The World Bank and its Five Institutions
Describe the use of rewards and incentives by the World Bank.
World Bank is a source for developing countries around the globe when they need financial and technical assistance, it is world’s largest institution which works in the field of development and up-till-now by offering loans, knowledge, and advice to more than hundred developing countries (World Bank, 2018). The World Bank was founded in the year 1944 as under the name of International Bank for Reconstruction and Development (IBRD) and soon was “The World Bank” originally the aim was to rebuild countries which were shattered during the World War II. Gradually with time, the aim was shifted from reestablishment to development by laying emphasis towards infrastructure by building dams, roads, irrigation systems, electrical grids, and dams initially (World Bank, 2018).
In the year 1956 International Finance Corporation was founded (IFC) was founded which was the first organization in the World Bank Group, IFC starting lending to developing country’s private companies and financial institutions. In the year 1960, International Development Association (IDA) was formed the second organization in the group which emphasized on the suppression of poverty from the poorest countries and became the primary goal of World Bank Group (World Bank, 2018). Within a short span of time International Center for Settlement of Investment Disputes (ICSID) and Multilateral Investment Guarantee Agency (MIGA) were formed which were the third and fourth organizations in the World Bank groups. With these two World Bank possessed the ability to connect financial resources of the world to the needs of the developing countries.
The fifth organization in the group is IBRD which is earlier mentioned by the name World Bank was established, overall World Bank group comprises of these five institutions which have their own diversified work and responsibilities. Currently, IBRD gives loans middle-income and creditworthy developing countries, IDA provides interest-free long-term loans, IFC operates in partnership with private investors, MIGA gives loan guarantees and insurance to foreign investors against loss and ICSID settles investment disputes between developing countries and foreign investors (Chossudovsky, 2017).
In 1996 during the time of October when the new president of the World Bank was appointed James Wolfensohn, prior to his appointment culture of the World Bank was different in many ways. It was almost fifty years since the establishment of the World Bank and many things changed during this long span, communist culture eradicated, a revolution took place with regards to communication and transportation, population explosion, and changes in the financial markets. But the culture was that the institutions in the World Bank group were not adapting to recognize these changes for structuring their policies with new realities (Sarfaty, 2012).
Transformation of World Bank into a knowledge bank
Another problem was of the shared view of the institutions, as to make policies according to the required conditions it was needed deliberately, although fundamentals were stated in official documents of institutions still they reflected diversified assumption behavior towards their policies and fundamental purposes. In the World Bank, lack of understanding was present in regards to its basic mission, governance system, and conditions which led to the increase of goals which were unwanted by the World Bank, also the size, complexity, and independence developed inconsistency in the environment, strategy, and overall organization (Bauer, 2016).
Generally when organizations bear pressures the decision makers involved adapt goals and strategies according to environmental changes, but World Bank did not have any intense competition or any external challenge, in this case influential capacity of environment was postponed or avoided, decisions related to minimizing incompatibility between strategy and internal organization were avoided, and addition of costs were not minded which occurred through inefficiencies and ineffectiveness of internal structures and through policies which were unable to respond external threats and opportunities (Kaulbars, 2011).
After understanding above problems which were there in the World Bank prior to 1996, signifies the hierarchy culture it had. The reasons for such culture can be the centralized system that existed in the organizations i.e. approvals were done from headquarter in Washington DC for any of the projects which were going in any under-developed or developing countries and officials had to wait long for the approval process for any action that has to be taken place as operations were also in the remote parts of the world (Janus, 2016).
The World Bank by the early 2000s became the foremost knowledge organization around the globe, in the year 1996 its president James Wolfensohn committed on promoting knowledge sharing within the organization after realizing the distance between the headquarters and the operational regions as it was becoming a major hurdle in achieving objectives. Although sharing knowledge program was not easy to be implemented as it involved setting up communication technology, ERP system was adhered provided by SAP, and most crucial were the thematic groups as they were an integral part of knowledge sharing program (Grant, Hackney and Edgar, 2010).
At the beginning of the program there were very few groups and by the end of the year 2004, the number increased to one hundred and forty, the reason is that people wanted to gain knowledge from other people as it was interesting rather than databases. Though change process involved the organizational structure to be changed from centralized to decentralized, by the year 2004 structure evolved well, with this culture of the organization and core behavior of the employees was also to be changed. Knowledge sharing was linked at the World Bank to performance appraisals and worked well for appraising annual performances and reviewing of the employees, those who actively promoted knowledge sharing were awarded by a “President Award for excellence” given to those who had exceptional team behavior (Razak et al., 2016).
Resistance to the Knowledge Sharing Program
Relating knowledge sharing with performance appraisal was a good strategy by the World Bank, though the Theory of Planned Behavior (TPB) relates to the strategy adopted by the World Bank as the theory states certain intentions are assumed which helps in capturing the motivational factors that have influences on the behavior, factors are attitude, social norms, and beliefs of individual regarding behavior (Gagne, 2009). Theory of Reasoned Action (TRA) also relates with the World Bank performance appraisal technique as it states that reasoned action clearly relates with behavior and also the theory uses two crucial elements i.e. attitudes and norms, both these factors influence behavior intent (Nutbeam, Harris and Wise, 2010). It is clear that TPB and TRA theory signifies the reason behind World Bank using their knowledge sharing program and linking it with performance appraisals of the employees as overall change process involved structural change along with the change in the core behavior of employees.
