Report of Human Resource Management in Microfinance Institutions: The State of Practice

This paper discusses the present status of human resource (HR) practices being followed by MFIs. It documents best practices, identifies gaps, highlights challenges, and recommends ways to improve the situation. The research for the paper is based on HR practices of 25 MFIs. The key findings of the study include:

• HR practices are evolving along with business expansion, with bigger MFIs having better practices while the others are trying to catch up;
• Most of the MFIs faced high attrition at field-officer level while the larger MFIs faced attrition even at supervisory and head office level;
• Staff felt some incentive needs to be given as it boosts morale;
• Very few MFIs had clear staff grievance redressal systems. Lack of awareness among staff about such systems and unwillingness to invoke the system needs to be tackled;
• Performance management system (PMS) is weak in MFIs;
• Restructuring the existing branch offices, especially matured branch offices can help reducing infrastructure and staff cost, improving their productivity. Use of technology like networked IT systems and mobile applications would be good tools for improving productivity and efficiency;
• Reward and recognition were found to be high motivating factors for the staff.