2. Introduction
Incentive systems critical for long term capacity development
Important part of improving performance and deepening democracy
Developing suitable incentive systems is complex
development theory
human resources management theory
sociology
economics
Non financial incentives are as powerful as financial incentives
Different motivators for all individuals and organisations
Must understand all 3 levels of society
3. Importance of the enabling environment
Society/enabling environment
Security, rule of law, culture,
civic engagement, land tenure,
free press, strong civil society
Organisation
History, mission,
culture,
incentives
Individual
Intrinsic motivation, morals
4. Motivations and the enabling environment
Sense of caring
Sense of being
Sense of fairness,
existence of criteria and
authority to prevent
unfair dealings and
encourage fair
behaviour, social
pressure
Internal motivation
- do good work
Motivations - initiations, direction, intensity and persistence of behaviour
Society/
enabling
environmentOrganisation
Individual
5. Incentives and incentive systems
Incentives / incentive systems
Society/enabling
environment
Organisation
Individual
Effective
Efficient
Sustainable
Accountable
PERFORMANCE
INNATE MOTIVATION
TYPES AT ALL LEVELS
Trigger
Motivations
$ + $
6. Types of incentives
Non financial
incentives have a
bigger impact at
higher levels
Physiological/basic needs
Safety needs
Social needs
Esteem needs
Self actualisation
Financial incentives
tend to meet basic
needs primarily
7. Individual incentives
Individual incentives
Financial incentives
Pay Base wage/salary, Bonuses, Stock options
Other direct financial benefits Insurance, Pension, Allowances, Materials
Indirect financial benefits Subsidies, Child care, Training
Non-financial incentives
Job security, social privileges, reputation, re-employment after retirement, holidays,
flexible working hours, sabbatical, study leave, planned career breaks, counselling,
recreational facilities
8. Organisational incentives
Organisational incentives
Financial incentives
Internal Group based performance awards and pay
External Benchmarking and competition among organisations
Non-financial incentives
Internal Autonomy; supervision schemes; recognition schemes;
training and professional development; leadership; team-
building; transparent and reliable promotion schemes;
supportive supervision and feedback; performance
management tools; staff participation in decision making
processes; horizontal and vertical communication among
staff; quality improvement teams and building a quality
culture; participatory problem solving assessments and
problem-solving processes
External Accountability schemes: citizens’ charters, service delivery
surveys etc.; market exposure; financial responsibility;
governance: transparency, preventive anti-corruption
measures, responsibility for decisions; regulatory
mechanisms
9. Good practice – lessons learned
Cambodia:
Rectangular
Strategy
10-15% inc in pay
Priority mission group
Parallel donor system
undermined pay
incentives
Increased pressure on
other sectors
Tanzania: Selective
Accelerated Salary
Enhancement
Target specific staff –
most impact on
bottlenecks in service,
sign performance
certificate, assessed
annually
Project took too long
Salary increase no
longer competitive
Performance reviews
not done
Public service pay
reform
Harmonised
approach
Thailand: Rural pay
incentives
Rural doctors paid
more than urban
doctors + given
different status,
housing, peer review
+ recognition
$ + $ incentives
10. Good practice!
Rwanda: Revenue
Authority
Non financial
incentives to
improve
performance of
organisation
Uganda: Grant
system
Performance
Linked funding for
local authorities to
apply for grants for
particular
programmes
Brazil: Subsidised
education
Demand side
funding to increase
school attendance
Mothers given $6
per child if attend
85% of classes
Increased national pride
Support from highest political levels
Broad based donor support
Clear mandate
Agency status, management autonomy
Improved corporate values + reputation
Successful human resources management
Client focus
Grants allocated based on fulfilled conditions
Widely published financials etc.
Increased accountability
Staff more motivated to meet deadlines
Financially stable
Targeted poorest
Strong partnerships and networks
Community participation
Municipalities had more autonomy
11. Incentive dilemmas
$
Donor
Government
Better aid
management
?$
?$
?$
?$
+ + +
?$
?$ ?$
Price
awareness
• Costs for service often not available
• Other services that are sacrificed not made explicit
• Advisable to introduce more price consciousness
• Support strengthening aid management
• Enter into mutual accountability arrangements
12. Vicious cycle of double demotivation
Try to work
10/20 x
harder
Not possible
Must be
better -
reason for
higher pay
Self inflated
attitude
leave
Demotivated
Demotivated
Reduce
performance
Reduced
performance
noted
10-20 x salary
leave
13. PIUs and Parallel systems
Short term advisors
Coaching models
Local consultants
Institutional twinning
Time-bound gap-filling
• Generally contributed to a lack of fundamental reform
• Sometimes try to impose prescriptions onto government
More consistent with positive incentives
14. Appropriate and optimal mix
Understand the enabling environment
Pay attention to culture and context
Research existing material and non material incentives at all levels
• Identify capacity gaps
• Create self assessment tools - non-material incentives
• Understand the de-motivating factors
Create an appropriate and optimal mix of incentives of different types
Link incentives and good human resource management
Target the right people and organisations
• Understand who/where the drivers of change might be
Sequence appropriately
Be creative to create the right mix
15. In summary
• Collective solutions need to be tailored to local conditions
• Try to support nationally led schemes
• Donors should pool resources + support national schemes
• Government not strong enough to take the lead - collective approach
• No national anchors - collective harmonised solutions
• Avoid at all costs incentive schemes in cash or kind
• Always have an exit strategy planned
