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Library » Staff Incentives: Integrating SPM into Microfinance Capacity Building

Staff Incentives: Integrating SPM into Microfinance Capacity Building
Jan 2011, Imp-Act Consortium

Integrating social performance into staff incentive systems

This guidance note emphasizes the importance of integrating a social lens into staff incentive systems when building microfinance capacity.

Capacity building materials related to staff incentives for MFIs often focus on monetary incentives to loan officers for financial performance. The note states that staff should be given incentives through a mix of financial and social performance indicators in order to build a strong MFI. The note discusses key questions to consider when reviewing an MFI‘s staff incentive system. It also identifies emerging practices that MFIs use to ensure that staff incentive systems appropriately balance their social and financial performance objectives. They include:

Using a combination of individual and group performance incentives;
Realizing the power of non-financial incentives;
Applying social principles to designing and communicating about incentive system;
Regularly reviewing results and adjusting the system.

The paper states that incentives are crucial to the success and realization of MFIs’ social mission. MFIs should carefully weigh the balance of indicators they use for incentive systems so that they achieve desired results and minimize unintended negative consequences.

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Publisher(s):
Imp-Act Consortium