The knowledge sharing initiative started by the World Bank in the year 1996 became a great success within a short span of time as it marked itself in the top ten list of Most Admired Knowledge Enterprises (MAKE) and by the middle of 2004 became prime knowledge organization around the globe (Grant, Hackney and Edgar, 2010). Though it was not easy to reach success in such a short span of time still the World Bank succeeded, the reasons which are analyzed and observed are mentioned below:
- Changing the organizational structure from centralized to decentralized added valuable efficiency in the knowledge sharing program.
- The strategy of knowledge sharing was brought by realizing business need to work resourcefully and effectually in order to face increased competition from big private banks.
- The World Bank realized that it has big unorganized data from global operations from which deriving information and knowledge will improve operations.
- Top management commitment to the program and provision of adequate financial resources during the span of the whole program.
- Installation of a dedicated satellite network that provided global access, as other countries were lacking infrastructure and telecommunication capabilities which created issues in transmitting data.
- Thematic groups which were made played a crucial role in the success of the knowledge sharing program, ninety percent of the total budget was allocated to these groups as boosting knowledge sharing was beings done at great pace.
- Changing the core organizational culture according to the need of the demanded environment and adapting new culture very well somehow gave a push to the knowledge sharing program as employees started enjoying their work.
- The World Bank used its internal knowledge for increasing capacity of knowledge sharing with its client countries.
- The World Bank promoted the internal knowledge sharing among the staff members or the employees.
- Task teams were facing problems in gathering World Bank’s existing knowledge as it was codified; this knowledge was further circulated through websites in the form of newsletter, briefs, and toolkits.
- Proper management of regional and networks efforts which were being made to improve knowledge sharing all around.
- Reviewing the knowledge sharing program by taking help of the employees facilitated in pointing out the shortcomings which were felt by the employees.
Transformation of the World Bank into “Knowledge Bank” was not an easy task as it sounds, external barriers can be removed by applying appropriate strategies and by understanding them but, the internal resistance which prevails in the organization creates difficulties in executing plans, strategies, and procedures related. Knowledge sharing is not something which is done to people; it is involving people in the very process by showing the benefits of knowledge sharing for themselves (Dale, 2011). Reasons behind internal resistance can be majorly from the employees, but sometimes it is from the internal of the organization also.
In the beginning when it was realized that knowledge sharing program will be launched; the organization thought that everything will be done smoothly, but it was not the picture that World Bank imagined. The employees of the World Bank were not in the favor of “Knowledge Bank” initiative as they thought it is a fairy tale that will never be true; this shows that World Bank employees in the starting phase were scared that it is a decision which will be a failure after all (Pablos and Patrica 2014). Early years were like this only because it was believed that World Bank will be unable to capture and organize systematically the knowledge which is inherited from staff, clients and partners.
Management Strategy for the Transformation of World Bank
Resistance existed in creating vital links between the thematic groups and the communities which were engaged in related topics, this was because of the employees as they were unable to figure out the upcoming future benefits from knowledge sharing. Another resistance which occurred during the knowledge sharing program of the World Bank was that employees views on this program was that it is a complete wastage of resources in terms of money, manpower, and time, and nobody will be benefited from this whether it is the involved thematic groups or the client countries or the overall organization (Azudin, Ismail and Taherali, 2009). Lastly, few of the staff members at the World Bank were completely threatened by the changes which were occurring in lieu of the program, few were not at all bothered about the program nor showed any enthusiasm towards the program, reason being it was felt that knowledge sharing is some kind of craze which will not last forever in the organization (Pandey, 2016).
The management strategy adopted by the World Bank for transforming it into “Knowledge Bank” is hard to depict whether it was a codification strategy or a personalization strategy. Codification strategy is the one in which repositories of information are involved, information is retrieved and controlled through organizational memory depends upon the transformations and the structure. Information technology is used to store the knowledge in databases from which people can retrieve the information without communicating with the creator of the information, hence organization’s ability to enter correct and codified knowledge comes into picture and with this, ability of its member is also crucial as they have to locate and use this knowledge (Chai and Nebus, 2012).
The personalization strategy involves sharing of experience and knowledge through person to person contact between the organization members, strategy assists a controlled approach in regard to information retrieval by the employees and helps them in catering deeper insights of the problem. Information technology is used but only for locating knowledgeable people and getting into direct touch with them, this strategy pushes the out-of-the-box thinking as the organization can invent innovative ways of serving their customers or themselves. This strategy lacks when there is no need for any specialized solution for the situations and sometimes its nature creates vulnerability towards superstitious learning (Hansen and Norbjerg, 2014).
