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

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CHAPTER 6 CONCLUSIONS AND RECOMMENDATIONS technology, and disaster management. The Bank’s ability to renew itself and function as a truly global Bank is critical to its success. 6.4 Some modification of the balance of power or authority, revision of operating processes and incentives, and adjustments to the organizational structure is needed to recalibrate incentives, modify procedures to ensure greater balance across elements of the matrix, and in some instances revisit structural impediments to operation of the matrix. The wide diversity among the Bank’s country clients and the multiple challenges they face require the application of selectivity and customization from the wide range of sector and global practices that the Bank can offer. There is thus a need to match client and country needs with the products and sector practices that the Bank can produce or mobilize, inevitably leading to some form of a matrix system. 6.5 As a public institution, the Bank is limited in its ability to implement marketbased practices and processes that are commonly applied, with success, in private firms to implement matrix systems. Yet even as a public institution, the Bank can learn from the experience of the private sector in implementing matrix structures and systems. Research and experience from the private sector (Gottlieb 2007, Galbraith 2009) shows that effectively operating matrix structures requires internal consistency among five key factors: (a) alignment and tracking of goals; (b) clear responsibilities and expectations; (c) a collaborative culture and leadership; (d) mature resource management processes; and (e) a robust performance management framework. The second key lesson from matrix organizations is that organizational design is not just about structure. Incentives and processes have to be aligned with structures, and all three have to be aligned with strategic objectives for matrix organizations to work. These key factors and the need for internal consistency remain fully valid for the Bank, while recognizing the Bank’s unique challenges as a public institution with multiple objectives and global reach. 6.6 The World Bank moved quickly to revamp its organizational structure. However, as the evidence from this assessment reveals, changes in incentives and processes were inadequate and not fully aligned with the strategic goals of the 1997 reforms. The incentive created by transferring budget authority to country directors increased responsiveness to the client but failed to create the conditions for quality services based on global technical excellence. The quality of Bank knowledge services is viewed by many as having deteriorated since the matrix was introduced. Budgetary processes and individual incentives militated against flows of knowledge and attention to quality. Organizational silos re-emerged along different boundaries. The very strength of the regional matrix undermined the effectiveness of the Bankwide matrix. And the links between the center and Regions was further weakened 105
CHAPTER 6 CONCLUSIONS AND RECOMMENDATIONS by decentralization and the emergence of global and corporate priorities. The absence of alignment among the Bank’s corporate goals and the interests of the Regions and networks did not ring any alarm bells because no metrics were put in place to track or reward achievement of strategic goals other than through lending volume and numeric counts of knowledge products. 6.7 IFC revised its matrix structure in 2010. IFC has built on its previous systems and includes individual incentives, and performance assessments aligned with the organization’s goals. Its compensation program is aligned with strategic objectives and includes achievement of quantifiable development goals. IFC has also proposed a set of monitoring metrics to track organizational results and identify problem areas more rapidly. While it is far too early to evaluate its implementation, these design features are worth considering as part of subsequent efforts to strengthen the Bank’s organizational effectiveness. 6.8 It is to the credit of the staff of the World Bank that people in the institution, at all levels, have largely adapted to the matrix system and have found ways to reduce its transaction costs. The improvement in responsiveness to the client must be preserved while expanding ownership to other country stakeholders, and the efficiency gains made by several regions and some sectors should be protected, and their flexibility preserved. The evaluation considered options ranging from a complete organizational restructuring to minimalist changes. Persuaded by the finding that attempts to replace the entire system would entail substantial disruption and incur large transition costs, and the evidence on client responsiveness and initial gains on quality, the evaluation does not recommend replacement of the matrix system. Nonetheless, the constraints and institutional deficiencies in the matrix system are sufficiently out of sync with current client needs and emerging operational challenges that a significant effort to address these systemic constraints in a holistic manner is in order. 6.9 Bank management is cognizant of deficiencies in the matrix system and in FY10 established a Matrix Leadership Team, comprised of operational vice presidents to reinvigorate the system. In parallel, management established a Knowledge and Learning Council, headed by a managing director (MD), to improve the Bank’s ability to deliver knowledge, enhance learning opportunities for Bank staff, and link country practitioners to global sources of knowledge to increase development impact. An Internal Reform Secretariat supports these entities, and in FY11, an MD was appointed to lead the Bank’s modernization efforts. This has led to the identification of key constraints, such as the span of control of sector managers and, in the past year, to several initiatives to upgrade the quality of the Bank’s knowledge work. However, the measures proposed have yet to address the 106
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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 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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