Chapter Highlights • Although outcomes of Bank-financed operations improved significantly over the past two decades, there has been a significant decline in outcome ratings since FY06. • Quality assurance systems are more effective for lending than for ESW and are weakest for NLTA. • The focus on reputational risk has crowded out attention to other aspects of quality of lending operations. • Accountability for quality is highest for task team leaders and nonexistent for sector directors. • Regional sector units, responsible for operational delivery, are receiving a decreasing share of regional budgets. • Messages from senior management, control over task budgets, and desires for promotion and salary increase are the primary incentives for meeting lending targets. • Job satisfaction and recognition by peers are the primary incentives for “matrix behaviors” designed to improve development outcomes, including focusing on results, collaborating across sectors, and mobilizing Bank-wide expertise. • Disincentives arising out of budgetary and information management rules discourage cross-sector collaboration.
Introduction The matrix system was designed to strengthen the Bank’s ability to deliver quality services that combine relevant local solutions with global knowledge. This was to be achieved by the combination of country priorities articulated by country management and global technical expertise brought to bear by sector management and the Bank-wide networks. The key question this chapter seeks to answer is “Are incentives and accountability mechanisms aligned in a manner that rewards high quality in client services and results?” To answer this question, the evaluation assesses the extent to which: • incentives and accountabilities are clearly defined to assure quality. • financing and budget incentives influence the quality of outputs and promote effective knowledge and technical services. • the matrix system fosters cross-sector collaboration and teamwork to achieve results. The evaluation has looked at both formal and informal incentives in recent years to assess the effectiveness of the matrix system. Improving quality in portfolio performance and encouraging greater cross-sector work were objectives of the 1997 reforms. This chapter briefly discusses the role of formal and informal incentives for quality and client orientation and their links to institutional arrangements.
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The Matrix System at Work