Tuesday, January 04, 2005

On our own (World Bank) governance: Board Effectiveness and the ticking clock

Dear Colleagues,

One year gone and less than one to go, so excuse me if I am getting a little anxious and want to share with you some concerns related to Board Effectiveness in a slightly more formal way than through our many brief corridor meetings. I know many of you share them.

First, the truth is that our Board is simply not functioning the way it should and that it really comes down to us to improve it since, unfortunately, in this matter we cannot instruct management to do it for us.

What is wrong? Well, in very few words, that we are drowned in too many written and spoken words about too many topics so that our power, as a body, is completely diluted to such an extent that we could easily qualify as the most expensive rubberstamp in mankind’s history. Think about the following facts:

Our yearly workload consists of about 850 formal Board documents, 3,700 other documents like project assessments, besides technical meetings, informal meetings, bilateral meetings, contact with our capitals, seminars, retreats, executive travel, spring and fall meetings, 11-hour communiqué-drafting sessions, plus, of course, hopefully, some life.

Being 24 EDs, means that very rarely a sufficient number of us are simultaneously focused on the same issue and, if it were to happen, like boats passing in the ocean as they say, chances are that there would always be a need for additional documentation that, presented in some future fall or spring, would at least mean having the issue to be revisited and analyzed by different EDs altogether.

Yes, we have our 24 Alternates, “with full power to act for him when he is not present,” plus the valuable additional resources of about 80 Senior Advisors and Advisors that could act as temporary Alternates, “in the event that both an ED and his Alternate ED are unable to be available.” Unfortunately, sometimes this could make for some additional dilution by splitting us up even more.

Many of us do receive good support from our capitals and so we might reasonably be fulfilling our role as a communication channel between our constituencies and the Bank. Nonetheless, when it gets down to that very personal fiduciary responsibility to “exercise individual judgment in the interest of the Bank and its members, as a whole,” it is clear that we are lacking, in too many ways. My reading of the Articles of Agreement makes it clear that someone counted on our own consciences, as individuals, in order to find some reasonable cohesiveness in this world full of uncertainties and contradictions, and this could perhaps require us to be somewhat more than management—not less.

The Bank is in itself a very peculiar organization and truly difficult to assess. That, together with the extreme sensitivity the Bank shows against any type of criticism, which stops the development of reports which would show clearly what does really work and what really does not work, clearly makes it currently impossible for us to prioritize in any sensible way our workload.

I know that when anyone starts hinting at these problems, the wet blanket of the dangers of micromanagement by the Board are quickly thrown over the discussions but, my friends, in this case what I really am referring to is the problem of the Board’s having a sub-micro influence on macro issues.

In the end, it really doesn’t matter if you are a Pavarotti, if you have to sing in Madison Square Garden during a Knicks’ match or in the deserts of Arizona, because in both these cases you will not be heard anyhow. In this respect, our Board’s acoustics are currently so bad that I have to repeat what I’ve frequently said in our discussions on the issue of voice for the developing countries, namely that, in reality, no one has a voice.

Where do we go from here? I do not know, but it really behooves us all to find out. This is not a matter for the management of the World Bank since they are not doing anything else than what normal management normally does, which is to maximize their own control of the organization by minimizing the Board’s interference.

Nonetheless, there are some ideas that could provide the basis for some discussions among us. For instance, there is always the possibility of splitting up more of our workload into more committees. Although they should have their own powers of approval, these powers should be subject to our possible objection. This would still mean that the Board does not relinquish its final say in any matter. This way we could perhaps create four committees with responsibility over geographical areas and so at least have more of a chance that, when we convene to discuss a matter, enough of us will have really read and analyzed that particular case in depth.

We know that the CODE, the Committee on Development Effectiveness, is reputed to be the most important committee of the Board, although that might just be false since CODE probably is just as weak as the rest of us and could in fact have the lowest functional-strength/importance-of-issue ratio. Nonetheless, many of the current issues of CODE are exactly those extremely important issues that should always be discussed at Board level, and so we might therefore be delegating in CODE some nondelegable issues, while retaining at the Board the workload of some less important tasks.

Another thing we should do, as I indicated before, is to be more straightforward in demanding from management evaluation reports that clearly identify what is working and what is not. Management should be able to come up with this overview, and, if not, we need to worry even more.

In conclusion, we all know that the needs of our world are almost unlimited, and I am certain that we never discuss something that does not have its very clear and urgent merits but, nevertheless, as every single effective hour of our Board discussions ends up costing us around 80,000 US dollars, we absolutely have to find better ways of prioritizing our time if we are to have a chance to fulfill our mandate as EDs.

I am aware that COGAM (the Committee on Governance and Executive Directors’ Administrative Matters) is planning to take up the issue of Board Effectiveness very soon and I know that it shares many of the concerns. I am certain this step will be a good opportunity to take this issue forward.

Meanwhile, and knowing that so many of you share these concerns, excuse me for reminding us all that our clocks are ticking.


Extract from Voice and Noise 2006