Staff Incentive Schemes for Deposit Mobilisation

This note addresses the issue of successful deposit mobilization by MFIs through staff incentive schemes. It lists the reasons for deposit mobilization:

• High demand for accessible and affordable deposit facilities;
• Locally mobilized funds to reduce the dependence on (foreign) donors;
• Increases the MFI's outreach.

The paper details some of the features of good staff incentive schemes for savings:

• There must be a clear relationship between the effort exerted on the job and the output variable that is used to calculate the bonus;
• It is much more useful to pay incentives based on team results;
• It is best to pay staff engaged in savings collection a generous base salary;
• There must be a way of identifying the individual loan officer or field agent who solicited the deposit;
• In order to incentivize staff to mobilize savings, they could be provided commissions both, on the net increase in the number of accounts and the savings balance.

Further, the document states the benefits of including staff incentive schemes:

• Rewards good cooperation among all those who attend to savings clients, even if their individual actions are not directly related to generating a new deposit;
• Avoids the problem of measuring individual performance;
• Improves customer numbers and service quality for existing clients, if the staff commissions are large enough;
• Rewards staff members engaged in deposit mobilization and savings transactions for working harder.

The briefing note, finally, concludes with some pointers for:

• Refining the staff incentive schemes;
• Distributing the branch bonus pool.