TO: Prof. David Hofmann
FROM: Tim Chang
DATE: March 26, 2014
RE: 1st assignment: reflection on an outside article
This memo reflects on the still ongoing organizational change of the World Bank, which is discussed by journalist Annie Lowry on New York Times’ October 7th, 2013 paper1. Specifically, this memo includes a summary on the World Bank’s situation, key organization design concepts related to World Bank’s organizational structure, and key organization design concepts related to World Bank’s potential organizational structure. With the following information, you can gain a better understanding of the application of organizational design.
World Bank’s situation
World Bank is the largest NGO that focuses on poverty reduction by providing financing solutions to developing countries’ development projects2. Made up of 188 member countries, the World Bank has 6 regional units across continents2. Also, the World Bank has almost 20 areas of different practices, and each of the regional units has its own teams for different practices that belong to the 20 areas2. It lends more than $30 billion a year and works in more than 100 countries. In 2013, employee survey revealed a “culture of fear” and a “terrible” environment for collaboration at the huge organization, which leads to considerations about restructuring1.
Key organization design concepts related to World Bank’s organizational structure
At World Bank, general management units serve and oversee regional (geographic) units (groups) of operations2. This design enables local focus, customization and relationships with local governments, as countries and regions are culturally different. Also, different countries have different regulations, increasing the amount of information World Bank needs to process. In this way, regional units can provide specialization of knowledge.
However, this design obstructs mobilizing and sharing resources across regional boundaries: employees working in different offices barely have any contact1. The structure creates inefficiencies when staff work in the same area of practice cannot share their experience and knowledge, making the World Bank a “terrible” environment for collaboration1.
Another issue with World Bank’s organizational structure is bureaucracy: extensive layers of management creates a bureaucratic, centralized organizational structure1. The World Bank is huge, and its tasks are complex. In order to manage the information flow, the World Bank has layers of middle managers. In this way, the money and approval processes are complex, and it takes time for information to flow within the organization vertically. This centralized structure reduces the operating speed, and as NGO competitions intensifies (smaller private NGOs such as the…