Integrating Social Performance Management into Microfinance Capacity Building: Staff Incentives

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

Staff incentives capacity building materials for MFIs often focus primarily on individual and monetary incentives for loan officers. The document states that in order to build a strong MFI, all staff should be incentivized through a combination of group and individual incentives, using a mix of financial and social performance indicators.

The document presents some key questions to consider while reviewing an MFI’s staff incentive system. It also describes some emerging practices in staff incentive systems that MFIs are adopting to ensure a balance in their financial and social objectives. They include:

• Using a combination of individual and group performance incentives;
• Recognizing the power of non-financial incentives to motivate staff;
• Considering positive and negative impacts of performance indicators;
• Applying social principles to the design and communication of the incentive system;
• Regularly reviewing results of the staff incentive system and making appropriate adjustments.