2013 Review of Staff Compensation for WBG - World Bank · 6/15/2017 · 1. This paper presents...

2017 REVIEW OF STAFF COMPENSATION FOR THE WORLD BANK GROUP

June 15, 2017

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2 THE WORLD BANK GROUP

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THE WORLD BANK GROUP 3

GLOSSARY

Bank Group or WBG The World Bank Group (WBG) consists of the International Bank for Reconstruction and Development (IBRD or the Bank), International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), International Development Association (IDA), and International Center for the Settlement of Investment Disputes (ICSID)

BPS Budget, Performance Review & Strategic Planning Vice Presidency

Country Office (CO) Staff For purposes of this paper, Country Office staff refers to locally-recruited staff in locations outside of Washington and Satellite Offices (Country Offices, shared service offices in Chennai, India, etc.)

CRO Chief Risk Officer Vice Presidency

Global Environment Facility (GEF)

Global Environment Facility (GEF) program is one of the WBG's largest and longest standing trust funded programs. GEF grants directly support actions to combat major environmental issues (e.g. climate change, polluted international waters, etc.) and stimulate green growth

FCV Fragility, Conflict and Violence

HR Human Resources Vice Presidency

HQ Headquarters / Washington

Midpoint The point in the World Bank Group’s salary ranges which is broadly aligned with the 75th percentile of salaries at comparable levels in the respective local labor markets

OPCS Operations Policy & Country Services Vice Presidency

Performance Rating (PR) System

The Bank Group’s individual rating system based on staff contribution and performance (ranging from a rating of 1 for ‘unsatisfactory’ up to a rating of 5 for ‘significantly exceeds expectations’) used as the basis to allocate individual salary increases

Salary Structure or Salary Scale

The set of salary ranges established for various grade levels. At the World Bank Group, the salary structure or salary scale has 11 salary ranges from GA to GK.

Structure Adjustment Aligns the salary scales with the increases in labor market salary levels. This refers to the weighted average percentage increase resulting from aligning the midpoints to the new market values


Supplemental Merit Increase (SMI)

The salary increase pool allocated for top performers (with performance rating of 4 or 5)

Total Merit Increase (TMI) The amount authorized for distribution to World Bank Group staff members, expressed as a percentage of current aggregate annual net salaries. This represents the sum of the Salary Structure Adjustment, Salary Progression Adjustment and the SMI. TMI is distributed to staff through the merit increase matrix

WBG Special Compensation Measure

(SCM)

Temporary response by the WBG to address sudden and severe macroeconomic disruptions in a country

WFA WBG Finance & Accounting Vice Presidency


Table of Contents

EXECUTIVE SUMMARY _________________________________________________________________ 7

I. INTRODUCTION _____________________________________________________________________ 8

II. STRUCTURE ADJUSTMENT AND ESTIMATED TOTAL SALARIES _________________________________ 8

III. ADDITIONAL MERIT MEASURES ________________________________________________________ 9

IV. KEY UPDATES ON STRATEGIC AREAS ____________________________________________________ 9

V. SPECIAL COMPENSATION MEASURES ___________________________________________________ 11

VI. NON-SALARY PROGRAMS ___________________________________________________________ 12

VII. SUMMARY OF RECOMMENDATIONS __________________________________________________ 15

List of Tables Table 1: Rewards and Recognition Award Programs across the WBG ____________________________ 14 Table 2: Summary of Market Data Sources by Job Family for Compensation Data Aggregation ________ 18 Table 3: Public and Private Sector Weights _________________________________________________ 18 Table 4: Staff Weights by Job Family at Grades GA – GI _______________________________________ 19 Table 5: July 1, 2017 Washington/HQ Salary Structure _______________________________________ 21 Table 6: FY17-FY18 Structure Adjustments and Total Merit Increases by Location __________________ 22 Table 7: Salary Progression Adjustment ___________________________________________________ 27 Table 8: List of Countries (alphabetical order) where WBG SCM was applied in FY16 ________________ 32 Table 9: List of Countries (alphabetical order) where WBG SCM was applied in FY17 (as of May 2017) __ 32 Annexes Annex A: Overview of WBG Compensation Methodology and Measurement of US Market 16

Annex B: July 1, 2017 HQ / Washington Salary Structure _________________________________ 21

Annex C: FY17 Retrospective and FY18 Recommendations – WBG Offices outside Washington ___ 22

Annex D: Additional Compensation Elements: Calculation Methodology _____________________ 27

Annex E: Country Office Compensation Working Group __________________________________ 29

Annex F: Scarce Skills Premium (SSP) for HQ and Satellite Offices __________________________ 31

Annex G: Special Compensation Measures ____________________________________________ 32


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Executive Summary 1. This paper presents proposals for the 2017 review of World Bank Group (WBG) staff compensation. 2. Under the refinement of the multi-year compensation review process approved by the Executive Board on June 11, 2015, this year’s review is the result of a comprehensive market review for HQ, Satellite Offices and Country Offices. 3. Overall, based on a comprehensive market compensation review, the HQ salary structure adjustment is equal to 2.2 percent. 4. Since its introduction in 2015, the Board-approved Special Compensation Measures framework has been successfully implemented in 10 countries. Following continuing consultations with both business and the Country Office Compensation Working Group, Management requests the Board to approve the proposed refinements to the Special Compensation Measures framework, which are intended to improve responsiveness and provide greater procedural effectiveness. 5. Key updates on strategic areas are provided to highlight ongoing work across various initiatives in support of the development agenda for 2030 under the Forward Look. This is also in line with the 3-year People Strategy, under the key area of “Strengthening Performance and Rewards”. Initiatives under this key area are helping reinforce the culture of performance, as underpinned by a robust rewards and incentives framework. Focus on FCV, Country Office Compensation Working Group, and Incentives for WBG Collaboration and Innovation, are among the important updates included. 6. Incentivizing behaviors that are focused on strategic areas, such as work related to leveraging more private sector investments, innovative approaches in dealing with FCV situations, are key to achieving a more effective World Bank Group. Management recommends to continue the WBG awards programs for FY18 in order to facilitate and promote greater collaboration, increased innovation, and collective delivery among staff, units, VPUs, and across the WBG, towards the broader corporate-wide objectives. Recognizing and celebrating outstanding individual and/or team achievements, collective delivery towards business priorities and development agenda, and increasing performance culture are among the key features that the WBG would like to continue to promote in its awards programs.


I. INTRODUCTION 7. This paper presents the results of the 2017 review of staff compensation for the World Bank Group. The main objective of this paper is to seek Board approval for the (i) 2017 (FY18) structure adjustments for WBG Washington-appointed staff and Country/Satellite Office staff, and (ii) the proposed refinements to Special Compensation Measures for Country Office compensation.

8. This year’s (FY18) compensation review for HQ, Satellite Offices and Country Offices is the result of a comprehensive review under the multi-year review process, as approved by the Board on June 11, 20151.

9. The recommendations in this paper are in line with key principles agreed during the 2011 comprehensive review of the different compensation elements. The agreed compensation guiding principles are:

a. Continue to be market competitive to attract and retain global top talent; b. Maintain a rules-based framework for governing decisions on salary adjustments; c. Be simple and easy to understand and administer; d. Remain fiscally prudent and consistent with medium- to long-term budgetary

requirements; and e. Further differentiate rewards according to performance.

II. STRUCTURE ADJUSTMENT AND ESTIMATED TOTAL SALARIES

10. The FY18 structure adjustment for HQ is calculated using the comprehensive market review approach, assessing market data from both U.S. public and private sectors (See Annex A for the WBG Compensation Methodology and Measurement of the U.S. Market).

a. Washington-appointed staff. The July 1, 2017 HQ / Washington structure adjustment for Grades GA-GI is equal to 2.2 percent. Annex B provides the FY18 HQ/Washington Salary Structure.

b. Salary ranges for grades GJ and GK are adjusted by the May 2016 to May 2017 Consumer Price Index (CPI) movement for the Washington-Baltimore area, in line with established Board approved methodology. However, actual individual salary increases for staff in grades GJ and GK are subject to the same merit increase matrix applicable to staff at grades GA to GI and distributed based on performance and position in the salary range.

