oversight

World Bank: Status of Grievance Process Reform

Published by the Government Accountability Office on 1999-05-13.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Report to Congressional Committees




May 1999
                  WORLD BANK

                  Status of Grievance
                  Process Reform




GAO/NSIAD-99-96
      United States
GAO   General Accounting Office
      Washington, D.C. 20548                                                                                   Leter




      National Security and
      International Affairs Division                                                                           Leter




      B-282152                                                                                       Letter

      May 13, 1999

      The Honorable Mitch McConnell
      Chairman
      The Honorable Patrick Leahy
      Ranking Minority Member
      Subcommittee on Foreign Operations
      Committee on Appropriations
      United States Senate

      The Honorable Sonny Callahan
      Chairman
      The Honorable Nancy Pelosi
      Ranking Minority Member
      Subcommittee on Foreign Operations, Export Financing
       and Related Programs
      House of Representatives

      In June 1998, in response to concerns about the fairness of its employee
      grievance process and as part of a broader effort to reform its human
      resource policies, the World Bank appointed an internal Grievance Process
      Review Committee.1 The Review Committee was charged with examining
      the Bank’s grievance system and recommending changes to make the
      system more fair and credible. The Committee undertook a broad
      examination of the Bank’s existing system and possible alternatives.

      In response to a requirement in the Omnibus Consolidated and Emergency
      Supplemental Appropriations Act, 1999,2 this report analyzes (1) the
      Review Committee’s principal findings and recommendations and steps the
      Bank plans to take to implement these recommendations and (2) key issues
      that Bank management will face as it moves to implement these
      recommendations.

      As an agency of the U.S. government, we have no authority to directly
      review World Bank operations. However, through the Department of the


      1This report uses the terms “World Bank” and “Bank” to refer to the World Bank Group of institutions.
      The World Bank Group is made up of the original “World Bank”—the International Bank for
      Reconstruction and Development—as well as the International Development Association, the
      International Finance Corporation, the Multilateral Investment Guarantee Agency, and the International
      Center for Settlement of Investment Disputes. These institutions share a single grievance system.

      2
          Pub. L. No. 105-277, 112 Stat. 2681-167 (Oct. 21, 1998).




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                   Treasury and the U.S. member of the Bank’s Board of Executive Directors,
                   we obtained access to Bank staff and documents sufficient to complete our
                   report.



Results in Brief   The Review Committee found that the Bank’s grievance system over
                   emphasized formal, adversarial approaches to dispute resolution; lacked
                   sufficient independence from management influence; did not adequately
                   protect grievants’ rights or hold managers accountable for complying with
                   Bank rules regarding appropriate treatment of subordinates; and was not
                   readily accessible to employees located away from the Bank’s Washington,
                   D.C., headquarters. The Review Committee also concluded that individuals
                   charged with implementing certain responsibilities within the system
                   lacked necessary expertise.

                   The Review Committee prepared a plan of action, accepted by
                   management in February 1999 and endorsed by the Board of Executive
                   Directors’ Personnel Committee, that is designed to improve the system’s
                   effectiveness and credibility. Based on our review of the plan and other
                   alternatives considered by the Committee, we note that the measures
                   recommended by the Committee refine and enhance but do not
                   fundamentally alter the Bank’s grievance system. Among other things, the
                   plan includes steps to (1) strengthen the system’s provisions for informal
                   dispute resolution, (2) hire additional staff with skill in relevant areas like
                   discrimination and employment law, (3) increase the system’s
                   independence, (4) strengthen procedural safeguards for grievants, (5) hold
                   managers accountable for complying with Bank rules regarding
                   appropriate treatment of subordinates, and (6) expand access for
                   field-based employees. The Review Committee also recommended
                   creating a Conflict Resolution Network composed of Bank units with
                   relevant responsibilities to provide a focal point for sustaining the Bank’s
                   commitment to insuring that the new system functions as intended. The
                   Network will report to the Office of the Bank’s President. The Committee
                   decided against recommending more far-reaching changes, such as
                   providing for independent arbitration of grievances, at this time.

                   The Review Committee identified a number of significant procedural and
                   operational issues for others to address as implementation proceeds. The
                   Bank must develop guidelines and regulations in several areas, train its
                   staff to properly carry out their new responsibilities, and create a
                   meaningful system for monitoring the system’s performance and
                   recommending additional refinements as necessary. As the Bank has just



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             begun implementing the Committee’s recommendations, it is too early to
             assess their actual impact on the manner in which employee grievances are
             addressed. As the reforms are implemented, the performance of the Office
             of the President in supporting the new system’s independence and
             authority will be a key factor in determining success in creating a fairer and
             more credible system. As a member of the Executive Directors’ Personnel
             Committee, the U.S. Executive Director will have an opportunity to
             exercise direct oversight as the system comes into operation. We therefore
             recommend that the Secretary of the Treasury instruct the U.S. Executive
             Director to work with other members of the Personnel Committee to
             actively monitor the new system’s introduction, assess its performance,
             and introduce refinements as necessary.



Background   The Bank’s grievance system is used to seek resolution of a wide variety of
             grievances, including complaints about compensation, performance
             evaluation, separation from employment, and supervisory harassment.

