Exclusive: DFC plans restructuring, 'anxious' staff say it's 'rushed'

The U.S. International Development Finance Corporation, or DFC, which finances private sector development solutions, last week told employees during a town hall meeting that it is planning a major reorganization of its staff structure and operations, a move that has left some employees surprised, upset, and confused. The agency’s CEO Scott Nathan revealed the new strategy in a Powerpoint presentation to more than 100 staff members at an online event Wednesday, according to several people who attended. DFC plans to reorganize the current team structure and switch the way it is focused to organize around five key sectors: infrastructure and minerals, energy, health and agriculture, small business support, and funds, according to a strategy document Devex obtained. Currently, DFC staff work in units or departments based on investment expertise — the type of financial instrument they manage — or size of the transaction, which can range from $1 million to $1 billion. “The proposed reorganization is terribly ill conceived with no obvious structural benefit,” a source with deep knowledge of the agency, who asked for anonymity to speak freely, told Devex. “For the staff it’s just chaos.” While reorganization is often met with staff reticence, several DFC employees told Devex they are particularly concerned with how the new strategy is being rolled out and how it will be operationalized. There is a lack of clarity about where some departments will fit in the new structure, and staff are worried that they won’t have a choice about which sector they will be assigned to, several employees, who asked not to be identified, told Devex. DFC confirmed that a reorganization is in the works, but did not respond to specific questions on the rationale behind the overhaul or explain the expected benefits. “Given an expanded mission, increasing demand, and extensive growth in personnel, for the last six months DFC has embarked on a strategic review as well as implementing improvements in processes and procedures,” DFC’s spokesperson Pooja Jhunjhunwala told Devex in a statement. “What was discussed with staff this week was the next step in this process; how to better align our organization to deliver on our mission.” DFC has embarked on an aggressive hiring spree since it was founded in December 2019, growing to 513 employees this year from about 373 three years ago, according to the strategy document. It also has plans to hire hundreds more in the next 18 months, an official said at the Society for International Development annual conference in Washington, D.C., last week. The number of new DFC projects jumped about 132% between fiscal years 2020 and 2022, with the total annual monetary commitment up 14% to $7.4 billion by the end of that period. Staff continue to be “an integral part of the work to improve our organizational structure,” Jhunjhunwala said, adding that the agency will share updates with its board and “engage” the relevant congressional committees “at the appropriate time.” The details DFC hired the Boston Consulting Group to help create the new strategy and the team met with staff, and conducted interviews about general challenges they faced, along with doing surveys and workshops. Staff were asked about challenges at the agency but not about how it might be restructured, several people familiar with the process told Devex. BCG found that employees didn’t feel that DFC priorities were consistent or well communicated, and that they wanted more certainty around who manages client relationships. They also said they need more support staff to evaluate the legal, environmental, and development impact of transactions to ensure the agency has the capacity to do more deals, according to the strategy document. “Our strategy and organizational realignment will provide clarity and allow for greater impact,” the powerpoint read. It described better definition of roles, deeper sector expertise, more collaboration across teams, and improved business development and client management as some of the key performance and process improvements through the new structure. “We should align staff and resources to support [business development] efforts in priority sectors and regions so we can build relationships/networks in those sectors/regions,” the document read. The five new investment teams will be led by vice presidents who will be responsible for the sectors. Climate and inclusion of women and other underrepresented groups will be cross-cutting priorities in all of the teams. DFC will also make some “strategic deals” outside of those priority sectors and “fast-track projects across sectors in response to pressing development & foreign policy needs,” according to the document, but there were few details about what that would mean in practice. The agency intends to make the changes quickly — putting them in place at the beginning of fiscal year 2024, which begins Oct. 1, according to the strategy slides. The reaction People are “anxious” and feel the changes are “being rushed,” said Sudhir Paladugu, the interim first vice president of DFC’s collective bargaining unit, or union, who works as a data analyst at the agency. People who asked questions have not received answers, he told Devex. Key questions have to do with where specific units will sit in the new structure and if staff with expertise in doing one kind of transaction — loans for example — will also be asked to do equity deals, which are very different. When staff had a chance to ask questions on Wednesday at an “office hours” session, several queries received vague answers, several staff members who attended told Devex. CEO Scott Nathan did not attend the Q&A and several staff members had the impression senior management was ill-prepared to respond or hadn’t fully thought through how the reorganization would impact various departments or units, they told Devex. “The union has not yet been officially consulted on these very significant changes to working conditions,” Paladugu said, adding that the agency is required to do so. “All of our members have been … constructive in providing feedback to management,” he said. “Personally I feel hopeful that our management will follow its responsibilities and obligations to work together with the unionized workforce to take into account and address people’s concerns.” For an agency looking to scale fast, these changes could present a challenge. Not only are reorganizations often messy, the restructuring would remove a key incentive for choosing to work at the DFC in the first place, staff and outside experts told Devex. A key perk for working — and staying — at the agency instead of earning double the salary on Wall Street is substantial travel and the chance to work on different types of deals in varied sectors and geographies. The new strategy would require a more narrow focus, several staff and sources with knowledge of the agency told Devex. This is not the first time such changes have been contemplated. DFC was created in 2019 when the Overseas Private Investment Corporation merged with a division of the U.S. Agency for International Development. Prior to that, OPIC also contemplated a similar reorganization, but it was decided that the negative impact on staff morale would outweigh the potential efficiency gains, two sources told Devex. A clearer explanation of the motivation behind the reorganization would help some staff better understand the reasoning, one staff member told Devex. The staff member said that they remain open-minded but are worried about the potential of many people leaving the agency, and the remaining staff ending up more overworked and possibly damaging the reputation of the agency. “I’m afraid they are driving this agency into the ground,” the staff member said.