Human Resource Management for Growing MFIs

This briefing note argues that developing effective human resource (HR) management systems and processes can assist an expanding microfinance institution (MFI) in managing growth and maintaining strong performance in financial service delivery.It states that as an MFI grows:

• Many of the informal systems are replaced by more formal systems;
• Job descriptions get revised and responsibilities multiply;
• Branch and head office structures evolve to support more activities and staff;
• Organization faces the challenge of appropriate management of HR responsibilities in the branches.

The note suggests that the following strategies are helpful in addressing this challenge:

• Good systems that disseminate standardized and documented HR procedures;
• Training staff on how the HR systems work;
• Senior management support;
• Partnership between the HR department and managers;
• Time management: Formal recognition of the amount of time required for good staff management in job descriptions and performance appraisals;
• Effective communication to and from staff;
• Recruitment with training;
• Staff performance management;
• Understanding and managing the MFI's institutional culture.

The note concludes that by building strong, well functioning human resource systems and tools, an MFI will be well poised to meet the demands of growth, manage the challenges of an evolving environment, and respond to the needs of clients.