The Role of Staff Incentive Schemes in Balancing Social and Financial Goals: Evidence From Four MFIs

Publication Date: Mar 2008
Published by: MicroFinance Network (MFN) & CGAP
Document Type: Paper

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This paper examines staff incentive schemes of four MFIs: PRIZMA, BRAC, BancoSol and Equity Bank.

This paper discusses the importance of well-designed staff incentive schemes (SIS) in improving MFI productivity and efficiency. It discusses the role of SIS to achieve a balance between social and financial goals. It further looks at the incentive schemes offered by the following four microfinance institutions:

• Prizma, Bosnia and Herzegovina offers annual team-based incentive to motivate staff and monthly individual bonus for loan officers that keeps up productivity and portfolio quality;
• BRAC, Bangladesh uses a monthly monetary performance-based SIS for loan officers. This improves staff productivity & efficiency;
• BancoSol, Bolivia utilizes performance-based SIS. Loan officers participate in a monthly bonus scheme through which high performers can double their total remuneration.
• Equity Bank, Kenya provides an annual bonus, competitive basic salaries and Employee Stock Ownership Plan (ESOP) under which staff can receive shares. These schemes encourage long-term commitment and employee loyalty.