             As of early 1998, the Bank’s system for addressing employee grievances
             included

             • counseling and informal dispute resolution through an ombudsman,
               racial and gender equity advisers, the Bank’s Human Resources Vice
               Presidential Unit, and the Bank Staff Association;
             • investigation of alleged misconduct (including improper management
               action toward subordinates) by an Office of Professional Ethics;
             • administrative review, by higher-level managers, of allegedly unfair or
               improper management actions toward subordinates;
             • referral of disputes unresolved by administrative review to quasijudicial
               proceedings before an internal Appeals Committee;3 and




             3
              The Appeals Committee is composed of three groups of Bank staff. The first group is chosen by
             management in consultation with the Staff Association. The second is chosen by management alone,
             and the third by the Staff Association alone. Individual grievances are reviewed by three-member pan-
             els that include one representative from each group, with members of the first group serving as panel
             chairs.




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• referral of disputes unresolved by the Appeals Committee for final
  disposition by an Administrative Tribunal made up of jurists from Bank
  member countries.4

Under U.S. law, the Bank is immune from suits arising out of its internal
operations, including employment relationships, unless the Bank decides
to waive this immunity.5 The Bank acknowledges that, because this is the
case, it bears a heightened obligation to ensure that its grievance process is
fair and commands confidence among the staff.

Aspects of the Bank’s system for addressing employee grievances have
been revised and augmented on a number of occasions. However, prior to
1998, the system as a whole had never been assessed. As part of a larger
effort to reform its human resource policies, Bank management decided in
early 1998 to conduct a broad review of the Bank’s grievance system. The
Bank subsequently set up an internal Grievance Process Review
Committee and charged it with reviewing the existing system and
recommending changes to make it fairer and more credible. Senior Bank
managers said that their decision to initiate this effort was prompted by an
awareness that many employees did not trust the system to fairly address
their grievances. Our conversations with grievants, as well as Bank staff
surveys and other information we examined in conducting this study,
confirmed that many employees lacked confidence in the existing system’s
basic fairness.

The Review Committee examined the operations of the Bank’s existing
system and a wide range of possible actions. Among other things, the
members of the Committee

• obtained detailed commentary on the Bank’s system and possible
  alternatives from a noted U.S. jurist with over 40 years of experience in
  civil litigation;


4The  Administrative Tribunal—the final stage in the Bank’s grievance process—is composed of seven
individuals, no two of whom may be nationals of the same country, who perform their duties on behalf
of the Bank while also continuing in other positions. Tribunal members are appointed by the Bank’s
Board of Executive Directors from a list of candidates submitted by the President of the Bank.
According to the international agreement that established the Tribunal, candidates for membership
must be “persons of high moral character and must posses the qualifications required for appointment
to high judicial office or be jurisconsuls of recognized competence.”

5
 See 22 U.S.C. sections 288-288d. See also Articles of Agreement of the International Bank for
Reconstruction and Development, Article VII; and Mendaro v. World Bank, 717 F. 2d 610 (D.C. Cir.
1983), holding that the Bank has not waived its immunity with respect to employment disputes.




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• commissioned a study of the grievance systems of several other
  international organizations;
• reviewed books and articles presenting current thought on best
  practices in formal and informal workplace dispute resolution, including
  descriptions of public and private sector systems recognized for
  employing effective procedures;
• obtained employee input through focus groups and a variety of other
  channels, some of which were confidential;
• solicited input from the Personnel Committee of the Bank’s Board of
  Executive Directors, which includes the U.S. Executive Director;6 and
• submitted a draft of their report for review by a panel of three
  recognized experts on workplace dispute resolution—two from the
  United States and one from Denmark.

In conducting its work, the Review Committee found no single model that
could be easily adapted to meet the Bank’s needs. Private companies and
public institutions in the United States and other countries employ diverse
approaches to workplace dispute resolution, and the national legal systems
of Bank member countries differ in many key respects. For example, the
rights and obligations inherent in the employer-employee relationship are
defined differently in different countries, and legal systems employ
different standards and approaches to guaranteeing that disputes are
resolved in a fair and unbiased fashion. The Review Committee sought to
draw from diverse sources to create a system that would function well in
the Bank’s unique multicultural environment.

In January 1999, the Committee posted a revised version of its report on the
Bank’s internal web site, invited Bank staff to offer comments, and
obtained an endorsement of its recommendations from the Board of
Executive Directors’ Personnel Committee. In February, the Review
Committee reported that management had accepted its report without
significant modification and that implementation had begun.




6
 The U.S. Executive Director chaired the committee through the first 10 months of 1998 and continues
to serve as a member.




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Reported                     The World Bank’s Grievance Process Review Committee concluded that
                             the Bank’s grievance system had a number of serious shortcomings and
Shortcomings, Bank’s         developed a number of recommendations designed to improve the system’s
Plan of Action, and Our      fairness and credibility. The measures proposed by the Committee refine
                             and enhance, but do not fundamentally alter, the Bank’s system. Based on
Evaluation                   our discussions with individuals both inside and outside the Bank and our
                             review of current literature on best practices in workplace dispute
                             resolution, we believe that these measures may improve the system’s
                             performance, but it is to early to assess their actual impact.


Shortcomings in the System   Identified shortcomings in the Bank’s grievance process included7

                             • overemphasis on formal, adversarial procedures as opposed to informal
                               approaches to resolving disputes, such as mediation;
                             • lack of expertise and/or independence from management influence in
                               Bank units with relevant responsibilities;
                             • lack of procedural safeguards to ensure that the Appeals Committee and
                               other elements of the system proceed in a fair and equitable manner;
                             • relative ineffectiveness in addressing complaints of bias and
                               harassment;
                             • limitations on redress for staff who are found to have been treated
                               unfairly;
                             • lack of effective measures for holding managers accountable for their
                               actions toward subordinates; and
                             • insufficient access for the approximately 2,600 employees who are
                               located outside of the Bank’s Washington, D.C., headquarters.8

                             The Committee noted that employees often saw the system as neither fair
                             nor credible and that this lack of confidence often deterred employees
                             from attempting to use the system to resolve problems. Members of the
                             Review Committee, as well the Bank’s Vice President for Human
                             Resources, commented that restoring employee confidence in the
                             system—and hence their willingness to use it—should be the reform
                             effort’s ultimate objective.



