The Post-Wolfowitz Bank: Graeme Wheeler Starts the Rebuilding Process

The Staff Association, which has emerged as the Bank’s own “civil society” has circulated Managing Director Graeme Wheeler’s strong and sensitive statement to the Bank Board’s Personnel Committee. Beyond highlighting the huge emotional cost the Wolfowitz Situation imposed on Bank staff, it hints at a few short-term changes that must be made in important personnel and policy processes. These are: the reporting relationship of the Bank’s Institutional Integrity Department, and the selection process for the next Vice President, Human Resources. Both are thought to have been captured by Wolfowitz cronies.

Opening Comments by Graeme Wheeler
Personnel Committee Meeting
May 23, 2007

These are personal views but it is important to understand how colleagues in the institution feel.

One of the special features of the World Bank Group is the pride that colleagues feel for the institution.

This comes through clearly in Bank Group Staff surveys.

Over 90% of respondents feel positive – not neutral – but positive and proud about working in the Bank Group.

These colleagues, the Board and our development partners have seen the Bank experience the greatest governance crisis in the Bank’s 62 year history.

The damage that has been done to the Bank Group has left us in deep dismay and experiencing profound sadness and anger that this fine institution has been seriously damaged in the eyes of the public and among our development partners.

All of us feel deeply for our operational colleagues working in the field, particularly those who have experienced criticism and skepticism about the Bank’s governance standards.

It has been doubly hard on those colleagues working in countries where the Bank has taken strong governance actions.

The Bank has been a somewhat private institution where colleagues are deeply passionate about and committed to the work we do.

We feel abused by the events that unfolded and at the misinformation that has occurred in the media.

While colleagues have played a positive and constructive role for the institution during this difficult time, I want to pay particular tribute to the work of Alison Cave and the Staff Association.

The Staff Association was highly supportive of the due diligence and governance processes followed during the past eight weeks and played a critical role during this emotional time.

It is essential for our credibility that the search for a new President be open, democratic and transparent.

The person selected as the next President should be:

– a leader with a very good understanding of international issues and the implications of globalism for development; and

– a manager with an excellent record in complex organizational settings.

Someone with a sound reputation as a technician or policy adviser is not sufficient. There has to be a well established track record as a highly skilled manager with strong statesmanship.

This is particularly important given that the Bank Group is a highly complex organization to manage and the need for repairing the damage to its reputation is paramount.

Throughout the institution, there is a huge desire to begin the necessary rebuilding phase to make the Bank Group a stronger institution and one that is even more effective for its development partners.

While all of us need to participate in this rebuilding, the role of the next President and his or her senior management team is critical.

Let me turn to governance issues.

First, one of the features that make our institution unusual is the very high turnover at senior management levels and in the Board.

Let me illustrate.

I was appointed a Vice President six years ago and at that time there were 35 members of the senior management team more experienced than I.

Over the past six years, the Board has turned over twice and 33 of the 35 more experienced colleagues on the senior management team have left.

In the past 18 months alone, about half of the VPs have departed.

We will see more turnover.

The new President has the right to change the senior management team. This is an important right as she or he must be comfortable with the team.

There will also be turnover among Executive Directors with the usual summer rotations.

We need to ensure that this high turnover is appropriately managed.

Because of this turnover, it is important that the Board and management do not delay taking urgent decisions.

Second, there has to be a fundamental review of the governance arrangements and how well these have functioned over the past two years and the last eight weeks in particular.

This needs to look at Board processes, including the role of the Ethics Committee. It also needs to look at the checks and balances, and safeguards within the Bank Group.

The President’s management approach resulted in a limited flow of information and involved trusting a narrow set of advisers. Media and communications were closely managed, and there was a sense that, at times, pressure was exerted on the Legal and Human Resources Vice Presidencies.

The Department of Institutional Integrity reports directly to the President and the Head of that Department is also a Counselor to the President.

All of this has to be carefully examined, and we must learn from the insights of what occurred.

Third, it will be particularly important to quickly rebuild trust within the organization.

This means restoring trust between senior management and the Board, re-establishing the strategic dialogue with the VPs and strengthening communication at all other levels throughout the Bank Group.

Fourth, the selection of the next Vice President of Human Resources is a critical appointment.

In my view, Xavier has done an excellent job as Vice President of Human Resources. He has also shown great dignity and strong personal values.

We are currently involved in a search for the next Vice President of Human Resources.

We are looking for someone with:

– an excellent technical and managerial reputation,

– strong personal values, and

– a sound knowledge of the Bank Group or the ability to acquire that knowledge quickly.

I am not comfortable with the structure, composition, or size of the 14-member search committee. I will be reviewing this in my role as Managing Director with HR responsibilities.

Fifth, there are other areas where we need to move quickly.

We need to complete the work on Whistleblower Protection and post the initial report on the Conflict Resolution System on the internal website for comment and review. We will begin implementation in areas where there is broad agreement.

Please be assured that we are making important progress in many areas.

Today, the senior management team informed Vice Presidents that the longstanding processes for making appointments which empower Vice Presidents and Managing Directors is being restored.

Yesterday, we had an excellent discussion on advertising the next batch of Country Director vacancies. This afternoon, I am meeting with Operational VPs to discuss the current process to select PREM Directors and Regional Chief Economists.

We are carrying out important work on compensation strategy, diversity, recruitment, and performance management. We will be engaging further with the Personnel Committee on the first two topics during June and July.

The paper before you on HR Renewal brings together a number of the initiatives that are underway and others that have been under review.

The renewal effort is the product of a longstanding process that has involved many people in HR as well as colleagues in the management team.

The measures that are being presented will lead to a stronger HR function for the Bank and are worthy of your support.

Thank you very much.

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