11. Satellite Office staff. The structure adjustments for Satellite Offices are calculated based on the result of comprehensive market reviews of the respective local labor markets.

12. Country Office-appointed staff. The structure adjustments for Country Offices are the result of comprehensive market reviews of the local labor markets. Country-by-country structure adjustments covering 139 WBG offices (including Satellite Offices) are provided in

1 2015 Review of Staff Compensation for the World Bank Group, May 22, 2015 (R2015-0095; IDA/R2015-0144; IFC/R2015-

0153; MIGA/R2015-0034) (continued)


Annex C. For the Bank, IFC and MIGA, the budget impact from the structure adjustments will be funded within the overall nominal budget envelope.

13. The estimated total salaries of HQ and CO staff are as follows: US$ 1,300 million for the Bank, US$ 501.4 million for IFC, and US$ 19.2 million for MIGA.2

III. ADDITIONAL MERIT MEASURES

14. The compensation methodology, approved by the Board on February 8, 2011, provides for two additional merit increase components: (a) salary progression adjustment, and (b) supplemental merit increase.3 Both of these components are absorbed within the nominal budget envelope across the institution, for the Bank, IFC and MIGA.

15. Washington-appointed staff. The FY18 HQ/Washington additional merit increase elements are as follows: the salary progression adjustment is equal to 2.4% and the supplemental merit increase is equal to 0.3%. These additional merit increase elements can be compared with step increases (typically tenure-based) provided by the public sector in most countries, with the difference that the WBG increases are distributed to staff based on performance.

16. Country Office-appointed staff. The total additional merit increases in Country Offices are calculated by applying the same methodology used for determining the additional merit increases for Washington-appointed staff. Annex C provides country-by-country additional merit increase envelopes.

17. All salary increases are fully performance-based. The HQ / Washington structure adjustment will be distributed to staff based on performance and position in the salary range. Similar to HQ / Washington, the structure adjustments for offices outside Washington (Country Offices, Satellite Offices, and shared service centers) will be distributed to staff in each location based on performance and position in range. No cost of living increases or automatic increases are provided.

IV. KEY UPDATES ON STRATEGIC AREAS

18. In alignment with the Bank Group’s strategy as reflected in the WBG’s Forward Look: A Vision for the World Bank Group in 2030, the 3-year People Strategy4 identified 5 key areas that will inform and anchor HR’s work over the next 3 years. Under “Strengthening Performance and Rewards” (as one of the key areas), updates on initiatives as set out below will help reinforce the culture of performance, as underpinned by a robust rewards and incentives framework.

19. FCV Focus - FCV is one of the cross-cutting themes of the People Strategy which requires additional focus to adequately compensate and reward staff working both in, as well as for, FCV locations. Following the HRC Update on FCV, Management is introducing the following refinements to help enhance the WBG’s value proposition for staff working in and for

2 Detailed estimates, including cost of salaries and benefits are part of each organization’s budget planning and reporting

process. 3 Annex D summarizes the Board-approved methodology on these components. 4 FY17-FY19 People Strategy, October 17, 2016 (HRC2016-0017).

(continued)


FCV. Key highlights are provided below, and additional information on these updates are included in the HRC presentation in February 20175:

a. As discussed at the February 22, 2017 engagement under the topic area of FCV allowance, the existing Hazard Pay mechanism that is currently provided to hazardous countries will be extended to all FCV countries, and will be renamed as Hazard and Fragility Pay.

b. Additionally, with efforts related to introducing FCV awards, the President’s Award for Excellence (launched in FY17) will recognize staff going above and beyond the call of duty for several strategic areas including work in fragile and conflict situations. The Bank’s existing VPU Team Awards program was also leveraged beginning FY17 to include FCV as an additional theme under the program’s selection criteria. Both the IFC Annual Performance Awards and IFC Corporate Awards programs continue to recognize staff for their work in fragile and conflict situations among several important criteria or thematic areas.

c. Components related to talent management, career development, learning, security, and other elements are likewise being introduced or leveraged to help strengthen the employment value proposition for staff working in/for FCV.

20. Country Office Compensation – A Country Office Compensation Working Group was initiated by the Staff Association in partnership with HR and other units (support and business units), to address country office compensation issues with a three-fold objective: (a) expand the knowledge of staff on the current compensation policies, increase transparency, and ensure meaningful staff and management engagement and involvement in the annual compensation review process; (b) develop refinements (where needed) to current compensation measures in situations of high inflation and/or depreciation; (c) explore areas for further discussion where current compensation policies need to be revisited due to insufficient or thin market data, unconventional and unofficial comparator pay practices, or other compensation-related issues. A progress update was made to the Human Resources Committee of the Board on March 8, 2017 where a range of potential actions was presented including immediate measures, and medium to long-term considerations6. Annex E provides additional information on the initiatives of the working group.

21. HQ/Satellite Offices’ Scarce Skills Premium (SSP) – The SSP is a tool used when business needs call for the recruitment or retention of rare or critical skills / talent to support the mission of the organization, especially in cases where recruitment of needed skills / talent has proven unsuccessful. To address continued challenges in attraction of key talent, level GG jobs will become eligible for use of the SSP beginning FY18 (See Annex F for additional information).

22. Incentives for WBG Collaboration and Innovation as two key themes supporting the Forward Look Agenda - In FY17, the President’s Office launched two WBG non-monetary awards programs to recognize staff’s contributions for various WBG strategic priorities and thematic goals.

5 Update to HR Committee, Effective Staffing and Enhanced Value Proposition for WBG Staff in FCV Contexts, HRC Meeting on February 22, 2017. 6 Key Considerations on Country Office Compensation: A Country Office Compensation Working Group Progress Report and Update to the HRC, March 8, 2017.


a. Now on its second year, the President’s Award for Innovation is aimed at recognizing innovation by project teams, where innovation is used as a powerful tool for accelerating development impact.

b. The President’s Awards for Excellence was launched to recognize WBG staff for going above and beyond the call of duty (such as the work in /for FCV), demonstrating exceptional leadership, or exemplifying WBG collaboration in a client engagement, work program delivery, or in an institution’s strategic initiative. Teams and/or individuals are eligible to participate in this program.

V. SPECIAL COMPENSATION MEASURES

23. Special Compensation Measures. The Board-approved Special Compensation Measures (SCM) Framework was introduced to address the economic conditions of local staff in Country Offices that may stem from sudden and severe CPI inflation or local currency depreciation (versus the U.S. Dollar). Based on feedback provided through the extensive discussions with the Country Office Compensation Working Group, as well as assessment and review of the countries where Special Compensation Measures were enacted7, refinements were identified to further improve on the existing framework.

24. Proposed Approach. The refinements seek to provide some flexibility to Country Office management in deciding which measures to apply as well as simplify the qualification period:

a. Discontinue the principle of the Order of Precedence. Currently, if a country experiences both inflation and depreciation, the inflation SCM takes precedence and inflation-related Special Compensation Measures are applied. While the Order of Precedence was originally introduced on the assumption that inflationary impact on local pay would have the biggest negative impact to staff, discussions and recent experience have indicated that in some circumstances, the impact of depreciation, rather than inflation was considered more significant and harmful to the staff. As such, this refinement would provide the Country Office Management, in consultation with HR Management, the flexibility in determining which of the SCMs would be best suited for that particular country office upon qualification.

b. Ease the transition between SCMs. Currently, if both inflation and depreciation are present, the Country Office must exit from the first SCM and subsequently qualify for the second SCM – i.e., undertake a 2nd qualification period during which time no SCM would be in force. The recommendation is that no exit be necessary if threshold for the second SCM is met during the application of the first SCM. This means that in particularly onerous circumstances, where a country office is impacted by both macroeconomic conditions, the country office staff will be able to transition directly to the 2nd SCM upon an exit from the first SCM.