                             7Grievants,members of Bank units with relevant responsibilities, and others with whom we spoke
                             confirmed that these were the grievance system’s predominant shortcomings.

                             8
                                 Approximately 8,300 employees work at Bank headquarters.




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Action Plan                   The Review Committee prepared a plan of action to address the major
                              shortcomings that it identified. Among other things, the Committee
                              recommended steps to increase the system’s capacity for informal dispute
                              resolution (for example, mediation), enhance its independence, and
                              strengthen procedural safeguards for grievants. The Committee’s overall
                              objective was to encourage settlement of most disputes through relatively
                              informal, and hence more expeditious means, while also increasing staff
                              confidence in the more formal procedures applied to settle disputes that
                              cannot be otherwise resolved.

Strengthening Capacity for    The Review Committee concluded that the Bank’s system overemphasized
Informal Dispute Resolution   formal approaches to dispute settlement while providing too little support
                              for informal means of resolving workplace conflict. Experts in the field
                              noted that grievance processes that are oriented toward formal dispute
                              resolution force parties even to relatively simple disputes to invest
                              substantial time and effort in complex adversarial proceedings. The
                              Review Committee observed that, at the Bank, this orientation had
                              discouraged many employees from attempting to seek redress and delayed
                              resolution for those who had chosen to proceed.9 In particular, the
                              Committee found that administrative review—the process wherein
                              employees can formally challenge adverse supervisory decisions by asking
                              that they be reviewed by higher-level management within the same line of
                              supervision—had proven ineffective.

                              In response to this finding, the Committee recommended eliminating
                              administrative review while strengthening the system’s provisions for
                              informal dispute resolution. Among other things, the Committee
                              recommended expanding the ombudsman office from one to three staff
                              members. In addition, the Committee recommended that the Bank
                              introduce professionally facilitated mediation as a means of settling
                              workplace disputes. The new mediation service would be managed by an
                              individual with substantial experience in workplace dispute resolution and
                              would provide access to a culturally diverse roster of external and internal
                              mediators who would work to settle disputes in a confidential manner. The
                              Committee intended these measures to bolster employees’ willingness to
                              raise concerns, increase the number of disputes that are settled in an
                              informal (and consequently less costly and more timely) manner, and, as a


                              9
                               One case that we reviewed, for example, took more than 2-1/2 years to move from presentation for
                              administrative review to a decision by the Administrative Tribunal. The Tribunal handed down its
                              ruling more than 2 years after the grievant had been separated from service with the Bank.




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                              corollary, focus the Bank’s more formal mechanisms on comparatively
                              difficult cases. Their actual impact—that is, their utility in reducing
                              workplace conflict—will depend upon a variety of factors, including the
                              expertise and functional independence of the people placed in the new
                              positions.

Increasing Independence and   The Review Committee raised a number of concerns related to the
Expertise in the System       independence and relevant expertise held by units with significant
                              responsibilities in the grievance system, including the Appeals Committee
                              and the ombudsman.

                              The Appeals Committee is the Bank’s primary vehicle for providing
                              grievants with a formal “day in court.” According to the Review Committee,
                              the Appeals Committee has historically processed about 30 cases per year,
                              on average. The Appeals Committee is composed of regular Bank
                              employees—not legal professionals—who serve as panel members in
                              addition to their other duties. According to Bank employees we
                              interviewed, these individuals are frequently pressed for time. In addition,
                              panel members must concern themselves with their own career prospects
                              in the Bank. Some employees expressed concern that, as this is the case,
                              panel members may not be entirely immune from worry about how their
                              decisions on controversial grievances will be regarded by senior Bank
                              management.

                              The Review Committee also noted that the ombudsman—traditionally a
                              single-person operation—has generally lacked special expertise for dealing
                              with the full range of problems that come to that office’s attention,
                              especially harassment and discrimination. In addition, the Review
                              Committee noted that placement of the Office of Professional Ethics and
                              the Bank’s advisors on racial and gender equity under the authority of the
                              Vice President for Human Resources had reduced employee confidence in
                              these offices’ independence from management influence.10

                              In response to concern about the Appeals Committee, the Review
                              Committee recommended enhancing this body’s professionalism by
                              creating a new staff position—Executive Secretary to the Appeals
                              Committee. This position would be filled by an expert in labor and
                              employment law. He or she would serve as a nonvoting member of panels


                              10
                               In April 1998, the Office of Professional Ethics was removed from the operational control of the Vice
                              President for Human Resources.




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                           hearing individual grievances, tasked with ensuring that procedural
                           safeguards are in place and observed, and with ensuring consistency and
                           continuity in panel deliberations and decision-making. The person
                           occupying this position would report to the Office of the President.

                           It is unclear what value the new position will add to the process. The
                           Appeals Committee already employs a legal professional who performs
                           virtually all of the functions that are contemplated for the new position.
                           The Review Committee made no specific recommendation for endowing
                           the new position with a higher degree of authority or influence than the
                           current incumbent already exercises over panel proceedings.

