Designing and Implementing Staff Incentive Schemes

Well-designed staff incentive schemes can have positive and powerful effects on the productivity, efficiency and quality of MFI operations. Conversely poorly developed schemes can have serious detrimental effects. Incentive schemes must be transparent so that staff members affected should be able to easily understand the mechanics of the calculation. Thus the system should not be overly complex and should contain as many objective factors and as few subjective variables as possible. Furthermore, the “rules of the game” should be made known to everyone and should not be changed arbitrarily. In addition, it is essential that the incentive scheme be perceived as being fair, and thus the goals set out by the scheme must be attainable, and better performing staff members must indeed be rewarded with higher salaries. Finally, everyone must be able to achieve a higher compensation by working better and harder.

There are five compelling reasons why excellent customer service must be a “prime directive” for any market-led MFI:

  1. Good service keeps customers;
  2. Good service builds word-of-mouth business;
  3. Good service can help you overcome competitive disadvantages;
  4. Good service is easier than many parts of your business; and
  5. Good service helps you work more efficiently.

This manual, which was prepared for the participants of MicroSave training programmes on this subject, comprises a set of notes for each training session. The session topics include:

  • Basic principles of staff incentive schemes
  • Defining the incentive scheme objectives
  • Selecting the incentive scheme mechanisms
  • Conducting the technical design work
  • Analysing costs and benefits
  • Selling the scheme to staff

The notes contain many examples and the manual concludes with a number of case studies.

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