Human capital is as strategic a resource as any other asset companies possess – it forms the backbone for companies operating in high-touch service industries, such as financial services (for the rich and poor), health care, air travel and the hospitality industry. This article discusses ways the human resource function can be successfully developed in microfinance.
Human Resource as a Challenge for Microfinance Institutions
A few months ago, I blogged about the various issues microfinance institutions face, and one of them pertained to the human resource function. A survey by Microfinance Insights revealed 51% of the respondent-MFIs identified human capital issues as their biggest challenge, which included problems in hiring qualified staff that was capable of working in both senior and junior positions. This is particularly troubling considering the strategic nature of human capital.
Here are some ways microfinance institutions can make human capital a valuable asset.
Establish Gender-Related Policies
- Gender-equalizing policies: according to the survey mentioned earlier, a large gender-gap exists in microfinance institutions in Sub-Saharan Africa and South Asia where less than 10% of the management staff was composed of women, typically. Granted, gender-gaps are common in less developed economies, but it is vital lessen this disparity in microfinance institutions since the clientele is largely female.
- Gender-sensitive policies: Navi Pillay, the UN High Commissioner for Human Rights recently highlighted the importance of gender-sensitive policies:
“Deeply rooted discrimination against women in all spheres of society – political, economic, social and cultural – weakens society as a whole…The negative effects of discrimination and flawed social structures are inevitably magnified – often dramatically – by conflict, and natural or man-made disasters”
Gender-sensitive policies include:
- Flexible timings to accommodate for house-keeping responsibilities ,
- Anti-harassment policies,
- Appropriate nature of work considering social norms – female employees may be unwilling to frequently travel, or travel long distances alone, or they may be uncomfortable dealing with (male) delinquent clients in patriarchal societies.
- Appropriate length of maternity leave, etc.
You can read about the topic of gender-sensitivity in microfinance in greater detail here.
Job Security and Employee Welfare
Human Resource theory predicts job security enhances loyalty and satisfaction of workers, and MFIs can leverage this link by ‘hiring from within’. This move will partially address the issues of
- hiring qualified workers in strategic positions (as workers move up the hierarchy, they continue to leverage tactical experience and trainings for strategic gains), and
- high turnover rates.
Note: The concept of hiring-from-within should not be used as a ‘blanket policy’ and it may only lead to the development of highly skilled upper management if the microfinance institution has been in business for several years.
The next post talks about:
- Comprehensive Performance Appraisals and Job Descriptions in microfinance institutions, and
- Creating the Right Culture, in the context of Human Resources in Microfinance.
