The document discusses human resource (HR) challenges in microfinance institutions (MFIs) in India. It analyzes the HR practices of two typical MFIs, one with weak and ad-hoc HR systems and the other with more structured professional practices. The sector overall faces issues with HR planning, recruitment, deployment and attracting qualified professionals. Ideal practices include systematic HR planning to identify personnel needs and sources. The key challenges are a lack of formal HR planning and attracting professionals due to confusion around microfinance models.

1. Challenges with HR Planning, recruitment and deployment Deepak Alok

2. Agenda Introduction Case Studies: two typical MFIs State of the sector regarding HR issues Ideal Best Practices Issues in attracting professionals to Microfinance Conclusions

3. Explosive growth in Microfinance has resulted in steep growth in HR requirements Projected Outstanding (Rs Crores) HR Requirement This growth has made the HR challenges one of the most important issue in the sector

4. Agenda Introduction Case Studies: two typical MFIs State of the sector regarding HR issues Ideal Best Practices Issues in attracting professionals to Microfinance Conclusions

5. We will consider two typical MFIs to explore issues in HR MFI - A MFI - B Community leader CEO Weak organization Professional CEO CEO centric operations, weak second line of leadership Leadership Microfinance just one of several activities Not aware of sustainability Singular focus on Microfinance Sustainability is the guiding force Strategic Focus NGO expands its operations to Microfinance Conscious attempt to provide financial services to poor. Promoted by a management professional Creation

6. HR Challenges of these two types of MFIs MFI - B MFI - A No structured training and induction system, job description Structured training and induction system, job description for the field staff Deployment Ad-hoc recruitment, often transferred from the other programmes Very structured recruitment for field staff Ad-hoc in the case of senior managerial staff Recruiting Almost no planning for HR Can roughly estimate personnel requirements for the next three-four months Mostly quantitative and focuses on number of recruitments as well as promotions More as an addendum to financial plan Planning

7. Agenda Introduction Case Studies: two typical MFIs State of the sector regarding HR issues Ideal Best Practices Issues in attracting professionals to Microfinance Conclusions

8. State of the Sector regarding on HR issues HR Planning Recruitment Deployment Little formal HR planning system Most of the planning is quantitative and concentrates on field staff To feed in to financial plans Planning is almost non-existent for the senior and middle management level Almost no planning for training, deployment and motivation MFI-A has good recruitment for the field staff level Cannot find professionals for middle and senior management level MFI-B often transfer staff from other programmes MFI-A has formal training and job description for the field staff level MFI-B has no formal training and job-description Training for the senior and middle level staff is mostly donor driven

9. Agenda Introduction Case Studies: two typical MFIs State of the sector regarding HR issues Ideal Best Practices Issues in attracting professionals to Microfinance Conclusions

10. HR Planning needs a systematic approach Define characteristics of personnel Identify functional requirements Identify source of personnel Personnel development and retentions HR Planning Operations Finance HR Legal Technology Education Experience Attitude Local graduates Other MFIs Other Industries B school Campus Compensation Training Job description Motivation

11. Agenda Introduction Case Studies: two typical MFIs State of the sector regarding HR issues Ideal Best Practices Issues in attracting professionals to Microfinance Conclusions

12. Issue in Attracting professionals MF Needs Professionals Large number of small transactions Margins are small Pressure to maintain portfolio quality High volume of cash transactions Large number of small units Can scale up fast MF can attract professionals Revenue model Continuity Capacity to scale up fast Can objectively measure performance Can compensate well Professionals are not coming Confusion in the microfinance sector SBLP Vs MFI Grameen Vs SHG Social Performance Vs Profitability Virtue vs Vice

13. Agenda Introduction Case Studies: two typical MFIs State of the sector regarding HR issues Ideal Best Practices Issues in attracting professionals to Microfinance Conclusions

14. Conclusions HR is the most critical resource in MFIs HR is a neglected function - not considered urgent Ad-hoc planning results in underperformance and can have disastrous consequences With proper planning MFIs can increase efficiency of HR and ensure stable growth Hire professionals, if the planning indicate a need for this