25. Continued Engagement with Business Stakeholders. In the course of FY18, HR will carry out further consultations and, if necessary, propose potential further refinements to the SCM framework to ensure that it evolves in a manner consistent with business needs.

7 Please refer to Annex G for the list of countries where an SCM was introduced in FY16 and FY17


VI. NON-SALARY PROGRAMS

26. WBG Awards Programs. Incentivizing behaviors that would help create a more impactful, results-oriented, innovation-driven culture is key to achieving a more effective World Bank Group. Incentives continue to be explored and leveraged to help drive the focus on the scale of impact, collaboration and working across WBG, mobilizing private, partner and domestic resources. These can be used as a tool to help drive staff and team behaviors to better align operational deliverables of the WBG with the Forward Look expectations in the context of Systems, Resources, Talent and Performance Management, and Rewards / Recognition.

27. WBG and IBRD Awards Programs. A summary of the WBG and IBRD awards programs that have a monetary component is provided below. The FY18 proposed IBRD awards budget is $3.8 million, covering the following WBG and IBRD awards programs.

a. WBG Spot Awards. The Spot Awards program recognizes and expresses appreciation for staff’s extraordinary efforts in delivery or service supporting WBG goals. Covering eligible staff across all organizational units (IBRD, IFC, and MIGA), it is awarded throughout the year. The program allows recognition of both individual and team efforts.

b. IBRD/GEF VPU Team Awards. The VPU Team Awards program provides meaningful recognition for outstanding team achievements demonstrating development impact and results, innovation, client focus, and collaboration across the WBG and with external partners. The VPU Team Awards criteria are broadly aligned with the WBG core competencies. To further support the focus on FCV, the VPU Team Awards also included FCV as a new criterion. In addition, this recognition program also enables each VPU to recognize a VPU-specific business priority. The vast majority of IBRD VPUs (including the Global Practices) participate in the VPU Team Awards program.

c. WBG Performance Awards for Integrated Units. As part of continuing efforts towards increasing performance-orientation and accountability for service delivery to the business, the performance awards program will continue to be adopted in the integrated areas of Human Resources (HR) and Information and Technology Solutions (ITS). The performance awards program for these integrated units is in lieu of VPU Team Awards.

28. WBG President’s Awards (Non-Monetary). While these awards are non-monetary, it is worth noting that two President’s Awards were launched in FY17 - the President’s Awards for Innovation and President’s Award for Excellence.

a. The President’s Awards for Innovation is an annual non-monetary team awards program. In FY17, this program was expanded from an IBRD program to a WBG awards program. The updated program now includes nomination for projects that have innovated in external client operations, across the WBG (i.e., IBRD, IFC and MIGA).

b. While a similar award was implemented in 2000-2004, a renewed President’s Awards for Excellence was launched to recognize WBG staff (individuals and teams) for going above and beyond the call of duty, demonstrating exceptional leadership, or exemplifying WBG collaboration in a client engagement, work program, or an institution’s strategic initiative (such as work in / for FCV). Staff or teams across all grades can be nominated quarterly, throughout the year.


29. IBRD Finance Performance Awards Program. This program rewards teams and individuals with significant achievements and contributions to the goals of respective units/departments and VPUs in alignment with overall Finance Group-wide business priorities. The program links objectives to performance and incentives, to encourage staff towards collective and collaborative delivery as they support one another across departments to achieve key Finance VPU priorities. For FY18 implementation (recognizing FY17 performance cycle), four (4) thematic goals (Financial Sustainability, Collaboration, Mobilization and Innovation) were identified for the Finance Group, for which collective and collaborative delivery will be anchored upon and evaluated. The Finance Performance Awards program is in place of the VPU Team Awards program.

30. MIGA Awards Program. MIGA’s FY18 Management Awards Program for teams and/or individuals is a valuable tool for recognizing staff and rewarding performance. The awards are primarily aimed at incentivizing behaviors that align with the Agency’s three-year strategy (MIGA2020#impact@scale). These are also intended to foster greater collaboration, increase knowledge sharing, and reward outstanding performance. The awards program will further align with the direction of consolidation of MIGA’s recognition programs into one MIGA Management Awards Program. It continues to reward significant contributions to MIGA’s institutional and/or operational results, while increasing the motivational effect of the awards by enhancing the recognition component. The FY18 Awards program, further aims to provide additional clarity on the intended behavioral and performance measures, while increasing MIGA’s recognition of effective collaboration among staff inside the Agency as well as across the WBG. The FY18 proposed awards budget of $228,000 is unchanged from FY17. This program is expected to help recognize staff most especially with the anticipated additional demands in the areas of IDA, FCV and Climate.

31. IFC Awards Programs. IFC’s awards and variable pay programs continue to be important components of IFC’s incentive system and employment value proposition. The Annual Performance Awards and Corporate Awards emphasize achievements in FCS/IDA, WBG collaboration and Diversity and Inclusion, to incentivize staff to reach IFC’s key objectives. IFC Smart Lessons award recognizes contributions to knowledge sharing in IFC and the wider WBG, and shares lessons learned in advisory, investment and financial operations. Over the past years, IFC has enhanced the alignment between the IFC Scorecard and the WBG Scorecard. Key changes introduced in the FY17 performance cycle include increased focus on fragile states, and portfolio supervision and greater performance differentiation, all in support of the strategic alignment of performance goals across individual, department and corporate-wide levels.

32. The IFC FY18 administrative budget proposal includes awards budgets as follows:

a. Budget of US$20.4 million; b. Additional amount of US$8.7 million, contingent on the achievement of corporate-

wide financial measures, including income and development impact-related metrics to reflect both short and long-term performance perspectives.

33. The current portfolio of IFC rewards and recognition programs cover the following:

a. Annual Performance Awards. The IFC annual performance awards program recognizes sustained outstanding performance at the individual or team level during the performance year. The program continues to have a direct and strong linkage to corporate-wide and departmental objectives (through the IFC Scorecard), where outstanding achievements and behaviors are recognized as IFC progresses in


creating development impact, financial sustainability and effective delivery to clients.

b. Corporate Awards. This program rewards team projects and/or initiatives with significant and lasting impact for IFC and its clients. For the FY17 performance cycle, there will be additional emphasis placed for exceptional achievements in Lower Income IDA and FCS countries, and for outstanding portfolio management, as there will be a larger number of teams awarded for these categories. The program will continue to reward WBG Collaboration, with particular emphasis to recognize teams that exemplify the promotion of new approaches to opening markets, as well as strong contributions to achieving WBG Diversity and Inclusion goals.

c. IFC Smart Lessons. Recognizing contributions to knowledge sharing in IFC and the wider WBG, Smart Lessons is a cash recognition program that enables development practitioners to share lessons learned in advisory services and investment and financial operations.

34. IFC strives to be a more engaged, business-driven, and performance-focused organization; accordingly, it will continue to improve its awards programs. Over the medium term, IFC seeks to simplify and clarify its awards/incentive plans and better aligning them to IFC’s business strategy.

35. A summary of the rewards and recognition awards programs across the WBG is provided in Table 1.

Table 1: Rewards and Recognition Award Programs across the WBG


VII. SUMMARY OF RECOMMENDATIONS

36. Management requests that the Executive Directors approve the results of the rules-based Board approved methodology (described in Annex A). For Washington, Satellite Offices and the Country Offices, the results were arrived using the comprehensive market compensation review methodology.

37. The Executive Directors are requested to approve the proposed structure adjustment of 2.2 percent for Washington-appointed staff and the country-by-country structure adjustments covering 139 WBG office locations (including Satellite Offices) as provided in Annex C.

38. The remaining components of the total merit increase envelope (salary progression and supplemental merit increase) will be absorbed within the nominal budget envelope for the Bank, IFC and MIGA. The Total Merit Increase (TMI) 8 envelope will be distributed to staff based on individual performance and position in range.