Among these two management strategies, the important thing is which one to choose as the primary one, as knowledge sharing is based on the basis of ways by which clients are being served, business economics, and the people who are being hired. Putting emphasis on the wrong strategy can be fatal for the organization and also adopting both strategies at the same time is not good for the organization. It must be realized by the managers or the decision makers what is that the company plans to offer, whether customized or standardized products are offered, they are mature or innovative, and lastly, employees are in need of open or tacit knowledge while they are solving problems or handling the clients (Jennex, 2012). As World Bank emphasized and invested too much on the thematic groups, it justifies that it adopted the personalization management strategy because it realized the need of more personal interaction is there to promote knowledge sharing.
Success of the Transformation Process
At the World Bank initially “Organic Groups” were present; they were geographically dispersed team to develop online workspaces, when knowledge management unit was established in the starting phase it was under information technology group. Later on when thematic groups and structural groups started gaining importance and they were moved to operations. Communities of Practice (COPs) or the thematic groups soon became an integral part and were being used at the World Bank as these groups used ninety percent of the total knowledge sharing program budget because they were proving to be crucial and vital for the organization in promoting the knowledge sharing program rapidly (Elisabeth, 2010).
After clarifying that thematic groups or the COPs were being used at the World Bank the next question which comes into the picture is that how they were being used. These groups were basically being used in establishing links for catering the knowledge to employees and the other groups around the globe, the World Bank installed an internal website in the year 2006 named “CommNET” for the communication teams which were spread across the world to work together on the projects, sharing updates, sharing information, and interacting effectively with other teams. Upgrade to CommNET was done in the year 2008 which helped the members of the group to post topic related blogs, and calendar, website users were able to search directories of groups and join other groups if they wanted (Lie, 2015).
The reason for using these groups at the World Bank was that it was realized people wanted to gain knowledge from other people and not from the databases of the World Bank as they felt it was more fun to learn from experiences of others and ask for the connections they had. Thematic groups allowed anybody to join voluntarily in their interest areas which were a good thing as people with knowledge in different areas were working as a catalyst in the promotion of the knowledge sharing program. Another reason for using these thematic groups or the COPs was that these groups helped in the rapid flow of the knowledge throughout the globe and operations became more efficient due to these, also this management strategy cut down the costs of the projects and they were completed much sooner than expected (Fernandez, 2008).
The major system which was used at the World Bank which encouraged innovation was its institute i.e. The World Bank Institute (WBI) which was created to help the client countries in assessing the areas where development is needed and plan program activities using the distance face to face learning. The country nationals are awarded scholarships, fellowships, and opportunity to publish books, papers, and case studies, institute have a knowledge development program known as “K4D” which creates client countries capacity to access the appropriate knowledge and further use it for faster growth and welfare by being competitive (Wunker, 2015).
A four-pillar framework was developed by the Institute for the client countries which can be used as a base for understanding their strengths and weakness, which will help in sketching goals, policies, and kind of investments to be made to achieve them. The K4D of the institute developed an interactive tool for benchmarking to encourage future investments by helping client countries in identifying all the problems and opportunities faced during the shift to the knowledge economy, and also assessing the ability to compete within the global economy. All over we can see how the World Bank used its institute as a system for encouraging innovation by providing client countries different programs and tools for accessing self (Tohidi and Jabbari, 2012).
Innovation is an important concern for organizations and its role in achieving the objectives by innovative methods of management, ways of doing work, and product development (Imagination, 2018). In the World Bank innovation was so important in achieving objectives because without innovation the bank would not have been able to achieve the initiative it took of becoming a “Knowledge Bank” because providing knowledge in a way that it is understood and used further for appropriate application is one tedious task. All the innovative application and planning facilitated the objective achievement and overall success of the World Bank, which included from information technology upgrade to thematic groups or COPs success in sharing knowledge around the globe. Innovation was also the Institute of the World Bank, which provided new kind of facilities that catered in the flow of information to the client’s countries; the institute provided every possible support for the achievement of objectives (Drucker, 2014).
Conclusion
The report concludes how the World Bank started its journey and for what purpose it was formed initially and with the passing time how the objectives, goals, and purpose of the organization kept on changing with time, the World Group of the World Bank is described and its related institutions and their work. The culture of World Bank is described from its establishment up-to year 1996, as after 1996 a lot of changes occurred when the new president of the World Bank joined. Prior culture is described how centralization existed in the organization and it became a hurdle in processing tasks and achieving goals, change process is described which took place after 1996 in which using the performance appraisal as a tool for promoting knowledge sharing program of the World Bank.
The report discusses the success of the knowledge sharing program in such a short time by the World Bank and how it achieved it and the key reasons due to which it was all possible. Internal resistance related to the transformation of the World Bank into the “Knowledge Bank” is described in detailed that what all were all the resistance that was faced from the employees’ side. Management strategies are discussed and justified which was more appropriate in terms with the World Bank, whether the codified one was suitable or the personalized one was suitable, after providing appropriate reasoning it was found that World Bank opted for the personalized management strategy.
Further it is discussed whether the thematic groups were used by the World Bank or not and when it was clear that they were used, the proper application of how they were used in the organization is being discussed and also why they were used by the World Bank, what benefit was there in using these thematic groups. Lastly, the system which was used for encouraging innovation is discussed and its role in achieving objectives.
References
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