Designing Staff Incentive Schemes For The Loan Officers Of Microfinance Institutions (MFIs)

Internationally, the United Nations had named 2005 as the Year of Microfinance; in October 2006 Mohammed·Yunus won the Nobel Peace Prize, all those things mean that, the microfinance is coming into a better period. In China, from the domestic financial system reform, to the re- consideration of "three rural" issue , especially after October 2006, when Mohamed·Yunus, the Nobel winner visit our country, all those are important opportunity for the development of microfinance. To further expand its business, the domestic microfinance institutions attach great importance to customer incentive but neglecting the incentive of loan officers, which is the starting point of this paper.The nature of the microfinance is to help the poor, so the microfinance institutions have two objectives: to help the poor and to earn enough profit to ensure their own survival, so the controversy between intuitionalism and welfarism generated. Welfarism gives more attention on poverty reduction, on the other side, intuitionalism give more attention on Sustainable development. Obviously, if the institutions themselves can not ensure its Sustainability, it is meaningless to talk about the goal of affording long-term services for the poor to help the poor. Therefore institutionalism is more prevalent. To achieve the sustainable development of the microfinance institutions, we can not ignore the effective incentive of loan officers. So, in this paper, I will do some research on the design of staff incentive schemes for the loan officers of microfinance institutions.In this paper, the main conclusions of research are:First, it is necessity and important to design and imply the staff incentive shames for loan officers of the microfinance institutions; Second, the basic principles for staff incentive schemes are fair and transparent; Third, a step-by-step approach to the design of staff incentive schemes for loan officers including: define the incentive scheme's objectives; decide how much the microfinance institutions is willing to spend; choose the frequency of the payment; select the incentive mechanisms; select the indicators ; design the pay formula, and so on.