Microfinance industry in India is turning in graduated table and range. Its one-year growing rate is more than 20 per centum and it encompasses more than 70 million families in India. Even at this rate there is a immense range for farther enlargement as it covers simply 3 per centum of the hapless households. The growing of the industry is multidimensional as it encompasses technological development in footings of usage of nomadic engineering, bio-metrics, etc ; new merchandise development such as micro life insurance, group based wellness insurance, etc ; development of new consumer section, etc. Supportive authorities policy is besides assisting many Bankss, fiscal establishments every bit good as developmental organisations to come in in this sector. Due to this exponential growing of the sector, the work force demand has increased from mere 4000 in the twelvemonth 2002 to 45,000 in the twelvemonth 2009. It is likely to increase up to two 50s thousand in the following decennary. The demand of the work force is non merely at assorted cells or degrees ; it besides requires different types of accomplishments sets. Microfinance being a peculiar industry which targets hapless and disempowered people particularly hapless adult females requires particular employee accomplishments such as high motive, high sense of belongingness for the organisation, good communicating, high mobility and readiness to take up new challenges, etc. It is obvious that the success of the industry to a great extent depends on the insurgency of new talented work force and the capacity edifice of bing work force. The paper uses information signifier secondary beginnings such as bing research and sing web sites of the organisations. It uses qualitative analysis tools such as instance surveies, etc. The paper finds that though few enterprises have been taken by authorities every bit good as by private organisations to make full up the spread, no systematic attempt has yet been made to see that industry growing would non acquire haltered in future. It besides highlights few experiments implemented by private organisations which have been successful to get the better of the barriers. At the terminal it provides few suggestions to undertake this challenge in the short tally and in the long tally.
Cardinal words: Microfinance, HRM, Training & A ; development
Introduction:
Indian microfinance industry is demoing an impressive growing non merely in footings of client coverage and outstanding portfolio, but besides in footings of the widespread impact it is holding on the lives of underside of the pyramid. In last few old ages despite recession impacting other sectors adversely, this industry has shown growing of minimal 20 per centum per annum. Assorted factors such as increasing range of Micro Finance establishments ( MFIs ) and Self Help Group ( SHG ) Bank Linkage Programme ( SHGBL ) initiated by NABARD, favorable authorities policies, positive function taken by foreign investors and donor organisations and high growing of societal enterprisers come ining in this field all have contributed to this colossal growing. One of the restraints which it faced today is pull offing human resources. Finding and retaining competent and skilled manpower to pull off this growing is the toughest challenge enchantress the organisations are confronting today. This paper throws some visible radiation on the challenges of human resource direction in the microfinance industry and attempts to supply some suggestions to get the better of them.
Growth of Microfinance Industry in India:
Two chief runing microfinance theoretical accounts i.e. The Self- Help Group ( SHG ) – Bank linkage programme and Micro Finance Institutions ( MFIs ) have recorded an impressive growing in past few old ages. Table 1gives the inside informations of the client outreach by these two programmes.
Table 1: Number of Clients covered under microfinance programmes ( in 1000000s ) :
Program
2006-07
2007-08
2008-09
2009-10
2010-11
Growth ( % )
2010-11
SHG bank Linkage programme
38.02
47.1
54.0
59.6
62.5
4.9 %
MFIs
10.04
14.1
22.6
26.7
3.4
17.6 %
Entire
48.06
61.2
76.6
86.3
93.9
8.8 %
Entire adjusted for convergence
44.97
56.0
70
71.0
76.7
8.0 %
Beginning: Srinivasan, Microfinance India: State of the Sector Report 2009, 2010, 2011, Sage Publication India Pvt Ltd.
The overall coverage of microfinance after seting the convergence between SHG bank linkage programme and MFIs programme has increased from 45 million clients to 77 million clients between 2006-07 to 2010-11. If we take a broader definition of microfinance which includes little histories of commercial Bankss every bit good as little and vulnerable borrowing members of the Primary Agricultural Societies, the outreach will increase to 162 million clients. Though microfinance besides covers non-poor every bit good as transeunt hapless in big Numberss, it is estimated that more than 50 per cent of low income families out of about 162 million are covered under microfinance programme ( Srinivasan: 2011 ) . The entire outstanding loans have increased from Rs. 229.54 billion to Rs. 513.83 billion during 2010 to 2011.
Need for Human Resource Management in Microfinance sector:
Effective HRM is about acquiring the right figure of people with right attitude and accomplishments in the right topographic point at the right clip ( Pityn & A ; Helmuth:2007 ) . It involves planing and puting procedures be aftering, policies for human resources, enlisting and choice procedures, wage, benefits and inducements, public presentation assessment systems, and developing & A ; development programmes for the human resources within the organisation.
