On July 1, many of the World Bank’s long-debated organizational reforms go into effect — but how will we know if President Jim Kim’s plans are working out, or just unraveling?
The leader of the world’s largest multilateral development bank has staked his reputation on the reform package, which is meant to help the institution’s expertise and solutions move more freely across regions, simplify the bank’s cumbersome internal bureaucracy, and respond to a call from the board of directors to cut $400 million in costs in an era of global financial uncertainty.
Kim’s decisions and the process by which he arrived at them — a staff survey conducted by external consultants was followed by strategizing behind closed doors and a sweeping reform plan that has caught many within and outside the bank off-guard — have contributed to a widely publicized air of anxiety among employees and a high-degree of scrutiny from media and think-tank commentators.
But on July 1 all of that “noise,” as Kim referred to it in a media briefing last week, could begin to matter less if the president’s vision to replace a complex “matrix” structure with a system of expertise-based “global practices” actually leads to higher-quality solutions and better access to knowledge for country clients.
“If you were to ask me, what was the point of the change process, the first was that we were not moving knowledge throughout the world,” Kim said during the briefing. “We have now corrected that situation.”
So what exactly will change on July 1? The answer is less straightforward than might be expected, but at least a few of the major changes can be identified right away.
The World Bank will begin to implement its new “systematic country diagnostic,” an evidence-based assessment of conditions in a country that can help or hinder the achievement of the bank’s new poverty and shared prosperity goals. The results of those diagnostics are meant to inform the bank’s new country partnership frameworks. The goal, according to the bank’s website, “is to build on the current country-driven model, but to strengthen this with a more systematic, evidence-based and selective approach to goal setting and prioritization.”
Starting July 1, technical staff will report to the new global practices. The recently named global practice senior directors will take up their posts as the bank’s leadership figures in each of their sectors. Also, the bank’s new Standardized Operational Risk-rating Tool will go into effect to “to help the World Bank consistently assess and monitor risks across all operational instruments and country programs,” according to a draft guidance note obtained by Devex.
Kim hopes these moves — and others set to roll out concurrently or over the course of the coming months — will leave the bank better suited to achieving its ultimate, high-level goals announced over a year ago: reducing the percentage of people living on $1.25 per day to no more than 3 percent by 2030 and “fostering income growth of the bottom 40 percent of the population in every country.”
Bank staff, board members, donors and outside commentators will not wait until 2030 to judge whether Kim’s tenure — and the reform package that could define his legacy — was a success or not.
If the World Bank chief is going to generate buy-in from employees who have spent months wondering if there will be room for them under the bank’s new structure and if so, where in the world those jobs may be located, he will have to show that the reform process does not majorly disrupt the bank’s operations, while also pointing to a few encouraging short-term signals.
“The quality of the knowledge that's being presented to clients and the access to all of the best experts in the bank on any particular topic should happen right away,” Kim said last week in response to a question from Devex about what he hopes will be some “quick wins” to build confidence in the reforms.
In addition to the quality of knowledge, he noted that a new plan from the bank’s Operations Group to simplify processes could also go a long way in the relative near term to address a concern that has resonated among the institution’s staff, partners and clients.
“We're going to move as quickly as we can to get those simplification pieces in place,” Kim said during the briefing. “This has been a huge issue, especially inside the bank, and [the country directors] were very excited about the potential of implementing the simplification, but those will take time.”
Alan Gelb, a senior fellow at the Center for Global Development who spoke to Devex about his expectations for what would indicate a positive start to the reform, agreed with Kim’s message about the opportunity for simplification to generate support.
“If the combination of internal changes and business model changes can produce a more efficient and less bureaucratically-fêted organization that would be a great plus,” he commented.
But those improvements could take three, four or even five years to be noticed, Gelb said, while the referendum on Kim’s change management is likely to come more quickly than that given the level of scrutiny that has already sprouted around the president’s reform package.