39. Management also presents the FY18 non-salary awards programs and recommends allocating, from within its net administrative budget, the following:

a. US$ 3.8 million for the WBG/IBRD rewards and recognition programs; b. US$ 0.228 million for the MIGA rewards and recognition programs; and c. US$ 20.4 million budget and an additional amount of US$ 8.7 million (contingent on

IFC’s achievement of corporate-wide financial measures, including income and development impact-related metrics) for IFC rewards and recognition programs.

40. Management also requests the approval of the refinements to the Special Compensation Measures framework, as described in par. 24, to be made effective as of FY18.

8 TMI is the sum of three elements: Structure Adjustment, Salary Progression Adjustment, and Supplemental Merit Increase.


Annex A: Overview of WBG Compensation Methodology and Measurement of U.S. Market

Overview

1. The following provides an overview of the policies and procedures used under the World Bank Group compensation system to measure the U.S. comparator market, adjust the Bank Group salary structure in relation to the market, and align staff salaries with the revised salary structure.

2. The system is rules-based. The reviews are conducted within an established methodology for setting salary levels. This annex describes the methodology used including (a) the acquisition of market compensation data at comparator organizations, (b) the aggregation of the market compensation data to develop the gross market compensation values at each salary grade and (c) the calculation of the corresponding net-of-tax market values that make up the headquarters salary scale.

3. The system is U.S. market comparator-based. Based on the Board-approved compensation system, the Bank Group Washington-appointed staff salary structure is referenced to the U.S. market. The Bank Group’s total compensation competitiveness facilitates its ability to attract and retain a high-quality, diverse staff in jobs subject to international recruitment. Under the WBG compensation system, this goal is accomplished by determining the Bank Group’s salary structure with reference to the U.S. market. Historical analyses have shown that the U.S. market consistently has been competitive internationally. On this basis, the system calls for international competitiveness to be reviewed periodically.

4. The Bank Group’s compensation system utilizes salary data from three labor market sectors in setting the salary structure: the public sector, the private general industrial, and the private financial sectors. In the public sector, market data are gathered from United States Civil Service, Federal Agencies and the Federal Reserve System. At grades GJ and GK, the midpoints for these grades are adjusted on the basis of inflation, rather than market survey data.

5. The market positioning of the Bank Group’s payline is key to attraction and retention. The competitive positioning of the Bank Group has been set at the 75th percentile of the private and public sectors. The 75th percentile positioning, as reaffirmed by the Bank Group-wide Compensation System Review conducted with the support of Aon Hewitt (formerly Hewitt Associates) in 2006, continues to be important for the Bank Group in attracting and retaining staff with the required professional excellence and experience9.

6. The use of total cash compensation, which includes both base salary and annual variable pay, is consistent with market pay practices and the WBG compensation system objective of reflecting market pay practices. The bonus and incentive payment components are an integral part of staff compensation in most private sector and many public sector organizations (as reaffirmed by the Board in 201110). The WBG uses base salary and annual variable pay components of the comparator markets to build the salary structures. Long term incentives, such as stock options or performance-based incentives that are based on multi-year results, are excluded although these continue to be an important component of compensation for professional jobs.

9 2006 Bank Group-Wide Compensation System Review – Stage 1 Report: Reconnaissance Findings, Competitive Analysis and High Level Design Recommendations (PC2007-0002), February 5, 2007. 10 Review of Compensation Elements of the World Bank Group, Phase 2 (HRC2011-011), November 29, 2011.


Job Matching and U.S. Market Data Sources

7. Job matching is an essential part of the compensation review process. Job matching of benchmark jobs to counterpart jobs in the market is an important element in any compensation survey. Benchmark jobs are reviewed annually to ensure continued relevance and market coverage. Job matching reviews are conducted to reflect changes in the Bank Group jobs relative to jobs in comparator organizations. This job matching review process contributes to a better understanding of the counterpart jobs in the market.

8. Multiple high quality data sources are used to ensure adequate coverage for Bank Group jobs. The comparator organizations used in each data source are also reviewed and updated to best reflect the market that the WBG competes with for its Washington-appointed staff (See Table 2).

a. U.S. Public Sector. The 75th percentile public sector data from the U.S. Civil Service Departments and Agencies and the U.S. Federal Reserve organizations are used.

b. U.S. Civil Service Data. The U.S. Civil Service compensation data are from various U.S. Civil Service Departments and Agencies that pay employees according to the US Office of Personnel Management (US OPM) General Schedule.

c. U.S. Federal Reserve Data. The compensation data from the Federal Reserve is drawn from the Federal Reserve Board and Federal Reserve Banks.

d. U.S. Private Sector. For the industrial sector, data from Aon Hewitt, Willis Towers Watson and HRA NCA were used. For the financial services sector, data sources are McLagan and Willis Towers Watson. For job families in the private sector, the 75th percentile market data is used.

9. The compensation data are combined through a method using multiple stages of aggregation to obtain an overall market value for each Bank Group grade. The following paragraphs describe the data aggregation process. The current data source weighting was approved by the Board as part of the compensation system (reaffirmed by the Board in 201111), and broadly reflect the recruitment sources for new Bank Group staff. The market data weights between private and public sector are provided in Table 3.

11 Review of Compensation Elements of the World Bank Group, Phase 2 (HRC2011-011), November 29, 2011.


Table 2: Summary of Market Data Sources by Job Family for Compensation Data Aggregation

Administrative Core Business & Technical

Market Data

Sources Accounting

External

Affairs

General

Services

Human

Resources

Info Mgt

Tech Legal

Office

Support Economist Finance Investment Operations

Tech

Specialists

U.S. Civil Service

Departments and

Agencies and U.S.

Federal Reserve

System

X X X X X X X X X X X

McLagan X X X X X X X X X X X

Willis Towers

Watson X X X X X X X X X X X X

Aon Hewitt X X X X X X X X X X

HRA NCA X X X X X X X X

Table 3: Public and Private Sector Weights

Grades Private Sector* Public Sector

GA to GH 67% 33% GI 50% 50%

* Within the private sector, private general/industrial sector and private financial sector are weighted equally. Compensation Data Aggregation for Grades GA to GD

10. At grades GA to GD, the data source weighting is one-third public sector and two-thirds private sector.

11. At grades GA to GC, there is insufficient number of jobs to support a separate analysis by job family. Therefore, the compensation market values at grades GA to GC are calculated at the average 75th percentile market values of the survey jobs at each grade.

12. At grade GD, the job family weighting for the 2017 review are reflected in Table 4.

Compensation Data Aggregation for Salary Grades GE to GH

13. For all the job families, the sector weights are:

a. U.S. Public Sector: Within the 33% weight, the U.S. Civil Service data are further weighted 60% and the Federal Reserve data are weighted 40%.

b. U.S. Private Sector: Within the 67% weight, the data are weighted 50% for the industrial sector, which is from Aon Hewitt, Willis Towers Watson and HRA NCA. The financial services sector data are also weighted 50%, and drawn from McLagan and Willis Towers Watson databases.


14. Job Family Weighting. At grades GE to GH, compensation market values are weighted in two steps: first, they are calculated by job family; and second, the job family market values are then weighted by the actual Bank Group staffing percentages. Table 4 provides the actual Bank Group staff weighting by grade and job family at GE-GH.

Compensation Data Aggregation for Grade GI

15. The data source weighting for grade GI is one-half public sector and one-half private sector, with further weighting in each sector. Staff weights by job family at GI are included in Table 4.

a. U.S. Public sector: The U.S. Civil Service data are weighted 60% and the Federal Reserve data are weighted 40%.

b. U.S. Private sector: The data are equally weighted by the financial and industrial sectors.

16. The combination of the data source compensation levels, sector weights, job family aggregation, and the actual staff weighting by grade results in the composite gross market values for grades GA to GI. The 2017 staff weights by job family across the grades are summarized below.

Compensation Data Calculation for Grades GJ and GK

17. At grades GJ to GK, the midpoints are increased by the year-to-year inflation rate in the Washington DC/Baltimore Metro area.

