At the right-hand side of every MFI’s wing is human resources and administration. These two functions are effectively combined or separated depending on the size and nature of the organisation. While the human resources and administration function could be described as the engine oil that ensures that the engine is effectively running, the operations unit is seen as the engine in charge of the production.

MFIs must begin to formalise their systems as the organisation grows. Job descriptions must be developed and revised as new positions are added and responsibilities multiply. Branch and head office structures evolve to support more activities and staff.

Generally, institutions with more than 50 employees are large enough to designate one employee to handle human resources on a full-time basis. Eventually, this manager is joined by staffs which specialize in aspects of HR management (e.g. training, benefits, performance evaluation management, etc.). For larger organizations with branch offices, the more demanding issue becomes how to handle human resource responsibilities in the branches. Branch managers must be empowered and trained to handle staffs under their care.

In general, it is best to retain the overall function and responsibility for human resources at the head office but to empower branch staff to supervise and monitor performance on a daily basis with reporting to the HR head at the head office.

Three researchers on human resources who worked on a project for Microsave[1] have identified the following as the key in the management of the human resources of the microfinance institutions: –

Good Systems

Disseminating standardized and documented HR procedures such as personnel policies; recruitment process; performance appraisals; salary guidelines, etc. assists staff in understanding the organization’s expectations and ensures consistency in practices.


Train all staff on how the HR systems work, especially during induction when introducing new employees to the MFI’s corporate culture.

Senior Management Support

Ensure senior managers not only recognize and advocate the importance of the HR systems but also a model and use the systems themselves.


The human resource department should take the role of an expert resource working in partnership with managers, supporting them to follow the HR systems in place. The key aspect of this partnership is motivation, training and development.

Time Management

Time management is not just keeping a clock and marking staff for their coming in and going out. Work must be structured in such a way that staff are able to use their man-hours effectively to perform them within the working hours. That calls for discipline at all levels. Formally recognize the amount of time required for good staff management in job descriptions and performance appraisals. Staff management should not be seen as a responsibility in addition to a manager’s regular workload but should have dedicated time and performance levels associated with it.


Growing institutions find that quick communication to the staff, and feedback from employees, becomes a challenge. The Chief Executive Officer may have once known everyone on a first name basis and could easily hold Branch Manager meetings in one room. Soon the number of staff and the rotation of staff requires that effective internal communication channels be developed to clearly explain changes in the organization, inform about institutional performance, solicit input from staff and customers, and manage the inevitable informal grapevine that may develop.

Effective memos, emails, Skype and other forms of communication channels help to define how communication is handled in the organization. A face-to-face meeting is still the key. This, however, must be planned ahead.


When the MFIs are growing, recruitment becomes a pressing issue for MFIs. A limited pool of qualified candidates and increasing competition makes finding and keeping good employees extremely difficult. In addition, the MFI will now need to attract new skills for positions such as Risk Manager, Internal Auditor, Finance Manager, Operations Manager, and others. This calls for both a strong recruitment process and a concentration on staff retention. Staff motivation is the key to retention of staff while other staff may be concerned with the future development of the organization. An organization that does not offer long-term job security for the staff, or does not seem to be doing so in the future, is likely to see its workforce leaving constantly.

An MFI in Nicaragua promotes staff from within finding that a current employee’s experience, commitment and knowledge of the organization are strengths that ensure success. This strategy requires that the MFI provides staff training and development programmes to help staff develop appropriate technical and management skills to grow within the organization. MEDA together with SEEP PLP developed a training manual called “Staff Management Training for Branch Managers” to respond to this strategy. The module introduces basic principles of staff management, an ideal tool for first-time managers who have been promoted.

Training and Development

With growth, greater formalization of training is required and is often reflected in longer, more structured induction periods, development of internal training courses to develop needed skills in the staff and dedicated training resources or facilities.

In Microloan Foundation, Malawi there is a training manager who reports to the Head of Human Resources. New recruits are first given one-week training about the organization’s systems, products and policies. This is followed by a further training by heads of department/units in charge of the new employees concerned. In Ghana, most of the top managers of the MFIs are trained at the Banking College, the Bank of Ghana (Central Bank) training school. Other MFIs are now setting up their own training schools.

Opportunities for learning new skills and developing professional experience can improve an MFI’s performance, and can encourage staff to remain with the institution. An MFI in Bosnia matches training with their business goals, but also provides general training on stress prevention, non-violent communication, and other topics applicable to all staff. This approach emphasizes the MFI’s commitment to helping all staff grow and succeed, while also providing training in specific skills areas. Many MFIs find it helpful to adopt a training policy with guidelines on criteria and decision-making for specialized training opportunities.

Staff Performance Management

While training is vital to human resource management, roughly 70% of all staff development takes place through on-the-job experience, feedback, coaching and relationships with staff. It is vital to ensure managers are giving effective feedback and coaching their staff toward success. A structured performance management process can be key to ensure this is happening.

A well-designed performance management system not only defines and monitors targets (e.g. new business, number of transactions, transaction speed, mystery shopping scores, etc.) but includes behaviours, attitudes and values that are expected from employees.

In Microloan Foundation, Malawi, Loan Officers are appraised on a number of clients, quality of the loan portfolio (Portfolio at Risk) and Client training (part of the Social Performance Management). At the head office, each department has its variables that staff are appraised. For example, finance department staff are examined on the accuracy of reporting, timely delivery of reports and control of expenditure.

An MFI in Tanzania was having trouble with employees who were not working well as a team and even behaving unethically in order to reach performance targets. They decided to create a new section of the appraisal system that included expectations for behaviours such as teamwork, meeting deadlines, and being honest. Now the staff are not only meeting performance expectations, but the morale and work environment reflects the institutional culture desired by the MFI.

Institutional Culture

Organizational culture is a system of shared assumptions, values, and beliefs, which governs how people behave in organizations. These shared values have a strong influence on the people in the organization and dictate how they dress, act, and perform their jobs. Other words, culture is the way things are done.

Understanding and managing the MFI’s institutional culture and keeping the mission and values front and centre is crucial for a growing MFI. New employees bring both positive and negative attitudes to the institutional culture. In addition, the institutional culture may change during a period of growth to professionalise and standardise systems which were previously more informal. The principle to follow in transferring culture is to communicate and lead by example.

In Opportunity International Savings and Loans Ghana Ltd, which started as an NGO MFI and transformed as a limited liability company, changing the culture was very important. As chartered accountant from an NGO & training sector, I was part of the team that helped in transforming and transferring knowledge to the majority of staff who needed a lot of change of mind just to perform their jobs well. The years 2003-2006 were critical in the making of Opportunity International Ghana one of the giant MFIs in Ghana.

An MFI in Kenya confronted this challenge when it transformed to a commercial bank and began adding more than 300 new staff per year. These employees needed to understand the customer-focused culture of the institution and become comfortable working in multi-task environments. The bank had to design strategies to quickly incorporate new staff into the way it did business. Corporate values were clearly articulated and posted throughout the institution. An institutional culture was emphasized in the induction training and new employees who failed to meet the expectations were not hired after the probationary period.


Documentation of processes, procedures and policies are critical to the actual observation of discipline in the organization. Training and development cannot be overlooked. In the fast-changing environment of the MFI sector, appropriate remuneration coupled with pecks like airtime for communication, uniform provisions, transport and travelling allowance and vehicles for top managers are key to retaining experienced hands. Even with this, experienced hands will still move on to other rewarding jobs. Bonding of the workers where long-term training and development is provided could help in retaining staff.

[1] Jennifer Helmuth, Lisa Parrott and David Cracknell


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