HR Challenges in Microfinance

This presentation discusses the human resources (HR) challenges faced by microfinance.It identifies the following challenges:

• There is a need to develop:
  • Appropriate management systems for a large HR base;
  • A strong middle management.
• The entry of commercial banks has distorted prices;
• There is a possibility of mission drift.

The presentation puts forth the following scenario of the microfinance industry:

• It has grown at the rate of 133% per annum (p.a.);
• It needs to be commercially viable and sustainable;
• The main goal of the industry is poverty alleviation;
• Most microfinance institutions (MFIs) are still grant funded;
• Average loan size to individuals has grown only by 15% p.a;
• HR intensive methodology requires a large field force.

The presentation lists the following implications for HR:

• Rapid growth has resulted in high costs of induction;
• Low levels of remuneration render the quality of HR inadequate;
• Manpower is joining financial services and not development;
• The original focus on poverty alleviation is fading away;
• Inadequate supply of HR is leading to rapid staff migration, thereby reducing contact with the customers.

The presentation concludes that inadequately inducted staff leads to poor quality HR, which affects the portfolio quality of the organization.