Changing the World Bank culture: lessons from the Doing Business scandal
If President Malpass is serious about change, he should focus on fostering new behaviors more in line with the Bank’s values
In 2011, a former World Bank Lead Economist turned psychologist — concluded in a working paper titled “Narcissistic Denial in Foreign Aid” that the World Bank suffered from “narcissistic injuries” and loss of meaning. The consequence, he said, was “the activation of social defenses such as splitting, denial, and ritualization of activities [which] contribute to resistance to change.”
The WilmerHale report on the Doing Business data manipulation shows that the Bank still has an internal culture problem. The structural issues in Doing Business and other country rankings highlighted in Professor Kelley’s Washington Post’s oped need to be addressed of course. Similarly, the Bank must strengthen the firewall between its reimbursable technical assistance and its economic and sector work. But the report’s conclusions are straightforward when it comes to the root cause of the disaster: misconduct on the part of Senior Management including bullying and retaliation, and a corrupt ethics complaint system. A second WilmerHale report is in the works on these specific topics.
The law firm’s conclusions hint at ‘beneath the surface’ dynamics which contributed to the scandal: hierarchical rigidity, centralization of decision-making, bullying, competition, secrecy, lack of accountability, status obsession, some level of internalized ageism, homophobia and misogyny, fear of reprisal as well as the crisis of meaning which generated many of those.
Changing the culture will take more than the well-meaning statement President Malpass issued on September 17: “intimidation, retaliation and bullying are unacceptable”. His predecessors all made similar proclamations, including former President Jim Yong Kim. Kim is now himself embattled in the Doing Business scandal (and one before that: the “Badré scandal” of 2016) from the tower of Global Investment Partners where he comfortably landed.
Issues of bullying, harassment and retaliation at the Bank are nothing new. Forbes in 2012 described the Bank’s headquarters as “dominated by fearful yes-men and yes-women, who–wary of a quick expulsion back to their own countries– rarely offer their true opinions”. In 2014, The Guardian mentioned “a “climate of fear” in which employees fear retaliation from management for speaking out”.
Besides the Bank’s beneficiaries, the victims are the 95% dedicated and passionate World Bank staff. They often find themselves pawns in geopolitical games orchestrated by self-serving and egocentric leaders. The WilmerHale report mentions the obsession with keeping President Kim “happy”. As for Ms. Georgevia, her disregard for the institutions’ wellbeing is now clear as she hires a PR firm to mobilize support for herself instead of resigning. It is hard how she thinks she can recover from such a damning report.
When Jim Kim came in the Bank, he himself claimed he had been surprised by how strongly Bank staff feels about ethics (granted his own compass is way off). A survey at the time (the 2012 Organizational Health Index Survey by McKinsey) had shown how seriously, the staff took notions such as “living our values” and “leading by example.” For most World Bank staff, these are more than business-school buzzwords. They are essential operating and guiding principles in which they believe. Many came of age at the Bank during the 2007 Governance crisis which led to Paul Wolfowitz’s departure from the Bank. The Wolfowitz crisis was a searing moment for the staff. It reaffirmed their faith in the institution. It taught them that the Bank’s legal and policy rules apply across the board to all employees and staff regardless of stature or rank.
The five core values of the Bank, hidden on the Ethics office internet page are: (1) personal honesty, integrity, commitment; (2) working together in teams — with openness and trust; (3) empowering others and respecting differences; (4) encouraging risk-taking and responsibility; and (5) enjoying our work and our families.
However, for the staff these values remain elusive. Retaliation, harassment and lack of recourses, issues reiterated by the Staff Association in their newsletter last week, frustrate any chance for a value-driven organization. The justice system at the World Bank, designed to palliate to the issue of the Bank’s legal immunity, provides little more than an appearance of justice. A management tool, the ethics office is staffed by Bank managers who lack expertise, training and independence from Senior Management. They eventually cycle back as Senior Managers themselves in a clear conflict of interest.
The vulnerability of World Bank staff should not be forgotten either. Many of those working on Doing Business were short-term consultants and they, along with the staff, kept in check through the “G-4 curse”. G-4 is the specific visa attached to one’s employment with the Bank: if one loses it, one must leave the country almost immediately.
If President Malpass is serious about change, he should focus on fostering new behaviors more in line with the Bank’s values. A new Bank in which everyone is a hands-on contributor and feels comfortable sharing ideas and opinions, in which young people get a chance to participate in decision making and use their talents, in which leaders interact with rank-and-file employees in a more casual manner and where people are held accountable. This would probably require to loosen the formality in the way World Bankers dress, interact, communicate with each other’s or lead our meetings, to eliminate the culture of secrecy, to foster greater inclusion, to promote different characteristics in leadership (e.g. from bullying to consensus building, from competing to collaborating) including in client-facing jobs, to ensure greater diversity in teams (today geographical diversity is undermined by the fact that most staff come from the same educational institutions). At the top of the organization, it might look diverse in terms of gender and race but really it is dangerously homogenous in attitudes, personality and character. Those are easy wins which could in turn affect positively the Bank’s culture. It would require first radical change within Human Resources, from its current role of rules enforcer championed by former VP Sean McGrath, into a values driver.
As for the shareholders, they should start taking seriously who they appoint to both lead the institutions and serve on their Boards. The Doing Business scandal is a sign that the sitting Board, which comes at a cost of about $170 million/year, does not carry out its oversight job. Their staff are often busy looking for the staff position in the Bretton Woods institution after their mandate ends. As for the Executive Directors themselves, they focus on micro-managing resource allocation with little regard for the big picture when they are not openly lobbying for breaking the rules to benefit the country they represent. The quality of Board Members and their qualification for the job has been steadily declining over the past twenty years. It is time to, once again, appoint people who have the interest of the Bank and of its clients as their primary focus, who can speak truth to power and who understand large and complex institutions.
The World Bank and the IMF’s impartiality and quality of data, some of it much more fundamental than the Doing Business ranking, must be unquestionable. Having it manipulated for political reasons is probably the worst nightmare for the staff and undermines the reputation and credibility of the Bretton Woods institutions.
As the current wave of global populism is directly linked to lack of trust in institutions, from Churches to Governments, such a scandal is damaging to all of us as well as to the important mission of eradicating poverty. We must make sure it never happens again by dealing with the longstanding underlying issues at the World Bank.
Fabrice Houdart worked at the World Bank from 2001 to 2016. From 2016 to 2020 he was Human Rights Officer in the office of the United Nations High Commissioner on Human Rights (OHCHR). He is now Managing Director, at Out Leadership, an LGBTQ+ business think tank based in New York City.