The exponential growing of the sector has posed a challenge for MFIs non merely in India, but across assorted states. Microfinance Banana Skins Reports carried out yearly since 2008 by The CSFI Survey of Microfinance describes the hazards confronting to planetary microfinance industry by taking a study of practicians, investors, regulators and perceivers. These studies show that issues related to corporate administration and direction quality are ranked in first five for all the old ages. Issues related to enrolling suited staff was ranked in first five in 2008 study and 14th in 2012 study. One major difference between microfinance sector and other sectors while looking at HR issues is that this challenge is non understood clearly in microfinance sector as this sector has non evolved professionally and it is believed that it can be managed easy as it is runing at ‘micro ‘ degree ( Ismawan: 2007 ) . Ikeanyibe ( 2009 ) states that one of the important ground behind slow growing of microfinance in Nigeria towards going sustainable is hapless human resource direction in this sector.
The study conducted by Microfinance Insights ( 2008 ) states that more than 51 per centum of MFIs in India consider human capital issues as the most urgent issue in comparing to fiscal issues, proficient issues and turnover issues. In pull offing human capital, enrolling qualified staff is considered to be extreme of import challenge ( 32 % organisations considered it most of import ) followed by forestalling turnover ( 28 % ) and preparation and capacity edifice ( 24 % ) . The chief of import challenges are 1 ) enlisting and choice 2 ) public presentation direction, wage and incentive direction 3 ) preparation and development and 4 ) human resource planning & A ; policies. Besides these there are other challenges such as happening campaigners who would be willing to work in rural locations, retaining the field staff, finding timings of the workforceA and maintaining the field staff motivated.
Discussion on each of the major issue is dealt with in item as follows:
Recruitment of the qualified staff and direction:
Microfinance as an industry has certain alone characteristics which has a strong bearing on the work force which it requires. It involves the methodological analysis of big figure of little sized minutess and run intoing fiscal demands of hapless in spread locations, necessitating diversified services. Though the size of single loan or nest eggs is little, microfinance programme requires big size of operations to go economically feasible. The microfinance programme is by and large besides supplemented by recognition plus activities such as concern preparation, capacity edifice, wellness and instruction programmes, etc. Thus the industry requires forces with multi accomplishments, high motive, good communicating and good community cognition.
The demand of work force in microfinance has been lifting from 4000 in the twelvemonth 2002 to 45,000 in the twelvemonth 2009 in India ( Alok:2007 ) . It is estimated that with this turning rate the demand of skilled work force in this sector is likely to increase to 2.5 hundred thousand in following decennary, out of which about 20,000 will be required at in-between degree direction and 1,50,000 will be required as loan officers or area/ programme leaders ( Sector Report- Microfinance India: 2009 ) . In add-on to this, there will be demand of microfinance professionals in commercial Bankss, insurance companies, agricultural Bankss and endeavors every bit good as in other development organisations including authorities organisations implementing development programmes.
There are assorted grounds why microfinance industry has non been able to pull competent forces. First, different sorts of organisations such as Bankss, public assistance organisations, NGOs, fiscal organisations have entered in this sector implementing diverse concern theoretical accounts to run the show. Thus their demands for human resources are besides varied. Second, indexs to mensurate the public presentation of human resources is varied which takes into consideration societal public presentation along with profitableness which does non give any clear image of the industry to the bystander. Third, as most of the organisations today are of regional or local nature, the growing chances within the organisation are non seen really prospective. As a consequence most of the organisations have to trust on ad hoc planning and recruit people largely on the footing of their local cognition, unity, and willingness to larn and blend with the community and via media on their proficient competences and professional experience. Broadly these organisations can be classified in to two classs such as those which have focused their activities in supplying fiscal services to hapless and those which are developmental organisations which are easy spread outing their operations in microfinance along with other developmental programmes such as instruction, wellness, etc. Requirement of human resources of both types of organisations is different as for the first class organisation, the sustainability and scaling up of operations is of import where as for the 2nd class it is non so of import.
The Organization Structure of a typical microfinance organisation is given below:
Chart 1: Organization Structure of MFI
Trustees/ Promoters/ Board of Directors/ CEOs
Area Coordinators / Directors/ Managers / Project leaders
Staff/ Administration
Field workers/Loan officers
SHG local leaders
SHG members
The accomplishments required at different degree are different. They are described below.
Table 2: Skill Requirements in Microfinance sector:
Sr.no
Positions
Core maps
Skills required
1.