18. Once the market salary levels have been weighted and aggregated for each WBG grade, the existing salary structure is adjusted effective July 1 to align the midpoints with the market grade levels at each WBG grade. The approved principles are that: (a) the midpoints of the Bank Group pay line should be positioned to the market on a weighted average basis12; and (b) the midpoints should be positioned close to the market values on a grade-by-grade basis.

12 This means that the weighted average margin by which the midpoints exceeds the market values of the various grades should be zero or very close to zero, when weighted by the number of staff per grade.

AccountingExternal Affairs

General Services

Human Resources

Information Technology Legal

Office Support Economist Finance Investment Operations

Technical Specialists

GA 100%GB 100%GC 100%GD 5% 1% 6% 7% 12% 4% 57% 1% 5% 1% 2% 0%GE 14% 6% 2% 7% 15% 5% 8% 7% 8% 21% 7%GF 7% 6% 2% 3% 15% 3% 15% 10% 6% 14% 20%GG 4% 3% 1% 3% 8% 4% 16% 10% 7% 16% 28%GH 3% 2% 1% 2% 3% 4% 14% 13% 17% 19% 21%GI 4% 3% 2% 3% 2% 3% 16% 10% 12% 32% 14%

Administrative Core Business and Technical

Grade

Table 4: Staff Weights by Job Family at Grades GA – GI


Converting Gross Market Values to Net Values

19. While labor market compensation data are collected and provided in gross terms, the resulting gross market value per grade are then netted down to restate them in terms comparable to the net-of-tax salaries of Bank Group staff. The gross market values are netted down based on current tax tables. Grades GA to GD are netted down using a single taxpayer status. Grades GE and above are netted down assuming a status of married with two children. The dependency allowance for a married staff with two dependents is then subtracted from the market values at grades GE and above. The effect is to restate all market values in terms comparable to the Bank Group’s net-of-tax salaries.


Annex B: July 1, 2017 HQ / Washington Salary Structure

20. The proposed July 1, 2017 annual net salary structure for Washington-appointed staff is shown in Table 5 below.

21. Based on a comprehensive market compensation review of Grades GA to GI, the overall average structure adjustment is 2.2%.

22. For grades GJ and GK, the Board-approved methodology is to adjust the midpoints for these grades by the May-to-May Washington-Baltimore Consumer Price Index (CPI) movement.13 On June 14, the United States Bureau of Labor Statistics reported that the May 2016 to May 2017 Washington-Baltimore CPI was 0.7%. However, individual salary increases for GJ and GK staff are not adjusted by the CPI movement but rather are based on individual performance and position in the new range using the same merit increase matrix as for all other staff.

Table 5: July 1, 2017 Washington/HQ Salary Structure

WBG Grade

Staff Count

(#)

Minimum (US$)

Midpoint (US$)

Maximum (US$)

Salary Range

Width*

Midpoint Progression**

GA 1 27,200 38,900 50,600 86% GB 19 33,200 47,500 61,800 86% 22% GC 636 40,700 58,100 75,500 86% 22% GD 579 47,900 68,500 89,100 86% 18% GE 811 65,200 93,100 121,000 86% 36% GF 1,677 85,300 121,800 158,300 86% 31% GG 3,111 112,800 161,200 209,600 86% 32% GH 1,853 153,000 218,600 284,200 86% 36% GI 231 233,100 291,400 349,700 50% 33% GJ 35 278,900 328,100 377,300 35% 13% GK 6 310,000 364,700 419,400 35% 11% * The salary range width is the percentage by which the maximum exceeds the minimum.

** Midpoint progression is the percent difference in midpoints from one grade to the next.

13 Historically, the salary structures of grades GJ and GK had been positioned between the market reference point of grade GI

and the President’s salary (by process of extrapolating upward from the market reference point (now referred to as the midpoint) of grade GI to the point below the President's salary). In line with Executive Board approval, the approach was changed from extrapolation to CPI-based approach in 2006 for GK and in 2008 for GJ. Per the 2006 Review of Staff Compensation for the World Bank Group, dated May 24, 2006, R2006-0085; and 2008 Review of Staff Compensation for the World Bank Group, dated May 15, 2008, R2008-0106, the shift to a CPI-based approach to adjusting the GJ and GK salary structures was made in order to address compression at the top grade levels of the salary scale.


Annex C: FY17 Retrospective & FY18 Recommendations - WBG Offices outside Washington

23. This section provides a summary of the structure adjustments and additional merit increases for locations outside of Washington in FY17 and FY18.

24. The FY17 and FY18 individual Country Office structure adjustments and additional merit increases are presented by WBG Office location in alphabetical order. The summary in Table 6 includes information for Satellite Offices (such as those in Western Europe, Japan and United States - New York City), all of which are based on local market reviews.

25. Inflation numbers are included as reference information to provide context for Country Office salary increases. WBG salary increases are not CPI movement-based but inflation is one of the many drivers of labor costs in the respective local markets. The inflation data presented in the following tables are primarily taken from the International Monetary Fund (IMF) World Economic Outlook or the Economist Intelligence Unit (EIU).

Table 6: FY17-FY18 Structure Adjustments and Total Merit Increases by Location

Country Region FY17

Structure FY18

Structure

FY17 Additional

Merit Increase

FY18 Additional

Merit Increase

FY17 Total Merit

Increase

FY18 Total Merit

Increase

FY18 Inflation

(Reference Only)

Afghanistan SAR 6.3% 3.0% 3.5% 3.0% 9.8% 6.0% 5.6%

Albania ECA 2.3% 2.8% 3.4% 1.7% 5.7% 4.5% 2.6%

Algeria MNA 8.6% 3.7% 0.1% 0.1% 8.7% 3.8% 8.6%

Angola AFR 34.7% 0.0% 0.7% 2.9% 35.4% 2.9% 23.5%

Argentina LCR 15.4% 12.0% 2.1% 3.1% 17.5% 15.1% 24.1%

Armenia ECA 3.5% 1.5% 0.3% 0.5% 3.8% 2.0% 2.6%

Australia EAP 5.2% 5.7% 0.5% 1.8% 5.7% 7.5% 2.2%

Austria HQ 3.0% 0.0% 0.9% 2.2% 3.9% 2.2% 1.9%

Azerbaijan ECA 5.3% 0.0% 0.1% 2.3% 5.4% 2.3% 12.8%

Bangladesh SAR 10.1% 11.1% 2.6% 1.7% 12.7% 12.8% 6.1%

Belarus ECA 0.9% 4.3% 2.6% 1.3% 3.5% 5.6% 8.0%

Belgium HQ 2.5% 0.0% 2.8% 2.5% 5.3% 2.5% 2.2%

Benin AFR 10.9% 5.1% 2.9% 1.5% 13.8% 6.6% 1.5%

Bhutan SAR 19.2% 34.7% 0.2% 0.1% 19.4% 34.8% 3.4%

Bolivia LCR 5.5% 1.7% 0.9% 2.2% 6.4% 3.9% 3.8%

Bosnia-Herzegovina ECA 0.0% 2.7% 3.3% 0.7% 3.3% 3.4% 1.0%

Botswana AFR 2.8% 9.2% 9.3% 0.1% 12.1% 9.3% 4.0%

Brazil LCR 7.8% 5.1% 4.6% 2.0% 12.4% 7.1% 4.3%

Bulgaria ECA 3.9% 5.1% 0.4% 0.2% 4.3% 5.3% 2.2%

Burkina Faso AFR 2.9% 2.5% 1.3% 2.1% 4.2% 4.6% 1.7%

Burundi AFR 0.0% 5.3% 5.0% 3.4% 5.0% 8.7% 10.5%

Cambodia EAP 8.9% 9.3% 0.9% 0.9% 9.8% 10.2% 4.2%


Country Region FY17

Structure FY18

Structure

FY17 Additional

Merit Increase

FY18 Additional

Merit Increase

FY17 Total Merit

Increase

FY18 Total Merit

Increase

FY18 Inflation

(Reference Only)

