Rethinking Staff Incentives: An Experience from India

Examining staff incentive systems of MFIs
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This paper first outlines the concept of Staff Incentive Systems (SIS) on a general level and then analyzes the case study of SEWA Bank, a cooperative bank in India with which the Frankfurt School worked on a capacity building program.

It states that the implementation of SIS has become an acceptable tool for many MFIs and banks to boost employee productivity and to increase staff retention. The paper makes certain key points regarding SIS, based on the SEWA experience. Some of them are:

  • Management can use both monetary and nonmonetary incentives as a tool to motivate employees;
  • Monetary incentives have not always proven successful in institutions with a strong social focus and mission;
  • Non monetary incentives (training etc.) and alternative measures have an immediate, positive effect.

The paper observes there is not a single SIS that fits all MFIs. Close attention must be paid to the question whether certain necessary preconditions (such as a functioning staff performance monitoring system) are in place before establishing a SIS and the incentive system must be in line with the corporate culture of the institution.

About this Publication

By Spohn, S., Haerdle, H. & Quesnel, V.