                           The Review Committee also recommended that the Bank augment the
                           ombudsman staff with two individuals holding expertise in specific areas of
                           concern and replace administrative review with a professionally managed
                           mediation service. Other Review Committee recommendations that were
                           intended to address this concern included staffing the Office of
                           Professional Ethics with trained investigators and having relevant elements
                           of the system, including the Office of Professional Ethics and the Bank’s
                           gender and racial equity advisers, report directly to the Office of the
                           President.

Strengthening Procedural   The Review Committee, as well as grievants and outside experts, identified
Safeguards                 a number of shortcomings in the procedures that the Office of Professional
                           Ethics, the Appeals Committee, and the Administrative Tribunal employed.
                           These sources said that these shortcomings reduced employee confidence
                           that these elements of the system will conduct themselves in a fair and
                           impartial manner. The Review Committee offered suggestions on how
                           these procedural safeguards could be strengthened.

                           The Office of Professional Ethics. The Review Committee noted that many
                           employees lacked confidence in the ability of the Office of Professional
                           Ethics to conduct investigations in a manner that treats both accused
                           parties and accusers fairly. In response, the Review Committee
                           recommended that the Office establish clear rules and procedures to
                           protect the rights of all parties and ensure that investigations are
                           conducted fairly.

                           The Appeals Committee. The Review Committee agreed with other Bank
                           employees and outside experts who observed that the Appeals Committee,
                           though originally developed as a vehicle for informal peer review, is now
                           expected to conduct proceedings that are essentially adversarial in



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character. The Review Committee concluded that while the procedures
followed by Appeals Committee panels may once have been adequate, they
could no longer be regarded as providing sufficient procedural safeguards
for the parties to disputes, especially grievants. Among other specific
shortcomings cited by employees and noted by the Review Committee,
panel chairs retained complete discretion with regard to calling and
cross-examining witnesses, and witnesses did not testify under oath. The
Review Committee confirmed the views of several grievants with whom we
spoke who stated that, as a result, panel deliberations often proceeded on
the basis of incomplete or biased information. The Review Committee also
noted that grievants often experienced substantial delays in moving
forward. Bank attorneys commonly filed detailed challenges to the
Appeals Committee’s jurisdiction, and there was no deadline by which
senior management was required to reply to panel recommendations.

In addition, the Staff Association, as well as grievants, pointed out that
employees bringing complaints before Appeals Committee panels often felt
overwhelmed by the enormity of the Bank as an opponent. These sources
noted that this feeling may be exacerbated by rules that permit grievants to
be accompanied by only one person—an adviser supplied by the Staff
Association or the Appeals Committee, or an attorney—as they participate
in panel hearings. Finally, some grievants objected to the fact that final
authority to act on panel findings and recommendations lay with
management—most often the Vice President for Human Resources.

The Review Committee did not recommend making Appeals Committee
decisions binding on management. However, it did recommend a number
of procedural improvements, including

• providing grievants with a formal role, along with management and the
  Appeals Committee itself, in determining the witnesses that will be
  called;
• explicitly recognizing the right of the parties to cross-examine
  witnesses;
• requiring witnesses to make a declaration of truthfulness before offering
  testimony;




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• reducing delays by limiting the Bank’s right to challenge the Appeals
  Committee’s jurisdiction11 and by requiring that Bank management act
  on recommended remedies within 60 days.12

The impact of these recommendations on Appeals Committee deliberations
will depend to a large extent upon the manner in which they are adapted
into the rules governing Appeals Committee operations, as well as the
manner in which they are applied in practice. For example, as already
noted, existing Appeals Committee rules vest the panel with the authority
to decide which of the witnesses requested by the parties will be heard—
and the scope of each witness’ testimony. Beyond submitting lists of
desired witnesses, the rules do not provide the parties to the case with a
role in deciding who is permitted to testify, or the topics on which these
witnesses will speak. However, the rules do establish standards for panel
decisions on such matters. They state that the panel may “reasonably” limit
the number of witnesses that appear and the scope of their testimony
“when it is satisfied that sufficient evidence has been heard to disclose fully
and fairly the facts related to the appeal.” It remains to be seen whether
the wording that is developed to replace this provision will substantially
strengthen this standard, and whether, in practice, the revised language will
provide grievants with a stronger hand in resolving questions on witness
selection and testimony.

The Administrative Tribunal. The Committee noted employee concern that
the Administrative Tribunal’s procedures did not provide its members with
a full understanding of the matters at issue. Some employees and outside
reviewers were particularly troubled that the Tribunal usually arrived at
decisions without benefit of oral hearings.

The Tribunal is not an appeals court, as we understand the term in the
United States. That is, it does not review the manner in which the Appeals
Committee has handled the cases that are forwarded for Tribunal action,
nor does it remand cases for rehearing before the Appeals Committee.
Rather, it conducts its own independent review of the facts and arrives at




11TheBank would continue to be allowed such challenges when the maximum time permitted
employees for seeking redress after experiencing allegedly unfair or improper management actions had
passed.

12
  To be more precise, the Review Committee recommended that Appeals Committee
recommendations become binding if management did not respond within 60 days.




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                                  its own decisions on the merits of each case. Unlike Appeals Committee
                                  recommendations, Tribunal decisions are binding on the Bank.

                                  The Tribunal meets infrequently, for short periods of time. Although it has
                                  the right to hear oral testimony, it seldom does. According to its staff, the
                                  Tribunal has held oral hearings on two occasions since its founding in 1980.
                                  The Tribunal has nearly always based its rulings on written submissions
                                  from the parties. These written submissions include an initial application
                                  by the grievant, followed in succession by (a) management’s answer to the
                                  application, (b) the grievant’s reply to the answer, (c) management’s
                                  rejoinder to the answer, and (d) additional written statements, if deemed
                                  necessary by the Tribunal.