With that in mind, one of the things to watch in the immediate aftermath of the July 1 changes will be how quickly the bank can get back to — and maintain — a more or less normal business environment.
The first signal of a successful start to the reform would be “that work continues on July 1,” Paul Cadario, distinguished senior fellow in global innovation at the University of Toronto and a former senior manager at the World Bank, told Devex.
“All the people that are working on loans, that are supervising loans, that are producing pieces of analytic advisory work come into the office, and they just sit down, and they continue the way they did Monday night. In other words, the work of the bank continues,” he said.
On July 1, the leadership and reporting structures within the bank change dramatically. In addition to continuity, Cadario said bank employees need clear communication from their new supervisors, namely the heads of the 19 global practices and the various managers who will deliver their message throughout the institution.
“The heads of the global practices need to meet first thing with all the managers who report to them to indicate, ‘We’re here; we are committed to making the global practices work,” he suggested.
Cadario added: “They have to signal to the managers that the managers are important. They don’t have to say, ‘I know you feel you’ve been neglected. I know you feel you’ve not been kept in the loop. I know you feel your jobs are in jeopardy’…They just have to say, ‘I’m here; I’m looking forward to working with you, and I want really good communication within the practice to carry out what we do.”
Communication and transparency have been major sticking points in the often fraught relationship between Kim and his staff so far.
In June, the Executive Committee of the World Bank Staff Association directed a strongly worded open letter to Kim, complaining that one of the president’s “key failings” has been his neglect of meaningful staff input to inform the reform process.
“Having lived with the specter of reorganization for many difficult months it feels like the worst is yet to come,” reads the letter obtained by Devex. The authors argue that the 14 global and five more cross-cutting practices, which will replace the old “matrix” structure on July 1, carry “overlapping mandates” and “will most assuredly fight over budget.”
The letter states: “With this as a backdrop, you can appreciate how staff are feeling. We don’t know what our work will consist of or whether and how we will work better in the new structure. We don't know where we will sit. And, we don't know if we will have jobs.”
Those concerns appear to fly directly in the face of the optimistic outlook Kim expressed last week.
“I'm much less worried now than I was six months ago,” he said. “We've really got all the pieces in place, meaning we've remapped all the staff appropriately. We have reapportioned all the budgets. Everyone knows what they're going to do, where the budgets are going to come from, and how the system will work starting July 1st.”
The staff association letter laments what it calls Kim’s “death by Power Point approach” to communication, before listing a set of five proposals for increased staff association engagement in the process.
Kim addressed the letter — and the broader concerns it raised — in last week’s media briefing.
“Yes, I did see the letter, and we responded” he said. “We listed all the engagements that we had with the Staff Association, and there were many, many, many engagements ... We responded to that letter with data, and so I think they were trying to make a rhetorical point, but the data really speaks otherwise in terms of the extent to which we have engaged them and asked for their input.”
Apart from the bank’s ability to move knowledge between regions more effectively, to approach risk in its lending practices with greater nuance and cut out some of the red tape that has saddled its programs, the current reform effort could also reposition the Washington, D.C.-based institution within a changing landscape of multilateral finance and international cooperation for development.
Many have remarked that the World Bank could face increased lending competition if plans for a so-called BRICS bank — agreed to last year by Brazil, Russia, India, China and South Africa — materialize as expected, and if a new China-led Asian Infrastructure Investment Bank likewise takes shape.
Kim, for his part, says that he welcomes any new entrants into the development and infrastructure finance arena, since the combined resources of the World Bank and the other potential banks would still not be enough to meet the infrastructure needs of developing countries.
Also, other issues like inequality and climate change have captured global attention at a time when the international architecture to confront them is found to be somewhat lacking, according to Gelb. If Jim Kim’s reforms are successful, the World Bank’s ambition to produce and disseminate globally-applicable research and expertise could be a boon for progress on issues that require a global reach.
“The new structure, I think, is going to facilitate our ability to tackle certain global public goods issues,” Kim said in response to another question from Devex.
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