The institutional aspects of reform—incentives, processes, and organizational culture—appear to be far more challenging than changes in organizational structure, even in the private sector. Incomplete implementation, when formal changes in structure are not accompanied by changes in the softer, more stubborn issues of organizational culture and incentives is a common weakness. Galbraith (2009) argues that changes in strategy, people, rewards, processes, and structure are essential for effective matrix reform. Others have pointed to unclear lines of accountability, competitiveness and internal power struggles, and proliferation of bureaucratic layers (Gottlieb 2007), as well as the inability to rebalance power across the matrix, reluctance to adopt collaborative behaviors, and lack of systems and processes to support the reforms as recurring challenges in matrix organizations. Sy and D’Annunzio (2005) identify five top challenges for matrix organizations: misaligned goals, unclear roles, ambiguous authority, lack of a matrix guardian or champion, and perpetuation of silos.11 A review of private sector experience reveals five critical success factors in implementing matrix structures. While a wide range of institutional factors and processes influence the effectiveness of any organization, the following five factors appear to underpin the success of matrix organizations: • • • • •
Goals are aligned and tracked across the organization, Responsibilities and expectations are clear to all, Collaborative culture and leadership, Mature resource management processes, and A robust performance management framework.
Matrix organizations thrive on transparency, accountability, and synergies across these success factors. However, these go far beyond changes in organizational structure. They require sustained attention to ensure that the changes are internally consistent and periodic rebalancing to maintain responsiveness to evolving business needs.
Bank Management ’s Self-Assessment of the Matrix System Previous assessments12 by Bank management resonate with those from recent IEG evaluations.13 Since 1997, the Bank’s matrix system has been assessed by management several times. The most intractable problems were identified as: (a) the persistence of sector “silos” leading to weak cross-sector collaboration and untapped synergies; (b) disconnects between Board-approved sector strategies and country operational programs; (c) limited staff mobility and sharing of knowledge and expertise across Regions; and (d) dispersed and poorly defined managerial accountabilities, resulting in inadequate quality control. A 2001 review of the Strategic Compact led to some adjustments in budget and human resources (HR) systems to improve incentives, but integration of country and sector strategies and cross flow of people and knowledge remained problematic. In FY03-04, QAG carried out an assessment of Sector Boards.14 The QAG assessment identified several matrix issues, including: the governance and effectiveness of Network Councils and Sector Boards, the relationship between
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The Matrix System at Work