                                  In response to concern about the adequacy of the record employed by the
                                  Tribunal, the Committee recommended making transcripts of Appeals
                                  Committee hearings available whenever cases advance to the Tribunal.13
                                  The Committee also recommended that the Tribunal consider the merits of
                                  holding oral hearings more frequently.

Improving the System’s Capacity   The Bank’s staff rules and related materials state that bias and
for Addressing Bias and           harassment—including sexual harassment—are contrary to Bank policy.14
Harassment                        Nonetheless, the Review Committee noted that confidence in the system
                                  was particularly low among female employees and employees of African
                                  origin. For example, recent surveys found that only 1 in 10 female
                                  employees experiencing unwelcome sexual attention sought help from the
                                  resources the Bank had established for handling such problems and that
                                  fewer than 40 percent of employees regarded the Bank as serious about
                                  dealing with nationality discrimination.

                                  The Review Committee proposed several measures that may help to
                                  improve the Bank’s capacity for addressing bias and harassment
                                  allegations. These include the expansion of the ombudsman office to
                                  include staff with appropriate skills and creation of a mediation service.




                                  13Inother cases, the Appeals Committee would continue its present practice of not creating full
                                  transcripts. Hearings would be taped in order to provide for creation of transcripts if required.

                                  14
                                    In a 1994 policy statement, the Bank defined harassment, whether by peers or superiors, as “speech or
                                  conduct which unreasonably interferes with work or creates an intimidating, hostile or offensive work
                                  environment, whether on the basis of race, religion, color, gender, sexual orientation, national origin or
                                  other like factors.”




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                        The Review Committee noted one particular provision that has limited
                        access to the more formal portions of the Bank’s system for many staff
                        experiencing bias or harassment. The rules and regulations governing the
                        Appeals Committee specify that, to seek redress through the Committee,
                        staff members must challenge specific adverse managerial decisions.
                        These may include allegedly unfair decisions on such matters as
                        performance evaluation, compensation, promotion, or separation from
                        employment. However, staff experiencing bias or harassment may be
                        unable to point to a specific adverse decision as a basis for seeking redress.
                        Experts in this area note that workers alleging bias or harassment often
                        base their complaints on more general allegations that their superiors have
                        maintained a hostile work environment.

                        In response to this shortcoming, the Review Committee recommended that
                        grievants be permitted direct access to the Appeals Committee without
                        first going through any other process. We note that the Appeals
                        Committee’s rules will also have to be changed to permit it to accept
                        jurisdiction over cases where no specific adverse management decision has
                        been cited.

                        Expanding the Committee’s jurisdiction to include broadly based
                        allegations of harassment, without reference to specific adverse decisions,
                        raises questions regarding the criteria that the Committee should apply in
                        arriving at its decisions. In this connection, the Review Committee noted
                        that the Bank is engaged in developing an improved, more comprehensive
                        harassment policy and code of conduct. This effort may provide the
                        Appeals Committee with an adequate basis for fairly addressing grievances
                        of this type, provided that it includes clear criteria for assessing managers’
                        actions.

Expanding Redress for   Grievants and other concerned Bank staff noted certain limitations in the
Successful Grievants    remedies that have been provided for grievants obtaining favorable
                        judgments from the Appeals Committee or the Administrative Tribunal.

                        First, the Appeals Committee has the authority to award successful
                        grievants reasonable attorneys’ fees, but it has seldom done so. In more
                        complex cases, grievants may incur substantial attorneys’ fees in obtaining
                        a favorable ruling. Grievants argue that they should be reimbursed for
                        these expenditures when the Bank is found to have been at fault. In
                        response, the Review Committee recommended that the Appeals
                        Committee make greater use of its authority to recommend award of
                        reasonable attorneys’ fees to successful grievants. The actual impact of



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this recommendation will depend not only on the Appeals Committee’s
willingness to recommend such awards in appropriate cases but also on
Bank management’s willingness to actually make such awards.

Second, terminated grievants have seldom been reinstated, even when
found to have been unfairly treated. Since 1990, for example, the Bank has
reinstated five individuals in response to Appeals Committee
recommendations, while no one has been reinstated based on a favorable
ruling by the Administrative Tribunal. The Review Committee’s report
noted that reinstatement has rarely been provided, even when the Tribunal
has found management guilty of “gross malfeasance.”

In lieu of reinstatement, Bank management has frequently opted to provide
successful grievants with monetary compensation. When recommending
reinstatement, the Tribunal is specifically required also to fix an amount of
monetary compensation, up to 3 years net pay, that the Bank may decide to
award instead.15 The Bank has opted for compensation in each of the
seven cases since 1990 in which the Tribunal recommended reinstatement.
During this same period, Bank management also elected to provide
monetary settlements in two cases in which the Appeals Committee had
recommended that reinstatement be considered.

Concerned parties contend that the low likelihood of reinstatement as a
remedy for unfair separation from employment is unacceptable, given the
special circumstances attendant to employment in the World Bank. They
point out that foreign nationals employed at the Bank’s Washington, D.C.,
headquarters remain in the United States only by virtue of their status as
Bank employees. Unless they find employment with another international
organization, such as the United Nations, they must leave the United States
within 60 days.

The Review Committee noted the desirability of reinstatement being
provided when justified but did not make any recommendations on this
matter, given that “decisions on reinstatement ultimately rest with the
[Bank] management.” It remains to be seen whether the Review
Committee’s endorsement of the more frequent use of reinstatement as a
remedial measure will have a substantial impact on future Bank actions.



