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

Overview
The Matrix System at Work
Context
The 1997 Bank reforms that introduced the
matrix management concept aimed to adapt
the organization to changing circumstances
and address concerns among external
stakeholders about the role of aid in
development. The reforms were motivated
largely by widespread recognition that the
Bank’s development programs were
excessively driven by a culture of lending, with
insufficient attention to client needs and the
quality of results, which are crucial to
development effectiveness. A previous round
of reforms in 1987 had strengthened the
country focus, but quality remained a concern.
Furthermore, access of developing countries
to development finance from the private
sector had increased significantly, leading to a
decreasing share of official development aid,
including Bank financing, in total flows to
developing countries. This trend has
continued after slight interruption by the
Asian financial crisis. In 1987, World Bank
lending represented 15 percent of all external
financing for developing countries. By 2002
Bank lending had declined to 4 percent of
external financing (Organizational
Effectiveness Task Force: Final Report, 2005).
By the mid-1990s, pressure for change was
acute. The 1997 reforms tried to address these
challenges through a new set of organizational
arrangements, increased decentralization, and
matrix management. The most frequent
rationale for a matrix structure is to balance
competing priorities, combine capabilities for
market advantage, share resources for
efficiency, and retain flexibility to redeploy
resources in the face of changing priorities
and a diversified client base. Typically matrix
systems involve a creative tension between
technical product delivery units and the units
that service clients. The matrix system—a
dual matrix, Bank-wide between the six
Regions and four networks, and in each
Region between Country Management Units
(CMUs) and Sector Management Units
(SMUs)—was to be facilitated by dual
accountability for technical quality and an
internal labor market for staff renewal and
mobility. Figure A depicts the current matrix
structure. It has been more than a decade
since the 1997 reorganization, and concerns
that the matrix system is not delivering on its
promise persist.
The objectives of the 1997 reforms were to
create a new Bank culture through increased
“client responsiveness” and delivery of
“quality services.” Board documents indicate
that client responsiveness was to be improved
through a new country compact and strong
country managers who would be closer to the
client, hold budget authority, and be
accountable for delivering the country
program and ensuring results. High-quality
services were to be achieved through strong
sector groups working together as a network,
sharing knowledge and expertise across
sectors and the World Bank. These groups
function through product teams providing
client solutions and results, building the
Bank’s global knowledge base, linking country
and regional experience to global experience,
and ensuring quality and accountability.
The 1997 reforms were accompanied by a
Strategic Compact with the Bank’s
shareholders who approved an incremental
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