Trustees/ Leaders/ Strategic thinkers/ CEOs/etc
Policy devising, strategic determination devising, affair with Government, giver organisations, spouses, fiscal organisations
Leadership, motive, capital market expertness, direction, international experience at high place, etc. , cognition about ordinances and legal facets
2.
Director/ Manager/ undertaking leaders
Needs and demand appraisal of the clients, doing and implementing concern program, coordination between top direction and the area/ programme leaders
Knowledge about capital market, local community cognition, local every bit good as English linguistic communication, communicating, direction
3.
Administrative Staff
Execution of programs, certifications, supervising budget, disposal
Community knowledge, local linguistic communication, equal cognition related to fundss, histories
4.
Field workers/ country leaders
Formation of new SHGs, scanning applications of new clients, home/fields visits, community meetings, actuating people to fall in the programme, organizing between direction and SHG members
Local linguistic communications, communicating accomplishments, motivate ion, flexibleness, mobility, histories
5.
SHG leader
Conducting monthly meetings, looking after fiscal minutess, between SHG members, organisation and Bankss
Histories, local linguistic communication and cognition, leading, basic reading and composing accomplishments
Though at each degree, endowment hunting is a challenge, it is much more terrible at the middle degree which is important for scaling up of the organisations ( Ross, P et Al: 2009 ) . Middle degree endowment is besides of import for conveying up new coevals of leading to take up the challenges of scaling up and variegation.
Performance direction, wage and incentive direction:
Performance direction is a procedure that helps employees to make higher degrees of public presentation though given set of aims, action programs, contributing environment and chances for personal development. Fair and just wage and wagess, transparence in disposal, unfastened communicating, understanding the parametric quantities of enlisting and publicity all play a really important function in making trust in the authorization and direction. Microfinance organisations face a affaire d’honneur job while make up one’s minding wage and inducements and publicity bundles for their employees. On one manus they need to supply proper wage and publicity bundle to execute their occupations in responsible and competitory mode. Sufficient compensation besides takes attention that employees do non yield to any force per unit area of deceitful activities, the chances for which are really easy available in microfinance industry. On the other manus due to low budgets and fiscal restraints compensable policies are by and large cost effectual.
Cook and Jaggers ( 2005 ) province the importance of staff keeping policies are of import for MFIs as they account for the direct cost of high turnover can be seen in footings of lost productiveness, new enlisting cost, developing and development cost, etc every bit good as the indirect cost in footings of loss in morale, increased absenteeism, autumn in company image, etc.
Training and development:
Training is the acquisition of cognition, skills that better the public presentation in the current occupation, whereas development focuses on the cognition and attitudes required to accomplish long term calling ends of an person every bit good as organisation ‘s aims ( Wright: 2009 ) . Training plays an of import function understanding the organisation ‘s aims and schemes to make hapless which is highly critical for set abouting duties. Initiation is of import for new employees to experience integrated with the organisation, to understand the civilization and aims of the organisation. Mubarik ( 2008 ) discusses the critical function of preparation and development in microfinance industry and states it acts like a multiplier if implemented decently. It besides requires assortment of preparation which is continuously germinating and alining itself with altering demands and aims of MFIs ( Krumm:2007 ) . Churchill ( 1997 ) states that foundation of any microfinance organisation lies at the venue of interaction between the organisation and its clients. The function of front line staff or loan offices, country leaders is really important in physique this relation. In such instance preparation can move as a multiplier.
The sort and types of preparation required at assorted degrees is besides varied such as preparation in finance, concern accomplishments, usage of engineerings, information engineerings, communicating, new concern preparation, etc. Due to scarceness of qualified forces, MFIs to a great extent depend on enrolling non qualified yet motivated and responsible individuals and puting in preparation and development to construct up their accomplishments and competences required for the occupation. There is famine of trainers in footings of Numberss every bit good as in footings of capacities. As a consequence most of the MFIs today are utilizing ad hoc developing programmes as and when the resources are available. Very few higher instruction institutes offer specialised classs in microfinance as compensations are lower in this sector as compared to other sectors.
As mentioned in Microfinance Insight study ( 2008 ) , India, more than 54 per centum of the organisations have developing programmes conducted at least one time or twice in a twelvemonth followed by 39 per centum organisations carry oning developing programmes more than four times in a twelvemonth. In pattern more than 55 % of the development of an employee occurs through on the occupation experience followed by 15 % through occupation relationship and regular feedback mechanism ( Mbeba: 2007 ) . Sa-Dhan is one of the taking organisation in India which is involved in distributing preparation and development activities in this sector. As per its findings, there are less than 25 institutes which are involved in leaving preparation and development activities in the field of microfinance. This figure is grossly unequal as compared to our present every bit good as future demands. Number of institutes in India have started taking enterprise and have come frontward to work this new chance. The inside informations of these enterprises are compiled in the undermentioned tabular array:
Table 3: inside informations of the Training Programmes Conducted for MFI Employees
Sr.No
Name of the organisation
Training programmes
1.