Cameroon AFR 0.0% 4.4% 4.6% 0.1% 4.6% 4.5% 2.7%

Central African Republic AFR 0.0% 4.6% 3.3% 0.1% 3.3% 4.7% 6.0%

Chad AFR 0.0% 4.5% 2.7% 0.1% 2.7% 4.6% 2.5%

Chile LCR - 0.0% - 2.0% - 2.0% 3.0%

China EAP 8.7% 10.4% 5.0% 2.7% 13.7% 13.1% 2.3%

Colombia LCR 4.2% 3.2% 3.3% 0.8% 7.5% 4.0% 4.0%

Comoros AFR - 1.7% - 4.0% - 5.7% 1.7%

Congo AFR 0.0% 0.0% 2.5% 2.0% 2.5% 2.0% 4.4%

Costa Rica LCR 5.8% 0.0% 1.5% 4.5% 7.3% 4.5% 2.6%

Cote d'Ivoire AFR 0.0% 0.0% 2.8% 2.4% 2.8% 2.4% 2.2%

Croatia ECA 6.9% 4.9% 0.1% 0.1% 7.0% 5.0% 1.4%

Democratic Republic of Congo AFR 0.0% 9.9% 4.0% 0.1% 4.0% 10.0% 18.4%

Djibouti MNA 7.9% 3.7% 0.1% 0.1% 8.0% 3.8% 3.7%

Dominican Republic LCR 12.5% 7.0% 4.0% 5.1% 16.5% 12.1% 3.8%

Ecuador LCR 5.5% 1.5% 0.1% 0.5% 5.6% 2.0% 0.9%

Egypt MNA 0.0% 0.0% 7.4% 2.5% 7.4% 2.5% 19.3%

El Salvador LCR 4.6% 1.3% 3.9% 4.3% 8.5% 5.6% 1.2%

Equatorial Guinea AFR 0.0% 0.0% 2.0% 2.0% 2.0% 2.0% 1.8%

Ethiopia AFR 0.0% 4.6% 8.9% 5.2% 8.9% 9.8% 7.9%

France - Marseille HQ 1.5% 1.1% 1.0% 8.5% 2.5% 9.6% 1.3%

France – Paris HQ 1.5% 0.0% 1.0% 2.6% 2.5% 2.6% 1.3%

FYR Macedonia ECA 3.6% 4.8% 4.3% 0.4% 7.9% 5.2% 1.1%

Gabon AFR 3.3% 1.8% 0.1% 0.7% 3.4% 2.5% 1.8%

Gambia AFR 0.0% 8.6% 3.5% 0.1% 3.5% 8.7% 8.6%

Georgia ECA 2.8% 6.7% 0.4% 1.3% 3.2% 8.0% 5.6%

Germany HQ 0.5% 0.0% 1.5% 2.0% 2.0% 2.0% 1.8%

Ghana AFR 23.8% 13.1% 1.7% 2.0% 25.5% 15.1% 11.3%

Guatemala LCR 7.2% 7.2% 2.8% 1.2% 10.0% 8.4% 4.3%

Guinea AFR 21.8% 12.6% 0.1% 1.1% 21.9% 13.7% 8.9%

Guinea-Bissau AFR 0.0% 2.4% 2.0% 10.0% 2.0% 12.4% 2.8%

Guyana LCR 0.1% 3.1% 1.9% 0.1% 2.0% 3.2% 1.6%

Haiti LCR 12.5% 11.4% 2.0% 2.3% 14.5% 13.7% 13.1%

Honduras LCR 8.5% 3.7% 2.3% 0.8% 10.8% 4.5% 4.3%


Country Region FY17

Structure FY18

Structure

FY17 Additional

Merit Increase

FY18 Additional

Merit Increase

FY17 Total Merit

Increase

FY18 Total Merit

Increase

FY18 Inflation

(Reference Only)

Hong Kong SAR, China EAP 6.2% 4.0% 1.2% 4.1% 7.4% 8.1% 1.7%

India - Chennai SAR 4.0% 4.4% 7.7% 6.0% 11.7% 10.4% 4.8%

India SAR 8.2% 19.9% 3.4% 3.0% 11.6% 22.9% 4.8%

Indonesia EAP 9.5% 9.6% 2.8% 2.8% 12.3% 12.4% 4.1%

Iraq MNA 15.6% 3.1% 0.8% 1.0% 16.4% 4.1% 2.9%

Italy HQ 0.0% 0.0% 2.0% 2.6% 2.0% 2.6% 1.5%

Jamaica LCR 6.2% 12.6% 9.3% 0.4% 15.5% 13.0% 3.2%

Japan HQ 2.0% 0.0% 0.9% 3.5% 2.9% 3.5% 1.2%

Jordan MNA 7.0% 8.1% 1.8% 0.7% 8.8% 8.8% 3.5%

Kazakhstan ECA 0.0% 0.0% 5.6% 2.5% 5.6% 2.5% 7.3%

Kenya AFR 0.0% 0.8% 5.3% 1.4% 5.3% 2.2% 7.3%

Kosovo ECA 3.3% 3.2% 2.7% 1.4% 6.0% 4.6% 2.2%

Kuwait MNA 0.0% 5.1% 4.4% 5.2% 4.4% 10.3% 4.0%

Kyrgyz Republic ECA 8.1% 8.2% 4.4% 1.9% 12.5% 10.1% 3.5%

Lao EAP 7.2% 11.6% 4.6% 0.8% 11.8% 12.4% 3.0%

Lebanon MNA 1.7% 3.0% 1.9% 3.5% 3.6% 6.5% 3.0%

Lesotho AFR 0.0% 6.3% 3.3% 0.1% 3.3% 6.4% 4.6%

Liberia AFR 0.0% 6.4% 2.8% 3.5% 2.8% 9.9% 10.1%

Libya MNA 0.0% 35.0% 2.0% 0.1% 2.0% 35.1% 25.0%

Madagascar AFR 17.1% 10.2% 5.4% 1.6% 22.5% 11.8% 8.8%

Malawi AFR 14.2% 6.9% 3.3% 8.9% 17.5% 15.8% 18.0%

Malaysia EAP 0.0% 9.8% 2.0% 0.7% 2.0% 10.5% 3.2%

Maldives SAR 0.0% 0.0% 2.0% 2.0% 2.0% 2.0% 2.6%

Mali AFR 0.0% 3.7% 4.3% 0.1% 4.3% 3.8% 1.7%

Mauritania AFR 2.4% 3.1% 1.0% 0.7% 3.4% 3.8% 4.7%

Mauritius AFR 2.0% 5.2% 2.3% 0.1% 4.3% 5.3% 2.7%

Mexico LCR 0.0% 3.1% 3.6% 2.4% 3.6% 5.5% 4.6%

Moldova ECA 0.0% 0.0% 3.1% 2.0% 3.1% 2.0% 7.5%

Mongolia EAP 7.9% 7.5% 0.2% 1.6% 8.1% 9.1% 4.4%

Montenegro ECA 0.0% 0.0% 7.0% 4.7% 7.0% 4.7% 2.3%

Morocco MNA 1.5% 3.5% 2.7% 3.6% 4.2% 7.1% 2.3%

Mozambique AFR 0.0% 0.0% 2.1% 2.3% 2.1% 2.3% 20.3%

Myanmar EAP 12.7% 18.0% 0.9% 0.1% 13.6% 18.1% 9.6%

Nepal SAR 10.9% 15.5% 1.7% 1.0% 12.6% 16.5% 8.4%

Nicaragua LCR 9.0% 8.5% 1.0% 0.6% 10.0% 9.1% 3.8%


Country Region FY17

Structure FY18

Structure

FY17 Additional

Merit Increase

FY18 Additional

Merit Increase

FY17 Total Merit

Increase

FY18 Total Merit

Increase

FY18 Inflation

(Reference Only)