15
   The Tribunal may order the payment of higher amounts of compensation in “exceptional cases” where
it believes such amounts are justified.




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                                  B-282152




                                  We note that final authority for deciding whether to reinstate an employee
                                  rests with the President of the Bank.

Holding Managers Accountable      The Review Committee reflected a concern expressed by many Bank
                                  employees when it observed that the system has not effectively held
                                  managers accountable for complying with the Bank’s rules regarding
                                  appropriate treatment of subordinates. Many employees view the Bank’s
                                  willingness to take action against managers who repeatedly violate the
                                  Bank’s commitment to fair treatment of employees as a key indicator of its
                                  sincerity in pursuing effective reforms.

                                  Several of the measures already discussed may help to address this
                                  problem. These include (1) clarifying the Bank’s standards and
                                  expectations regarding harassment, (2) strengthening the Office of
                                  Professional Ethics’ investigative procedures and personnel, and
                                  (3) expanding the Appeals Committee’s purview to include grievances that
                                  are not based on specific adverse managerial decisions.

                                  The Review Committee also recommended that the Bank reinforce
                                  accountability by reporting Appeals Committee decisions that clearly
                                  indicate mismanagement to offending parties’ superiors, sanctioning
                                  managers who are found to have committed “serious or repeated”
                                  violations of staff rules, and advising Appeals Committee witnesses that
                                  knowingly making false statements would result in disciplinary action.

                                  Finally, the Review Committee recommended that the Office of
                                  Professional Ethics, the ombudsman staff, and the Bank’s racial and gender
                                  equity advisers cooperate to develop a system for monitoring and reporting
                                  cases of harassment and discrimination. While potentially worthwhile, this
                                  recommendation may be particularly difficult to put into effect. If
                                  effectively implemented, the system envisioned by the Review Committee
                                  increases the likelihood that management-staff disputes will be addressed
                                  in forums—like the ombudsman’s office—whose continued effectiveness
                                  depends on maintenance of confidentiality. Outside experts noted that this
                                  simultaneous commitment to greater accountability and greater
                                  confidentiality presents those charged with implementing the new system
                                  with a major challenge—preserving an appropriate balance between the
                                  two commitments.

Ensuring Access for Field Staff   The Review Committee noted that employees working outside of Bank
                                  headquarters have made relatively little use of the grievance system—at
                                  least partially because of the difficulties that they have faced in accessing



                                  Page 15                           GAO/NSIAD-99-96 World Bank Grievance Procedure
                            B-282152




                            the various elements of the system, which have been located almost
                            entirely within the Bank’s Washington, D.C., headquarters. The Review
                            Committee made a number of recommendations for improving field staff
                            access. These included

                            • providing access to the Office of Professional Ethics and the
                              ombudsman office through secure, toll-free telephone lines;
                            • tasking the ombudsman staff with working to develop a network of local
                              ombudsmen to serve field offices—possibly in cooperation with other
                              international organizations;
                            • requiring that the manager of the proposed mediation service ensure
                              that mediation is available to field offices; and
                            • equipping the Appeals Committee to conduct videoconferences with
                              field offices.

                            We note that providing most field offices with effective access will be quite
                            challenging, given the fact that Bank employees are dispersed among more
                            than 90 sites around the world.



Key Implementation          The Review Committee left management with a number of key issues that
                            must be more fully addressed as implementation proceeds.
Issues

Outstanding Procedural      As already noted, a number of procedural matters must be addressed
Matters                     before certain of the Review Committee’s recommendations can be fully
                            implemented. Among other things, these matters include (1) completion of
                            procedures to govern Office of Professional Ethics investigations and
                            policies clarifying the Bank’s expectations regarding harassment and
                            (2) clarification of the Appeals Committee’s jurisdiction, the role of its
                            proposed additional legal staff member, and rules governing the selection
                            of witnesses and the scope of their testimony.


Developing an Appropriate   The Review Committee recognized that appropriate, effective training for
Training Program            Bank employees, especially managers, is critical to the success of the
                            reform initiative. In addition to informing employees about the new
                            system, the Committee envisioned a training program that would provide
                            Bank staff with improved ethics, conflict resolution, and communications
                            skills, as well as increased sensitivity to cultural differences. Experts agree




                            Page 16                           GAO/NSIAD-99-96 World Bank Grievance Procedure
                              B-282152




                              that effective training in these areas can reduce workplace conflict and
                              facilitate early resolution of such disputes as may still arise.

                              To begin work in this area, the Review Committee recommended that a
                              new unit be created within the Office of Professional Ethics charged
                              specifically with promoting “corporate values and ethical behavior” among
                              the staff. (The Office previously concentrated almost exclusively on
                              conducting investigations.) The new head of the Office has already made
                              some efforts in this direction, such as examining the Bank’s existing
                              training portfolio to identify elements that can be expanded and/or
                              strengthened. However, substantial work remains to be done to create the
                              multifaceted, coordinated training program that the Review Committee
                              envisioned.

                              The Review Committee noted that one important topic in this training
                              program should be how to prepare and communicate meaningful
                              performance evaluations. The President of the Bank highlighted the
                              performance evaluation system as a critical area of concern. He noted that
                              Bank managers have not, in practice, been required to provide candid and
                              timely performance feedback to employees. The Bank’s Human Resources
                              Vice Presidential Unit is currently engaged in introducing an improved
                              performance appraisal system.