Sa-Dhan in coaction with Indian Institute of Banking and Finances, Mumbai
Diploma classs for microfinance, workshops for educational institutes, proficient support to educational institutes supplying preparation programmes, etc.
2.
Planet Finance, Mumbai, India
IT preparation, web site making, on-line preparation classs through online university, practical library
3.
IFMR Trust, Chennai
Planing and set abouting customized preparation programmes, development of demand and impact assessment engineerings, research
4.
BIRD, Lucknow
Customised HR developing programmes, carry oning conferences
5.
EDA, Gurgaon
Training classs for microfinance and microenterprises related to fundss and operation direction, societal public presentation, capacity edifice demands appraisal, capapcity edifice and handholding support to MFIs, CGAP and in house preparation classs, developing to the trainers, etc.
6.
ADMAS, New Delhi
Training programme for SHG Federation, procedure of formation and strengthening of federation, issues, maps and steering rules of federation, etc.
7.
KKIT School of rural Management, Bhubaneshwar
Customised preparation prgrammes, conferences and workshops
8.
Indian School of Microfinance for Women, Ahmendabad
Principles of microfinance, Financial analysis, delinquency direction, Accounting systems, internal audit, Empowerment appraisal, Research methodological analysiss
Beginning: Compiled by writer from assorted beginnings
Human Resource Planning & A ; Policies:
Human resource planning and policies are cardinal to all other human resource related issues. Women ‘s World Banking study on development of competence based human resource direction ( 2007 ) states that microfinance organisations today can non entirely trust on leading qualities and capablenesss of their leaders because as a turning organisation it is required that development of capablenesss of all the forces must take topographic point. Therefore MFI must see HRM non merely as a proficient map but as important scheme map to derive sustainable advantage. Schemes related to human resource planning and policies are mostly decided by direction quality and corporate administration policies of the MFI. Composition of board and institutional linkages affect how the organisation is governed and managed. As MFIs are chiefly emerged as an outgrowths of development organisations rather frequently the composing of board is skewed more towards people with societal development orientation instead than other managerial abilities ( Sa-Dhun Report: 2006 ) . As there is more force per unit area on MFIs to go financially sustainable in future, there is a demand for board to go more active in running MFI in more professional mode where other managerial abilities such as proficient expertness in jurisprudence, finance, etc is required. Most of the organisations today lack proper administration and ordinance and monitoring construction. At the same clip most of them are demoing healthy marks of growing. Capacity edifice in the signifier of preparation in pull offing information system, tracking loan portfolios, assessment and fund direction system is required non merely to pull off the growing but besides to extenuate hazard. The public presentation of 127 Indian MFIs in Human Resource Quality & A ; Management is rated by M-CRIL in 2003. The major findings are a follows:
Table 4: Quality of HR and Management
Performance
Trust/ Society
Co-operatives
NBFC/ Sec 25 Cos
Entire
Excellent
0
0
2
2
Good
15
6
4
25
Average
62
11
5
78
Poor
20
0
2
22
Entire
97
17
13
127
Beginning: M-CRIL, Improving Microfinance Pracice, 2003.
It shows that non merely bulk of MFIs are following in any mean class, except NBFCs & A ; Sec 25 cos. , non a individual MFI is falling in first-class class. Possibly, NBFCs and Sec 25 cos have improved their direction patterns in order to pull more investors and loaners.
Relevance of Challenges of HRM for MFIs in turning phases:
Key challenge in turning MFIs is to command the high public presentation of the human resources because HRM system comes under emphasis during high growing phase ( Helmuth, Parrot & A ; Cracknell: 2004 ) . There is a alteration in organisation civilization, communicating channels, enlisting and preparation demands, every bit good as public presentation direction. Informal systems need to be replaced with formal systems. Job descriptions need to be clearly specified. Recruitment of campaigners necessitating different accomplishments such as hazard trough, internal hearers, selling directors, etc is required. Training and development of bing staff to scale up the concern and larn proficient things and new staff to supply societal orientation required to work in MFIs is desperately required. Period of growing is besides likely to convey alteration in organisation civilization from more informal to more professional and standardised manner. The demands of the turning MFI are separation of HRM as a cardinal functional country, enrolling professionals, initiation & A ; orientation, developing & A ; training of field staff and inducement based wages.