Niger AFR 0.0% 0.0% 2.0% 2.0% 2.0% 2.0% 2.0%

Nigeria AFR 23.2% 9.7% 1.6% 1.8% 24.8% 11.5% 16.9%

Pakistan SAR 17.4% 10.4% 3.8% 1.9% 21.2% 12.3% 4.9%

Panama LCR 8.0% 7.0% 2.1% 0.1% 10.1% 7.1% 1.8%

Papua New Guinea EAP 9.9% 7.9% 2.3% 4.1% 12.2% 12.0% 7.3%

Paraguay LCR 10.5% 7.4% 5.5% 1.1% 16.0% 8.5% 4.3%

Peru LCR 4.3% 1.9% 0.3% 2.4% 4.6% 4.3% 3.7%

Philippines EAP 7.7% 7.0% 0.9% 1.6% 8.6% 8.6% 3.3%

Poland ECA 0.6% 2.4% 2.1% 3.4% 2.7% 5.8% 8.8%

Romania ECA 4.5% 2.2% 2.1% 5.3% 6.6% 7.5% 1.2%

Russian Federation ECA 0.0% 0.0% 2.6% 2.0% 2.6% 2.0% 4.4%

Rwanda AFR 0.0% 7.4% 3.5% 0.2% 3.5% 7.6% 6.3%

Samoa EAP 0.0% 0.0% 2.0% 2.0% 2.0% 2.0% 2.4%

Saudi Arabia MNA 4.1% 2.9% 1.9% 0.5% 6.0% 3.4% 2.0%

Senegal AFR 0.0% 4.5% 3.9% 0.5% 3.9% 5.0% 2.4%

Serbia ECA 3.3% 3.4% 0.9% 1.2% 4.2% 4.6% 3.8%

Sierra Leone AFR 3.0% 8.6% 3.9% 0.1% 6.9% 8.7% 14.9%

Singapore EAP 5.0% 5.4% 2.8% 7.1% 7.8% 12.5% 1.1%

Solomon Islands EAP 2.6% 5.8% 1.7% 0.4% 4.3% 6.2% 5.2%

South Africa AFR 3.6% 1.9% 2.8% 1.4% 6.4% 3.3% 5.8%

South Korea EAP 0.0% 5.4% 6.6% 5.5% 6.6% 10.9% 1.9%

South Sudan AFR 0.0% 5.3% 5.4% 0.1% 5.4% 5.4% 425.9%

Sri Lanka SAR 8.8% 12.1% 1.6% 2.6% 10.4% 14.7% 5.0%

Sudan AFR 3.5% 11.4% 5.1% 0.1% 8.6% 11.5% 23.4%

Switzerland HQ 2.0% 0.0% 3.8% 2.0% 5.8% 2.0% 0.8%

Tajikistan ECA 4.2% 3.9% 3.2% 0.1% 7.4% 4.0% 10.0%

Tanzania AFR 12.6% 11.4% 3.7% 4.1% 16.3% 15.5% 7.2%

Thailand EAP 3.5% 4.1% 1.5% 0.4% 5.0% 4.5% 1.3%

Timor-Leste EAP 3.9% 4.0% 0.1% 0.1% 4.0% 4.1% 1.6%

Togo AFR 0.0% 5.0% 7.7% 0.4% 7.7% 5.4% 2.1%

Tonga EAP 0.0% 0.0% 2.0% 2.0% 2.0% 2.0% 3.2%

Trinidad and Tobago LCR 7.8% 0.0% 1.8% 2.0% 9.6% 2.0% 3.7%

Tunisia MNA 9.0% 13.7% 4.1% 0.1% 13.1% 13.8% 4.6%

Turkey - Ankara ECA 9.1% 7.3% 0.7% 2.0% 9.8% 9.3% 9.7%

Turkey - Istanbul ECA 9.4% 8.9% 0.6% 3.1% 10.0% 12.0% 9.7%

Turkmenistan ECA 3.8% 7.3% 0.4% 0.2% 4.2% 7.5% 16.0%


Country Region FY17

Structure FY18

Structure

FY17 Additional

Merit Increase

FY18 Additional

Merit Increase

FY17 Total Merit

Increase

FY18 Total Merit

Increase

FY18 Inflation

(Reference Only)

Uganda AFR 0.0% 5.0% 4.8% 0.4% 4.8% 5.4% 6.8%

Ukraine ECA 0.0% 6.0% 2.7% 0.1% 2.7% 6.1% 13.0%

United Arab Emirates MNA 7.6% 5.4% 4.1% 2.6% 11.7% 8.0% 3.0%

United Kingdom HQ 2.1% 0.0% 1.4% 4.3% 3.5% 4.3% 2.8%

United States – New York City HQ 2.5% 0.0% 2.4% 4.9% 4.9% 4.9% 0.7%*

Uruguay LCR 9.2% 6.1% 4.1% 1.9% 13.3% 8.0% 7.9%

Uzbekistan ECA 9.3% 11.4% 0.7% 0.4% 10.0% 11.8% 18.0%

Vanuatu EAP 6.8% 5.4% 0.1% 0.1% 6.9% 5.5% 2.5%

Vietnam EAP 6.8% 10.4% 4.2% 2.9% 11.0% 13.3% 4.0%

West Bank and Gaza MNA 3.5% 3.1% 2.6% 1.2% 6.1% 4.3% 0.6%

Yemen MNA 3.4% 5.3% 0.5% 1.4% 3.9% 6.7% 4.2%

Zambia AFR 0.0% 11.7% 5.5% 0.1% 5.5% 11.8% 10.9%

Zimbabwe AFR 4.6% 5.3% 1.6% 3.0% 6.2% 8.3% 3.4%

*May 2016 – May 2017 Consumer Price Index (CPI) movement for Washington-Baltimore area


Annex D: Additional Compensation Elements: Calculation Methodology

Salary Progression Adjustment Methodology

26. The salary progression adjustment (SPA) represents the difference between the weighted average salaries versus the aggregate midpoints. The table below shows the 5-year trend 2012-2016 (FY13-FY17) of the weighted average salary gap versus the aggregate Midpoints, which is the basis for the FY18 SPA for Washington-appointed staff.

27. Based on the Board-approved methodology, a five-year rolling average (determined based on confirmed staff with greater than one-year time in grade) serves as input for the salary progression adjustments. The rolling average approach helps to address competitiveness gaps between WBG salaries and the market that may occur over time as a result of "payroll not being equal to pay line". In addition, the use of a five-year average on a rolling basis has a "smoothing" effect that will gradually address salary erosion against market.

28. The SPA (or a similar element) is common among IFIs to allow progression of staff salaries within their salary ranges and to help address salary erosion that reflects the ongoing changes in the staffing skills and mix. For FY18 (2017), the salary progression adjustment for Washington-appointed staff is 2.4%, based on the 5-year average aggregate salaries (of confirmed staff with more than one year of service in the same grade) relative to market reference points over the same period, as established by the Board-approved methodology.

29. Similar to the step increases in the public sector, the SPA provides for progression within the salary ranges, with the difference that the Bank Group’s SPA (together with all other elements such as the structure adjustment and SMI) is distributed based on staff performance.

Table 7: Salary Progression Adjustment

Year Salary Gap with the

Midpoint (Full Actual)

Salary Gap with the Midpoint

(Using staff with greater than one-year time-in-grade)

Percentage Point Difference

2012 3.3% 1.8% 1.5%

2013 3.9% 2.4% 1.5%

2014 4.0% 2.7% 1.3%

2015 3.9% 2.7% 1.2%

2016 3.9% 2.4% 1.5%

5-year Average 3.8% 2.4% 1.4%


Supplemental Merit Increase Methodology

30. The Supplemental Merit Increase (SMI) envelope is determined using a rules-based measurable methodology.

31. The SMI envelope is determined based on the salary gap of staff with performance rating of 4 or 5 relative to the midpoints of their grade salary range (performance rating or PR is based on relative contribution against peers). The SMI envelope is determined using ratings based on the previous year’s performance and aggregate salaries of high performing staff.

32. For 2017, the supplemental merit increase pool for Washington-appointed staff is 0.3%. Each Country Office's supplemental merit increase pool is determined following a formula that is similar to Washington’s SMI pool calculation. Annex C shows the country-by-country results, applying the SMI approach to each Country Office (included in the Additional Merit Increase data).

