factor in 25 percent of the projects rated mostly unsuccessful or worse for development effectiveness. PSRs have been relatively successful in identifying and monitoring implementation issues, and about 70 percent of the problems had been adequately addressed.
Integrating Development Results into Staff Incentive Structures in IFC IFC is integrating a development focus into staff incentives. IFC uses DOTS ratings as the indicator for project development performance in the Corporate Scorecard. As an incentive, it introduced Department Scorecard Awards in FY02 to reward staff for contributing to scorecard objectives. The program was expanded to the entire Corporation in FY10 as the Corporate Scorecard Award and is based on development impacts (measured by projects’ development results ratings), client satisfaction, profitability, productivity, and growth. The Long-Term Performance Awards Program for investment staff began in 2004 to recognize development and financial results of projects that staff brought into the portfolio five to eight years earlier. Every year, IFC compares the development outcome of each investment staff member’s “portfolio” based on IEG-validated XPSR or DOTS ratings or proxies based on credit risk ratings. Staff that score above average are then compared in terms of financial returns to IFC. This system, based on development outcomes, is unique among MDBs. The IDGs will become part of the Scorecard, and directors’ and managers’ performances are assessed on new projects’ contributions to the IDGs. This is balanced with other Scorecard elements, such as projects in IDA countries, to reduce perverse incentives. IDGs are not used directly in annual staff performance ratings. Similarly, for Advisory Services, development effectiveness ratings are part of directors’ and managers’ performance assessment indicators, and development effectiveness success rate targets typically cascade down to all operational staff performance objectives. This enhances their responsiveness to results. Increasing the use of results indicators is a double-edged sword. It moves IFC in the right direction and focuses attention on the development mission, but it creates incentives for upward-biased self-evaluation ratings and information. The increasing gaps between XPSR self-ratings and IEG’s independent ratings show that there is a growing tendency to self-rate positively.
USE OF MONITORING AND EVALUATION IN IFC STRATEGIES Strategy Development
IFC’s strategies provide guidance on project choices to increase development impact. Regional, industry cluster, and Advisory Services strategies identify focus areas over a three-year horizon. The strategies are reviewed and updated every year, typically with management discussions in December or January of
Use and Influence of Monitoring and Evaluation in IFC and MIGA
63