Monitoring and Refining the   The Review Committee noted that in the past none of the units in the
System                        system collected meaningful information on its own performance.
                              Representatives of the Appeals Committee, for example, reported that their
                              unit had not instituted effective means for obtaining structured feedback
                              from grievants and managers about their experiences before the
                              Committee. In addition, because the Bank’s system was not really an
                              integrated structure but a set of uncoordinated mechanisms created at
                              different times for different purposes, such data as had been collected
                              could not be used for systemwide analyses. Because the system developed
                              in this manner, the Review Committee observed that the Bank also lacked
                              an effective institutional focal point for examining relevant information and
                              taking such actions as may be indicated, including recommending
                              refinements in the system.

                              The Review Committee concluded that the Bank should develop
                              systemwide performance measures that can be used as a basis for
                              monitoring the new system’s performance. Staff satisfaction would be the
                              chief measure, along with accessibility and the cost and time required for



                              Page 17                           GAO/NSIAD-99-96 World Bank Grievance Procedure
B-282152




settling disputes. Substantial effort remains to be invested in
operationalizing these concepts, designing data-gathering instruments, and
creating databases so that meaningful information on the system’s
performance (including the performance of each unit within it) can be
effectively gathered, accessed, and analyzed.

In order to provide a focal point for a sustained commitment to improving
the system, the Review Committee proposed creating a conflict resolution
network comprised of all of the offices holding responsibility in this area.
In addition to approving all proposed rules and procedures for the new
system’s constituent elements, the network would be charged with
monitoring the system’s performance, identifying emerging issues, and
recommending additional refinements as necessary. The Review
Committee recommended that the network continue to explore the
introduction of other dispute settlement options, such as arbitration by
external dispute resolution professionals, into the Bank’s system.16 The
network would have an implementation coordinator who would oversee
creation of the new system and a rotating chair that would report to the
Office of the President on at least a quarterly basis. The Review Committee
also proposed that the network share with the employees information on
major trends and developments. However, the manner in which this
network will actually operate remains to be determined.

The Review Committee recommended that key actors in the new system—
including the head of the Office of Professional Ethics and the Appeals
Committee, the ombudsmen, and the chair of the conflict resolution
network—report directly to the Office of the President. These
recommendations highlighted the important role that this office should
play in ensuring that the reformed system operates in a fair and
independent manner, that managers are held accountable for their actions
toward subordinates, and that refinements in the system are introduced as
experience is gained through actual operations.

To further ensure a sustained commitment to improving the system, the
Committee also recommended that annual reviews be conducted during


16
  Providing access to external arbitration is one of many options that are available for augmenting the
independence and impartiality of the system. The Review Committee considered including arbitration
among its recommendations. However, the Committee decided against making such a recommendation
at this time, given that (a) substantial effort will already be required to implement the Committee’s
other recommendations and (b) the real need for arbitration as a supplement to the new system can
only be judged after the new system has been in operation for some time.




Page 18                                      GAO/NSIAD-99-96 World Bank Grievance Procedure
                          B-282152




                          each of the next 3 years, with provisions for taking employee views into
                          account, as well as commentary from outside experts and the Board of
                          Executive Directors’ Personnel Committee. Substantial effort remains to
                          be invested in planning and carrying out these reviews in a manner that
                          ensures that they provide a meaningful basis for continued improvement in
                          the system.


Evaluating the            The Administrative Tribunal was not created by management but by an
Administrative Tribunal   agreement among the Bank’s member countries. Thus, Bank management
                          cannot mandate changes in Tribunal operations on its own initiative. Major
                          changes can only be made by agreement among the member countries.
                          The Committee recommended that the Tribunal itself reassess its own
                          procedures, taking input from Bank management and staff into account.
                          Whether the Tribunal follows this recommendation remains to be seen, as
                          does the nature of the conclusions that such an assessment might reach.



Conclusions               The Bank has acknowledged serious procedural and operational
                          shortcomings in its grievance system and has prepared an action plan to
                          address these shortcomings.

                          As implementation has just begun, the extent to which the action plan will
                          increase the fairness and credibility of the grievance system cannot be
                          assessed at this time. A number of open issues remain to be addressed,
                          including several procedural matters, development of an appropriate
                          training program, and creation of an effective monitoring system.
                          Sustained management commitment and support will be needed to resolve
                          these issues. As the revised system comes on line the performance of the
                          Office of the President in supporting the system’s independence and
                          authority will be a key factor in determining its success. As a member of
                          the Executive Directors’ Personnel Committee, the United States
                          Executive Director will have an opportunity to exercise direct oversight as
                          the new system comes into operation.



Recommendation            To help ensure that the Bank achieves its ultimate goal of restoring
                          employee confidence in the grievance system, we recommend that the
                          Secretary of the Treasury instruct the U.S. Executive Director to work with
                          other members of the Executive Directors’ Personnel Committee to
                          actively monitor Bank efforts to implement the new system developed by



                          Page 19                          GAO/NSIAD-99-96 World Bank Grievance Procedure
              B-282152




              the Review Committee, assess its performance, and introduce additional
              refinements as needed.

              One critical element in helping to ensure the success of the reforms
              adopted by the Bank is the collection of meaningful data on whether these
              reforms have made the system more fair and credible. These measurement
              criteria have yet to be developed. To help assure that the Bank’s goals are
              achieved, we recommend that the Secretary of the Treasury instruct the
              U.S. Executive Director to work with other members of the Personnel
              Committee to ensure that the Bank develops indicators that will provide an
              adequate basis for judging the reforms’ actual impact.



