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Library » Aligning Interests: Addressing Management and Stakeholder Incentives During Microfinance Institution Transformations

Aligning Interests: Addressing Management and Stakeholder Incentives During Microfinance Institution Transformations
2009, Rhyne, E., Lieberman, I., Busch, B. & Dolan, S.
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Managing stakeholders’ interests when undergoing transformation

This paper focuses on aligning stakeholders’ interests during the process of transformation of non-profit MFIs into commercial entities with clear ownership and governance structures.

The paper focuses on the people involved in the transforming MFI, namely, general managers, board members, staff, and clients, all of whom have a personal stake in the outcome of the transformation, and also develops tools for aligning interests. It uses case studies and draws lessons from the experiences of transforming MFIs. It suggests that:

Organizations undergoing transformation should address personal interests fairly and transparently;
Third-party independent advisors can be helpful in assisting an organization in working through issues of aligning interests;
Industry must increase consensus regarding what incentives constitute fair and ethical remuneration;
Legal, accounting and regulatory implications of the concepts presented in the study must be further researched.

Finally, the paper states that the most important tools available for aligning interests include equity participation, severance packages, aligning interests for board directors, employee share ownership plans and profit sharing.

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22 Mar 2010



ek sovannarith ACLEDABANK Cambodia

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Journal Volume/Pages:
36

Publisher(s):
Center for Financial Inclusion at ACCION International