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APPENDIX A MATRIX MANAGEMENT AND ORGANIZATION OF THE WORLD BANK By 1986, program lending and budget support grew significantly in the Bank’s portfolio, and the previous organizational architecture built around technical departments was no longer tenable. The 1987 reorganization aimed at a new balance between country focus and technical quality, by creating “country departments” composed of several countries in a subregion and comprising all sector divisions as well as a “country operations” division charged with formulating the Bank “strategy” of assistance for each recipient country. The country departments were led by a department director allocating budgets to the sector divisions for their projects (presumably consistent with the strategy for the individual client countries). To complement the arrangement, a “technical department” was created in each Region to provide specialist support as and when demanded by the country departments. External circumstances and the understanding of development changed dramatically in the subsequent decade—from the seismic repercussions of the disappearance of the Soviet Union, the informatics revolution, the demands of globalization, the new institutional economics, the recognition of the governance-development nexus, and the increasing importance of private financing of development. Source: IEG 10. While the reform in 1987 strengthened the country focus, technical staff worked primarily in country department silos and the technical quality of the Bank's project work deteriorated. 1 The 1987 reform was aimed at transforming the Bank from one with an exclusive focus on “projects” toward one that viewed projects in the context of country programs. The 20 Country Departments were composed of subregional clusters of countries, with technical and program management skills combined in each under Division Chiefs to carry out the work program. Highly specialized, one-of-a kind skills were housed in four Technical Departments to service the Country Departments. 2 However, the relationship between country and sector units remained hierarchical and perpetuated silos across Country Departments, affecting knowledge flows and operational quality. The 1997 Reform 11. By the mid-90s, pressure for change was acute. First, tensions between CMUs and SMUs continued and despite increasing focus at the country rather than global level, client orientation was lower than desired. Second, technical quality of the SMUs became a growing concern: subdivision of technical staff into country departments was seen to have led to a loss of global technical leadership. Third, changes in the external environment created an imperative for reinventing the Bank. The share of 1 The Wapenhans Report (1992) and first Quality Assurance Group (QAG) reviews, which cover older projects approved prior to 1997, indicated that about one third of Bank projects were not likely to have satisfactory outcomes. 2 In 1991, the Technical Departments were reduced in size—one third of the staff went to the country departments, one third to Central Vice Presidencies, and one third stayed in the Technical Departments within the Regions. 115
APPENDIX A MATRIX MANAGEMENT AND ORGANIZATION OF THE WORLD BANK total capital flows coming from development assistance declined from 50 percent to 20 percent between 1990 and 1997, while new sources of knowledge services emerged in partner countries, including universities, think tanks, and the private sector in the developing world. 12. The 1997 reforms, as detailed above, tried to address all three of these challenges through three main changes: (a) a new set of organizational arrangements; (b) increased decentralization; and (c) matrix management arrangements which included dual reporting in the SMUs (but not the CMUs) and budgets authority with the CMUs. Thus, the introduction of matrix management was a major element of the 1997 changes, but not the only change. 13. The new matrix system was layered on top of existing operational realities: rapid changes in the Bank’s external environment, such as renewed demand for lending in the wake of the Asian financial crises and the growing significance of global public goods; longstanding conventions in organizational culture, including the widespread use of lending commitments as the dominant metric for success; and competing objectives by varying stakeholders, for instance those of donors, nongovernmental organizations (NGOs), and country partners. While these underlying realities are unrelated to the internal matrix management of client and SMUs, they represent a part of the operating environment in which the matrix system exists, and thus affect its effectiveness directly. Incentives for Client Orientation and Technical Excellence after 1997 14. Formal incentives. All the changes introduced in 1997 were expected to operate by affecting formal incentives and behavior, in a way that improved client orientation and technical excellence. The new organizational arrangements consisted of (i) reducing the number of countries covered by each CMU, (ii) creating networks (and Sector Boards) to link SMUs at the regional and Bank-wide level (to increase the level of global technical excellence available to client teams) and (iii) creating network anchors (to facilitate exchanges of global technical knowledge among the Bank SMUs and with external partners). In addition, decentralization was intended to increase client orientation by facilitating the contacts with clients. 15. The two sets of changes above were in line with (and an evolution of) the successive institutional arrangements during the previous two decades, with similar objectives and similar instruments. What made the package of reforms substantially different was the introduction of matrix management with dual reporting relationships and country budgets allocated by CMUs to the different SMUs. This, and not the creation of the networks and Sector Boards, or decentralization, is what makes the reforms of 1997 qualitatively different from those that came earlier. 116
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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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CHAPTER 4 DELIVERING QUALITY SERVIC
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Page 152 and 153: Appendix A Matrix Management and Or
Page 154 and 155: APPENDIX A MATRIX MANAGEMENT AND OR
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Table E.1. Country Directors and Ma
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APPENDIX E KEY FINDINGS FROM SECTOR
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# Other Questions Q # 7 APPENDIX E
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APPENDIX E KEY FINDINGS FROM SECTOR
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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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