Scope and     To understand the Bank’s grievance system, we reviewed the rules and
              regulations governing its operation and interviewed employees from all
Methodology   Bank units with substantial responsibilities in this area. These units
              included the Appeals Committee, the Administrative Tribunal, the Office of
              Professional Ethics, the vice-presidencies for Human Resources and Legal
              Affairs, the Senior Advisers for Racial and Gender Equity, and the
              ombudsman. We examined the Review Committee’s written conclusions
              regarding the system’s strengths and weaknesses, discussed these matters
              with staff from relevant Bank units, reviewed a number of grievance case
              histories, and interviewed grievants and their attorneys. We also reviewed
              the results of employee focus groups held to inform the Review
              Committee’s deliberations, as well as several reports that were prepared by
              outside experts at the Review Committee’s request.

              To provide a firm basis for reviewing (a) proposed improvements and
              (b) measures for ensuring that these proposals are successfully
              implemented, we interviewed experts on workplace dispute resolution and
              reviewed written commentary on effective formal and informal workplace
              dispute resolution from a number of expert sources. These included the
              American Arbitration Association, the Society of Professionals in Dispute
              Resolution, and the American Bar Association. To further inform our
              review, we read written reports on the grievance systems employed by
              other international organizations and by private and public sector
              organizations in the United States, including U.S. provisions for
              adjudicating disputes of this type before federal and state courts.

              We examined the Review Committee’s draft recommendations and
              discussed them with members of the Committee, including the
              co-chairmen and the head of the Staff Association; the President of the



              Page 20                          GAO/NSIAD-99-96 World Bank Grievance Procedure
                      B-282152




                      Bank; heads of relevant Bank units; grievants; and outside experts,
                      including those engaged by the Review Committee.

                      We did our work in Washington, D.C., between October 1998 and February
                      1999 in accordance with generally accepted government auditing
                      standards.



Agency Comments and   The Department of the Treasury and the President of the World Bank
                      provided written comments on a draft of this report. These comments are
Our Response          reprinted in appendixes I and II.

                      The Department of the Treasury stated that the report presents a fair and
                      accurate assessment of the Bank’s grievance process and the Review
                      Committee’s proposals. Treasury affirmed the commitment of Department
                      staff and the U.S. Executive Director to monitoring Bank implementation
                      of the recommended reforms to ensure that they have their intended effect.
                      The President of the World Bank noted his personal commitment to
                      ensuring that the recommended reforms result in a highly effective system
                      for addressing employee grievances.

                      The President of the World Bank commented that, in his view, the report
                      did not clearly convey a number of points that he considered important.
                      Specifically, he stated that the report did not

                      • recognize that the Bank’s grievance system reform effort—part of a
                        broader effort at reforming the Bank’s human resource policies and
                        practices—began well in advance of GAO’s review;
                      • capture the unique challenge of creating an effective system in an
                        international organization composed of 181 member countries with
                        widely varying dispute resolution practices;
                      • acknowledge the magnitude of the changes being made in the system,
                        especially the substantial shift in emphasis toward settling disputes
                        through informal, nonadversarial means; or
                      • mention that the experts consulted by the Bank viewed the system
                        developed by the Review Committee as a “state of the art” model.

                      Our draft specifically stated that the Bank appointed a Grievance Process
                      Review Committee in June of 1998, whereas our examination of the Review
                      Committee’s findings and recommendations did not begin until October
                      1998. The draft also acknowledged that the Bank’s decision to examine its
                      grievance process grew out of a broader, ongoing effort to reform the



                      Page 21                          GAO/NSIAD-99-96 World Bank Grievance Procedure
B-282152




Bank’s human resource policies. The draft’s background section discussed
the difficulties inherent in developing an approach to resolving workplace
disputes that would function effectively in a multicultural environment
such as the Bank’s. It also stated that the Bank’s reform plan included a
wide variety of measures that were intended to strengthen the system in
each area where shortcomings were identified. We began the discussion of
these measures in our draft report with a description of the Review
Committee’s recommendations for substantially strengthening the Bank’s
capacity for informal dispute resolution.

Our draft also recognized that the Review Committee sought, through
various means, to ensure that its final report to management would be in
line with current professional thinking on best practices in workplace
dispute resolution. In discussions with Bank staff and with GAO, the
experts consulted by the Bank commented that the Review Committee had
taken current best practices thinking into account in developing its
recommendations, and that the Committee’s action plan provided the Bank
with a sound basis for developing a fairer and more credible system.
However, these experts also noted that no plan, however constituted, could
be relied upon as certain to be satisfactory and that because this is the
case, it is important that the Bank develop systems for effectively
monitoring and refining the system as implementation proceeds.


We are providing copies of this report to the Honorable Robert E. Rubin,
Secretary of the Treasury, and to Mr. James D. Wolfensohn, President of the
World Bank. Copies will be made available to other interested parties upon
request.

Please contact me on (202) 512-4128 if you or your staff have any questions
concerning this report. The major contributors to this report were Michael
McAtee, Stephen Lord, and Mark Dowling.




Harold J. Johnson, Associate Director
International Relations and Trade Issues




Page 22                          GAO/NSIAD-99-96 World Bank Grievance Procedure
Page 23   GAO/NSIAD-99-96 World Bank Grievance Procedure
Appendix I

Comments From the Department of the
Treasury                                                              AppeInxdi




             Page 24     GAO/NSIAD-99-96 World Bank Grievance Procedure
Appendix II

Comments From the World Bank                                         AppIex
                                                                          ndi




              Page 25   GAO/NSIAD-99-96 World Bank Grievance Procedure
                   Appendix II
                   Comments From the World Bank




(711389)   L
           ertet   Page 26                        GAO/NSIAD-99-96 World Bank Grievance Procedure
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