PAPER WRAP-UP: Microfinance Insights: Human Resource Challenges and Solutions in Microfinance: Survey Report

This report is based on an online survey entitled “Human Resources Challenges and Solutions” conducted from February through March 2008 by Microfinance Insights magazine, a quarterly publication produced by Intellecap, an India-based program development and service provider for microfinance institutions. The Report was published in April 2008 as a 19-page document available here.

Microfinance Insights magazine ran an online survey on Human Resources Challenges and Solutions from February through March 2008. 90 respondents from 31 countries participated in the survey. The majority of the respondents (71 percent) were from microfinance institutions including rural banks, large financial firms, and microcredit-focused NGOs. The remaining respondents were from microfinance-focused consulting firms.

According to the Microfinance Insights data sample, 51 percent of surveyed Microfinance institutions cited human capital issues as their most challenging issue, in comparison with financial issues (29 percent) and technical issues (15 percent). Recruiting qualified staff, preventing turnover, and offering relevant training and capacity building initiatives were highlighted difficulties faced by institutions in the survey report.

Respondents cited recruiting the right kind of people as one of their major human resource obstacles with 63 percent of respondents listing strategic thinkers with experience in microfinance as the most difficult positions to fill. Many institutions also had difficulty finding qualified people who were willing to work at the grass-roots level.

According to the survey results, the most important criteria in recruitment for executive-level positions was local knowledge (58 percent) followed by international experience (27 percent). Similarly, for staff-level recruitment, local knowledge was cited as the most important criteria (55 percent), however was closely followed by local language proficiency (54 percent).

In the survey sample, 57 percent of microfinance institutions used monetary performance-based incentives as a means to reduce high turnover rates. Institutions that were not as concerned with turnover rates used non-monetary performance-based incentives such as public recognition for achievements.

Surveyed institutions used capacity building and training as a retention tool with 54 percent of respondents offering employee training one or two times a year and 39 percent of respondents offering training more than four times a year. Frequency of training corresponded with the perceived competitiveness of the hiring environment. More competitive environments had a higher frequency of training.

Participants cited poaching of staff by commercial banks as a major obstacle to employee retention.

A gender gap also exists within participating institutions’ staff and management. In Sub-Saharan Africa and South Asia, the majority of microfinance institutions had less than ten percent women management. Forty-six percent of all MFIs surveyed had less than ten percent women in their management team.

The main methods of recruitment were through advertisements in local magazines, newspapers, online job sites and word of mouth (72 percent). Only about 25 percent of the sample used headhunting firms, business schools, colleges and career fairs. The majority of the sample MFIs stated insufficient availability of job service providers with appropriate knowledge in their region.

By Melissa Duscha

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