We Aren't Selling Vacuum Cleaners: PRODEM's Experiences with Staff Incentives

Publication Date: Apr 2001
Published by: MicroBanking Standards Project
Document Type: Journal Article

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What are the best incentives and how often should they be paid?

Looks at the development of incentive schemes in PRODEM:

• 1993 - 1996. Individual incentive program based on targeted number of clients, percentage of loans in arrears, portfolio per loan officer. Paid monthly. It had a negative effect on team performance and encouraged a short-term outlook
• 1996 - 2001. Annual group bonus awarded for branch performance worth an additional month's salary.Encouraged a long term perspective, adjusted seasonal fluctuations and was issued following the audit

• Financial incentives need to be used very carefully - especially when they represent more than half of a loan officer's take home pay;
• Incentives need to account for the social as well as the commercial mission of microfinance organisations.