European Microfinance Week 2021

PRESENTATIONS

In this session, Cheryl FRANKIEWICZ shared results of a global survey among MFIs by the e-MFP Human Resources Action Group (AG) to map current Human Resources Development (HRD) practices in the financial inclusion sector. Before the deep dive into the survey results, Elisabeth NIENDORF introduced the talent management life cycle as a tool for HRD. This life cycle consists of the following stages: attraction and recruitment, onboarding, performance management and appraisal, compensation and remuneration, development, succession planning, retention and exit. The tool can help MFIs to improve their HRD and gain a competitive advantage in the market. It was used to structure the questions asked in the global survey.

Frankiewicz started her presentation with the objective of the global survey among MFIs. By mapping current HR practices, the survey aimed to highlight the relationship between HR practices and MFI performance. The AG identified the following major success factors: 1) Learning & Development (L&D) opportunities; 2) Culture and work environment; 3) Employee/agent engagement, commitment, motivation; and, 4) Communication, feedback and transparency.

It found that extensive L&D opportunities can be associated with higher employee turnover, but four HR practices seem to counter this trend: 1) Hiring from within; 2) Having a formal grievance mechanism; 3) Performance management targets and training for supervisors; and, 4) L&D measures that reward performance.

The major factors hindering MFI HRD performance are related to: 1) HRM structure / capacity; 2) Lack of financial resources; and, 3) Alignment of HR with business strategy or goals. With regards to HRM structure and capacity, most respondents rely on supervisors to implement performance management and L&D functions. Yet, only a third provides managers with both HRD targets and training on how to assess skills and provide feedback.

The survey results show that different approaches to HRD can be successful and provide five opportunities for action: 1) Strengthening alignment between HRD and business strategy; 2) Monitoring cost-effectiveness of HRD initiatives; 3) Engaging employees; 4) Supporting managers in their HRD role; and, 5) Benchmarking strengths of current HRD practices.

With the survey results, the AG identified ten HRD practices that support MFI performance: 1) The most senior HR representative reports directly to the Board of Directors, CEO or most senior management executive; 2) HRD strategy is reviewed annually to ensure its alignment with business strategy; 3) Recruitment and selection procedures are clearly documented and adhered to; 4) New hires are oriented to relevant policies and procedures, as well as the organisation’s vision and values; 5) The organisation segments its human resources and defines HRD strategy for each segment; 6) The rate of turnover and the reasons for employee exit are analysed at least once a year, disaggregated by segment; 7) Managers have clear HRD targets and receive training on how to assess skills and provide feedback; 8) Employees are involved in setting their performance targets, gauging the necessity of L&D measures to support their achievement of those targets, and evaluating their performance against those targets; 9) Employee satisfaction is measured, and the results are shared annually; and, 10) A formal grievance system enables employees/agents to raise workplace concerns in a confidential manner and tracks their resolution.

DISCUSSION

Patricia RICHTER first asked the speakers from the MFIs why they participated in the survey. Joy SANTOS responded that ASKI wanted to learn from their participation and gain new perspectives, benchmarking their own HRD and identifying areas for improvement based on global indicators. Sarvinoz GANIEVA gave a similar response and emphasised that Bank Arvand participated to get an outsider perspective on their activities, to find out how they could improve HR practices, and to learn about best practices.

Richter followed up with a question for Santos on how ASKI succeeded in establishing the HR department as an advisor and business partner within the organisation, and by doing so go beyond the typical administrative role of HR departments. Santos explained that in her organisation, HR is working closely together with other departments for setting goals and targets, especially during the period of strategic planning. HR leads in knowledge sharing sessions and involves everyone in HR management through the line managers.

Richter noted that open communication is key to implement business strategies and asked Ganieva to show what role the HR department plays in Bank Arvand to achieve open communication. According to Ganieva, the HR department must support and stimulate employees and can organise team building events to foster open communication. Bank Arvand’s HR department also supports the Bank’s agent network. Agents form a crucial link to the clients and are involved in implementing the bank’s business strategy through local managers. In some cases, agents can even become employees of the bank when they show that they are up to the task.

Richter then raised attention to the topic of digitisation and how it can support and facilitate HRD. Santos explained that ASKI has implemented a Human Resource Information System (HRIS). This HRIS allows the organisation to manage attendance, monitor salaries and optimise the use of the bank’s mobile payment platform. During the pandemic, when employees needed flexible work arrangements, the HRIS also helped the organisation to support loan officers work productively from their homes. The organisation embraced digital solutions to interact virtually with their employees and adapt to the new situation created by the pandemic.

Finally, Richter turned to Laura FOOSE and asked her to share information about SPTF’s work on social performance management. Foose reiterated the importance of HRD for the effectiveness of MFIs and explained that SPTF is updating the Universal Standards for Social Performance Management which are developed by and for the financial inclusion industry. The update will include standards on responsible Human Resource Development and they are stronger than they were in the last version with standards on hiring, training, protecting, and incentivizing employees so that they understand your social mission and are prepared to carry out that mission. According to Foose, HR is receiving more attention and organisations which give proper attention to HR appear to be more resilient to the COVID-19 crisis. It is important to long-term sustainability as well as to ethical behaviour to invest in your employees, so that they feel valued and understand and respond to the needs of your customers, which is rewarded in terms of loyalty.

For the conclusion of the session, Richter asked each panellist for a key take away. Frankiewicz responded that technology can make it easier for employees and MFIs to interact proactively throughout the talent management life cycle. Santos agreed that organisations should optimise the use of technology to enable employees to be digitally transformed. Ganieva identified a higher need to develop soft skills than hard skills. Last, but not least, Foose noted that we are at the beginning of the age of worker power with more attention for employees.