Results of the Staff Incentive Survey Carried Out Within the Central Europe and Central Asia Region

This paper discusses findings from a survey on MFI Staff Incentive Systems (SIS) for the Central Europe and Central Asia region. The research focuses on:

• The variety of financial and non-financial incentives used by MFIs in the region;
• Frequency of staff receiving incentives and how often the incentive system is reviewed;
• Types of indicators used;
• Operational advantages and disadvantages of using a SIS.

The research finds that:

• MFIs of varying types and sizes use SIS;
• MFIs are motivated to introduce SIS through literature, training courses, conferences and other MFIs that use SIS;
• An effective SIS is transparent, contains objective indicators, attainable goals and compensates staff who work harder;
• Loan officers are the most targeted of the staff members who are eligible for SIS;
• SIS use both financial and non-financial bonuses;
• MFIs pay bonuses frequently and review them on an annual basis;
• Though SIS can increase staff productivity and result in a lower staff turnover, it cannot mask operational and management deficiencies.

The recommendations that emerge from the survey suggest that:

• MFIs strengthen the links between staff incentives and their organizational objectives;
• MFIs stress more on the balance between financial and social performance;
• MFIs consider using more non-financial incentives.

The paper concludes that while SIS is an important reason for productive staff to remain attracted to and work for an MFI, the prospect of working for an organization that contributes positively to their community is an important factor.