33. The SMI, put together with the structure adjustment and the salary progression adjustment forms one single merit pool, or Total Merit Increase, that will be distributed to all eligible staff based on performance and position in salary range.


Annex E: Country Office Compensation Working Group

34. The Working Group on Country Office compensation for Locally-Recruited Staff was first convened in July 2016. This working group consisted of representatives from HR, BPS, WFA, OPCS, CRO, the SA, IBRD and IFC Country Management, as well as HQ and CO staff. The following provides a summary of the Country Office Working Group objectives and progress updates. Additional information can be found in the key updates presented to the Human Resources Committee in March 2017.14

35. The working group focused on the following:

a. Transparency and Engagement – Expand the knowledge base of staff on the current compensation policies on salary setting and on retirement programs, publish the comparators, and ensure meaningful staff engagement and involvement in the annual review process.

b. Special Compensation Measures (SCM) - Review current SCM for staff in situations of high inflation and/or depreciation; and formulate refinements to address common themes or issues for Senior Management and Board consideration.

c. Compensation Policies - Identify COs where current compensation policies need review because of insufficient survey vendor data/comparators; undocumented comparator pay practices; or areas where current SCM does not apply.

36. HR participated as a partner in the discussions, and helped ensure members were informed on the current methodology and recent updates. Several members have also been a part of the FCV HR Working Group, and CO Compensation Working Group discussions have drawn on the FCV nexus of CO Compensation.

37. The CO Compensation Working Group identified several immediate steps with regard to Transparency and Engagement which support the WBG compensation program, namely:

a. Publish all Country Office salary review comparators, now available to all staff via an intranet compensation portal link;

b. Ensure CO management and COSA/staff engagement in identifying local benchmark comparators (already implemented in the FY18 review process);

c. Publish additional information in the compensation portal to improve understanding of the CO compensation methodology; and

d. Establish a CO Rapid Response team, where HR would take the lead with other stakeholders when CO staff are facing a severe (economic) crisis, which would liaise with both Benefits and HR Operations to assess impact on related items, such as Out of Country Care. This team would, based on mitigating circumstances, also potentially propose applicable bridge solutions if an application of a Special Compensation Measure was imminent.

38. In addition, the Working Group had detailed discussions on three following specific compensation issues, but further data gathering is needed to develop firm recommendations:

14 Key Considerations on Country Office Compensation: A Country Office Compensation Working Group Progress Report and Update to the HRC, March 8, 2017.


a. Measures to address the incompleteness, thinness, or scarcity of market data in certain locations, largely FCV

b. Review of regional responsibilities of Country Office staff or local jobs and associated job survey benchmarks

c. Possible expansion of Special Compensation Measures to look at longer assessment periods, as well as accumulated depreciation.

39. Incompleteness / thinness of market data is a key issue in difficult locations, largely FCV. HR conducted in March 2017 an initial review to understand the incompleteness of market data in relevant locations, including the existence of informal and unreported compensation. To do so, a WBG HR mission team consisting of both HR Client Services and HR Compensation and Benefits staff visited a number of AFR country offices 15. Discussions with CO staff as well as external comparators were facilitated by the respective Country Office Staff Association (COSA) members. A range of potential actions are being considered, including market survey methodology refinements to address situations on thinness or incompleteness of market data. One such action is the use of factors / coefficients or a percent top-up on the market data (similar to the pre-2000 approach of a percent % top-up on the UN scale), where such thinness or incompleteness of market data persists (largely FCV locations). Any application of such market factors will be limited to relevant locations (including FCV) (subject to board approval).

40. Action items, including refinements to current approaches/practices, are:

a. Current and/or near-term implementation: “Quick wins” related to transparency and engagement; and application of survey market factors to address market data incompleteness for FCV locations with very thin markets (test/pilot locations).

b. For further discussion and consultation: Discussion/consultation with stakeholders during the course of FY18 on medium to long term items such as issues related to regional scope of some local jobs, deeper exploration of survey market factors or other measures/approaches to address market data thinness, and further expansion of the SCM to include longer assessment periods and accumulated depreciations.

15 Cote D’Ivoire, Burundi, Ethiopia, Madagascar, Zambia and Zimbabwe. A separate mission in Madagascar occurred in late January 2017.


Annex F: Scarce Skills Premium (SSP) for HQ and Satellite Offices

41. The policy to offer a Scarce Skills Premium (SSP) to HQ and Satellite Offices was approved by the Board in June 2013, with Senior Management approving the SSP plan design in January 2014. Use of the SSP was made available in HQ and Satellite Offices effective of February 1, 2014.

42. The SSP is provided as a percent of an individual’s annual net salary. The standard SSP percent falls within the range of 25% to 30% (current median and average SSP provision in country offices), with a maximum of 50%.

43. The SSP percent is data-driven. The specific SSP percent is determined through an external review process with an independent compensation / HR firm regarding the market compensation levels and scarcity of needed skills in the relevant labor market.

44. The SSP may be offered in addition to (or in combination with) other compensation tools. Together with the recruitment bonus16 the SSP is expected to help address challenges in obtaining the needed skills.

45. SSPs needed for retention purposes (vs. recruitment) require at least a “satisfactory performance” rating as a criterion for eligibility. Satisfactory performance is also required as a minimum for renewal or continuation of SSP payment.17

46. The SSP governance process follows the Accountability and Decision-Making (ADM) Framework, and the final approval is provided by the following functions:

a. Grade G is subject to the approval of the relevant Manager with the concurrence of the line Director (to apply beginning FY18)

b. Grade H is subject to the approval of the relevant VP or Director c. Grades I and J are subject to the approval of the relevant MD; and d. Grade K is subject to the approval of the President.

47. The SSP review process is outsourced to an external consulting firm through a retainer arrangement, with oversight and guidance from HRCPR. The cost for each SSP review is charged to the requesting unit.

48. Each individual SSP request is reviewed based on the business case presented. SSP utilization is monitored closely with the target recipients not to exceed 5% of eligible staff across the WBG18. The terms and conditions for providing the SSP are described in the individual's SSP agreement letter.

49. The SSP payment is a non-budgeted element and is absorbed within each unit’s administrative budget. In addition, each unit bears the annual administrative cost of the external provider review. Subsequent updates on the review are charged separately.

16 Another existing WBG compensation tool, the recruitment bonus ranges from 1 month to 3 months of a staff member's net salary. Two-thirds of the bonus will be paid in the first month of service, and one-third will be paid after six months of service. Recruitment bonus payments are not part of annual net salary and are non-pensionable. 17 Satisfactory performance rating is defined as PR 3 under the current system. 18 SSP utilization reported in the World Bank Quarterly Business & Risk Review Quarter 4 FY16.


Annex G: Special Compensation Measures

50. The table below lists the countries where WBG SCM were applied in FY16 and FY17 (as of May 2017).

Table 8: List of Countries (alphabetical order) where WBG SCM was applied in FY16

Region Country SCM Type LCR Argentina Depreciation ECA Azerbaijan Depreciation LCR Brazil Depreciation AFR Ghana Depreciation AFR Malawi Inflation AFR South Sudan Inflation AFR Zambia Depreciation

Table 9: List of Countries (alphabetical order) where WBG SCM was applied in FY17 (as of May 2017)

Region Country SCM Type AFR Angola Inflation LCR Argentina Depreciation ECA Azerbaijan Depreciation AFR Ghana Inflation AFR Malawi Inflation AFR Nigeria Depreciation AFR Sierra Leone Depreciation AFR Zambia Inflation

51. Process for Governance and Application. Compensation Unit to notify HR VP, Regional Management, BPS, and other stakeholders of planned activation of Special Compensation Measures.

52. Budget Impact. Cost pressures, if any, arising out of the Special Compensation Measures, are absorbed within the Bank and IFC’s nominal budget envelope.

2013 Review of Staff Compensation for WBG - World Bank · 6/15/2017 · 1. This paper presents...

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