Overview The Matrix System at Work
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OVERVIEW rather than on the 1997 ma
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OVERVIEW satisfactory or better in
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OVERVIEW toward capacity building a
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OVERVIEW Innovation in the field is
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OVERVIEW Figure D. Outcomes of Bank
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OVERVIEW modernization in the corpo
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OVERVIEW management structure but t
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OVERVIEW Structure Bank-wide matrix
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MANAGEMENT RESPONSE interest and ow
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MANAGEMENT RESPONSE Management cons
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MANAGEMENT RESPONSE that reach far
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CHAPTER 1 INTRODUCTION AND CONTEXT
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2. The Strategic Alignment of Secto
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CHAPTER 2 THE STRATEGIC ALIGNMENT O
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CHAPTER 3 THE PROMISE OF A KNOWLEDG
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APPENDIX D EXPERIENCE IN THE TRENCH
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Appendix E Key Findings from Sector
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APPENDIX E KEY FINDINGS FROM SECTOR
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Table E.1. Country Directors and Ma
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# Other Questions Q # 7 APPENDIX E
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APPENDIX F FOCUS GROUP DISCUSSIONS:
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APPENDIX F FOCUS GROUP DISCUSSIONS:
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Appendix G Comparison of the Six Re
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APPENDIX G PROFILES OF THE BANK’S
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Appendix H Working across Organizat
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APPENDIX H WORKING ACROSS ORGANIZAT
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Appendix I Budgetary Incentives 65.
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APPENDIX I BUDGETARY INCENTIVES Bud
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APPENDIX I BUDGETARY INCENTIVES 72.
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APPENDIX I BUDGETARY INCENTIVES com
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APPENDIX I BUDGETARY INCENTIVES Fig
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APPENDIX I BUDGETARY INCENTIVES mea
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APPENDIX J WORKING ACROSS SECTORS A
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Appendix K World Bank Sector Strate
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APPENDIX K WORLD BANK SECTOR STRATE
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APPENDIX K WORLD BANK SECTOR STRATE
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Appendix L International Finance Co
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APPENDIX L IFC 2013 CHANGE INITIATI
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APPENDIX M STAFFING DATA Note: Head
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APPENDIX M STAFFING DATA Table M.7.
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Appendix N Managers Interviewed Nam
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References Barnett, Michael N. and
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REFERENCES Sy, Thomas and Laura Sue
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Endnotes 1 See Wapenhans 1992, 1994
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ENDNOTES appropriately assessed by
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ENDNOTES 46 The respondents to this
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ENDNOTES 71 See Safeguards and Sust
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