WASHINGTON — The World Bank, a famously bureaucratic institution, is undergoing its first restructuring in nearly two decades. The overhaul is intended to keep it relevant at a time when even the poorest countries can easily tap the global capital markets, but with just weeks to go, the process has turned into what several staff members described as a nightmare, stalling their work and sapping morale.
In an interview, Jim Yong Kim, the American doctor and former president of Dartmouth College who took over leadership of the bank two years ago, strongly defended his plan. The overarching goal is to break down the bank’s regional “silos,” he explained, which discourage, for instance, experts who are working on mobile banking in sub-Saharan Africa from sharing best practices with experts handling the same issue in Central America.
To tackle that problem, Dr. Kim has created more than a dozen new global practices — on subjects like trade, health and infrastructure. Technical staff based in Washington will be organized into those practice groups as of July 1. “We had to make this change in order to really force the information to flow,” Dr. Kim said.
“We had to make this change in order to really force the information to flow,” said Jim Yong Kim. Credit Jonathan Ernst/Reuters
Along with that restructuring of 15,000 bank employees, Dr. Kim has also undertaken a sweeping financial review, to squeeze out inefficiencies and cut $400 million from the bank’s operating budget.
“This is the first time we’ve been able to say: Here’s where the revenue’s coming from” and where the spending is going, Dr. Kim said. “For the first time, we’re going to be able to compare expenditures.”
Current and former staff members said they agreed that change needed to come to the World Bank. “The bank is losing its relevance in middle-income countries,” said Uri Dadush, the director of the international economics program at the Carnegie Endowment for International Peace, referring to countries like India, China and Brazil.
“These countries don’t need a $1 billion or $2 billion loan from the bank,” Mr. Dadush said. “And many of the countries now have a lot of indigenous capacity to analyze and make technical decisions” without assistance from World Bank experts, he added.
Dr. Kim pointed out that the bank had recently doubled its lending capacity for middle-income countries.
The complaints from the bank’s core staff in Washington, most of whom spoke on the condition of anonymity because they feared retaliation, started piling up almost as soon as Dr. Kim initiated the reorganization. And over time, more and more of those complaints have been directed at Dr. Kim personally.
“This is not the way you run a change program,” said Paul Cadario, who worked at the bank for more than three decades. “No vision. No communications mechanism. No indication when it’s all going to be over.”
That turmoil has created what some people inside the World Bank described as a toxic environment. In not-for-attribution interviews, midlevel officials voiced concerns about such moves as restrictions on travel expenses even as hordes of highly paid McKinsey and Booz Allen consultants roamed the halls — and Dr. Kim was accused of hypocrisy for his own expenditures.
“The staff are clearly unhappy,” said Nancy Birdsall, the president of the Center for Global Development, a Washington-based research group. “There’s been a loss of confidence, not necessarily in the idea of the reorganization, but in the process.”
Yet even some World Bank staff members said that employees’ own sense of entitlement, and the fact that the bank had not undergone such a major internal review in nearly two decades, also explained some of the negative reaction.
In part, employees said they were concerned about personnel decisions. Four dozen executives have had to apply for new jobs. Last year, three highly regarded female executives were also unceremoniously pushed from their positions, which angered many other women at the bank.
Others said they were unimpressed with the executives named to lead the global-practices teams. “They’re good people, they might be great people,” said one bank official. “But they’re not top-quality people. These aren’t big names.”
Moreover, the global-practices leaders did not include any people from Africa or East Asia, arguably the bank’s two most important client regions. When African governors of the bank objected, Dr. Kim sent a letter to reply, if not to apologize.
“Thank you for our meeting yesterday,” it said. “I apologize for having had to leave so quickly; I had a meeting scheduled immediately after our session. I would like to take this opportunity to reiterate to you my personal commitment to diversity and specifically the inclusion of Africans among all ranks of staff at the World Bank Group.”
Another central concern is that the restructuring has taken up too much time, distracting the bank’s workers, rattling relations with clients and leading to risk aversion. “People are desperately trying to justify themselves and veering away from projects that might raise questions,” a staff member said.
But Dr. Kim pointed out that the bank was on track to do more business this year than it did last year; during earlier restructurings, parts of the bank’s business shrank. High-level bank employees also stressed that Dr. Kim had instituted regular review processes that would reduce the need for such stark reorganizations in the future.
Pettier concerns have abounded, too. As part of the $400 million cost-cutting exercise, the bank issued new guidelines on travel, limiting business-class flights and even adjusting breakfast allowances. “Leadership needs to reflect: Are ‘breakfast savings’ worth the ‘expense’ of staff morale?” said one letter in a popular alumni newsletter.
Perhaps no change caused more outrage than the elimination of parking subsidies for the crowded and expensive downtown garages where many officials park. Yet “to subsidize parking is a little weird for an organization like us,” countered Bertrand Badré, the bank’s chief financial officer, pointing out that the bank is committed to combating climate change.
Many complaints, serious and frivolous, have also questioned Dr. Kim’s management — especially concerns about his lack of communication with rank-and-file employees and perceptions of his overspending when asking the rest of the bank to cut back.
A much-discussed Financial Times editorial rebuked him for his use of private planes. One other popular rumor had Dr. Kim purchasing a tuxedo and charging the World Bank for it.
A press officer responded that Dr. Kim had taken chartered planes only to otherwise inaccessible destinations, and that he had used them less frequently than past presidents. (More than 90 percent of his travel is commercial, the spokesman said.) And the tuxedo story is just a story, he said: Dr. Kim had purchased white-tie wear for a Nobel Prize event, but he paid for the clothes himself.
Dr. Kim said that he did think he could have communicated about the restructuring process more clearly, and sooner. “I’ve been told this a million times by people who have gone through this,” he said. “It’s this notion that you can never communicate enough.” He added: “If I were to give anyone else advice, it would be to overcommunicate from the beginning.”
For all the complaints, many others involved with the bank and its lending policies said they supported the reorganization. “Let’s keep the mission of the bank in mind,” said Ian Solomon, a former World Bank executive director. “This is not about whether people in Washington are comfortable, or whether the process is simple. Development is hard. There’s a lot more we don’t know about getting it right than we do know.”
He added: “I applaud Jim for taking this one on.”
The Obama administration, which effectively named Dr. Kim to his post, also threw its weight behind the reorganization. “The United States is confident that the World Bank’s restructuring addresses the changing development challenges of the 21st century and will better equip the bank to meet its global mission,” said Marisa Lago, the assistant Treasury secretary for international markets and development. “Implementation and execution are key to this process.”
And Dr. Kim himself said that he believed the bank’s staff would see dividends after July 1. “I think it’s going better than I could have imagined two years ago,” he said.