Details

Case

Kashf Foundation: The Dilemma of Incentive Within A Non-Profit Initiative

Abdul Karim Khan, Maria Qanita

INDUSTRY : Non-Profit Organization; Social Welfare

AREA : HRM/OB

ORGANIZATION : Kashf Foundation

LENGTH : 28

LUMS No : 05-754-2013-1

PUBLICATION YEAR : 2013

KEYWORDS:

Kashf Foundation,Dilemma,Incentives,NPO,Non-Profit Organization,Teaching Initiative,Fixed versus Variable Pay,Tole of External Factors on the Compensation System,The Social, Moreal and Financial Aspects of Incentive Schemes,Motivation and Extrinsic Rewards,Organisational Culture and Financial Rewards.

DESCRIPTION:

This case is based on a dilemma faced by the human resource manager of Kashf Foundation on how to motivate his loan officers. Loan officers are actually the back bone of Kashf¿s operations. A wave of turbulence hit the organisation in late 2008 and brought its financial health to the ground. Kashf Foundation, being a non-profit venture did not have the capacity to offer a lucrative career path to potential employees, specifically the loan officers. However, because of its noble cause people joined the organisation for a sense of serving the community and contributing towards the betterment of the targeted households that received microfinance services. This resulted in not only bringing business and consequently financial sustainability to the organisation but also earned the loan officers respect within the community. Before the tide hit, Kashf had a progressively improving financial health and reflected an overwhelming satisfaction level (that hovered close to 100%) on part of the clients. Then in autumn 2008 a crisis hit the organisation. The crisis was triggered by rumors spreading in the Kashf¿s client base about false claims made by a local politician that, he will waive off all the repayment of Kashf loans in his constituency. This, in addition to the overall deteriorating economic conditions of the country made it impossible for the loan officers to collect the repayment of loans or issue new loans. Loan officers were taking the most heat in this time of crisis and as a result two main problems were seen. One was the unwillingness of the loan officers to go into the field, as they were mistreated and threatened rather than respected, and secondly the attrition among loan officers increased considerably. Now, the challenge for the human resource manager is to design an incentive structure that can motivate and retain the loan officers. The human resource manager is contemplating over the option of moving away from a fixed pay structure to a variable pay structure.

LEARNING OBJECTIVES:

1) To identify the impact of external events on the HR systems. 2) To evaluate the pros and cons of fixed versus variable pay structures. 3) To understand the alignment of HR systems with the business direction. 4) To learn the moral, social and financial components of incentive schemes. 5) To understand the relationship between extrinsic rewards and motivation.

SUBJECTS COVERED:

Human Resource Management, Organizational Behavior