Suggestions and recommendations:
Few suggestions are made based on the successful experiments from the field.
Choice and Recruitment:
Use of Brand Ambassador Technique: Ujjivan Financial Services Pvt Ltd, a reputed MFI in India uses this technique where bing employee of the company represent company by sharing his/her occupation places and experiences to fresh appliers specifically coming from the same vicinity.
Enrolling local staff: Raghav N ( 2012 ) gives illustrations of few instances where MFIs in South India have used advanced tools to command high abrasion of field workers and subdivision officers by engaging locally after making land confirmation of the campaigners and groom field officers, loan officers to go branch officers in the long tally.
Employee referral is used really efficaciously for pulling right endowment. For case Equitas Microfinance India employees more than 60 per centum of their staff utilizing employee referrals.
Looking out for alternate occupation searchers such as people who have taken VRS from Bankss, fiscal establishments, retired yet active people
Lateral employment of people who are willing to play their 2nd frame
Using management/post alumnus pupils for summer undertaking or on coincident undertakings
Introduction of flexi timings to pull more adult females loan officers and subdivision officers
Introducing ‘snack allowance ‘ specifically for field workers as been efficaciously implemented by Equitas Microfinance, India.
Performance Management, Remuneration and incentive Management:
Puting clear and mensurable ends and proviso of preparation resources
Associating fiscal inducements to fiscal public presentation
Appraisal of public presentation on single parametric quantities along with squad parametric quantities
Appraisal of public presentation on economic every bit good as on societal parametric quantities.
Provision of economic every bit good as non economic inducements are of import.
Training and Development:
One of the positive action taken by Bank of Indonesia in microfinance establishments is to get down a collaborative attempt for capacity edifice with Ministry of Finance, Indonesia and German Agency for Technical cooperation ( GAT ) in 2004 ( Kere: 2007 ) . This joint attempt established the ‘CERTIF ‘ system which focuses on development of accomplishments and competences and set criterions for forces working in microfinance industry. Its chief aim is to increase the outreach and to guarantee the quality of services to the low income groups through concentrating on development of preparation classs and stuff, make sufficient figure of trainers by developing to the trainers, carry oning scrutinies and enfranchisement for bettering criterions, associating organized and unorganised fiscal markets through preparation and edifice consciousness about authorities policies and ordinances
The unfastened and distance acquisition is emerging out as a feasible programme to cover with this job. PlaNet Finance and The house echange LCC implemented a pilot undertaking to develop MFI staff in Latin American & A ; African MFIs, which is found out to be successful. It is potentially most feasible agencies of supplying preparation. Though inital investing is really high, it is lily to come down significantly after scaling. It can besides be supplemented at subsequently phase with follow-up preparation or direct preparation – blended attack. The chief challenges in this type of preparation are initial investing in hardware and in package, development of methodological analysis, courseware for effectual bringing and development of basic computing machine literacy in order to better the public presentation.
Traveling from category room preparation to outdoor field preparation to give a practical exposure.
The combination of schoolroom and ‘on-the-job ‘ preparation is found out to be most effectual.
Tie up with proficient and direction colleges
Conducting preparation and initiation programme in common / regional laungages
Change in the course of study of bing direction and other station alumnus classs to integrate cognition and accomplishments required for microfinance
Human Resource Planning and Policies: .
Pityn & A ; Helmuth ( 2007 ) supply a tool kit to develop HRM system in MFI based on its size and development phase such as little size holding up to 20 staff, medium holding 20 to 49 staff and big MFI holding 50+ staff. In the start-up phase HRM is likely to play a strategic function in establishment ‘s development. As MFI becomes average graduated table, MRM activities become more administrative in nature. In big MFIs, HRM once more starts playing a strategic function in act uponing organisational construction and making and keeping organisational civilization.
Need for formal and non formal fiscal sectors to come together and have collaborative programmes for Human resource planning.
Decisions:
It is really clear that microfinance is at this important occasion of growing phase to a great extent depends on competent, qualified and committed work force. Though it poses as a major challenge for the sector today, it besides opens a batch of chances to the microfinance sector every bit good as to other sectors such as instruction, arrangements, preparation and development, etc. microfinance being an intermediate sector runing between formal and informal fiscal sector, requires human resources holding ability to work in equivocal of all time altering environment with professional attack. There is besides need for continuously upgrading the accomplishments and cognition about the sector as the sector itself is germinating in footings of comprehensiveness and deepness. Proper engagement of all the cardinal stakeholders such as Government ( Central, province every bit good as local authoritiess ) , investors, MFIs, Banks, public assistance organisations, regulative governments every bit good as clients is important to take up this challenge.
