Woman at microfinance group meeting in rural Orissa, India. Photo by Souradeep Ghosh, 2016 CGAP Photo Contest.
Microfinance has always been a high-touch business, with personal contact playing an indispensable role in the delivery of financial services for low-income clients. Human relationships and values like trust and empathy are crucial in determining whether a microfinance institution (MFI) will be able to grow and remain sustainable. And it is the MFIs’ frontline staff - the loan officers and other field staff – who must uphold these values and relationships with their clients, presenting the face of the MFI to their most important public – their clients. Loan officers are in a critical position to influence clients’ experience with access to credit and their engagement with an MFI. Yet they are often under intense pressure to meet targets, and many do not receive the support they need to do their job well and present a smiling, caring face to their clients.
A job full of challenges and pressure
MFI field staff are responsible for identifying potential clients, building relationships and linking them to their institution, a job which can be challenging, particularly given the social context in which most loan officers operate. A typical microfinance client in India is a woman from a rural household, who has restricted mobility due to gendered social norms, is illiterate, and is not the sole decision-maker of her household. It takes a lot of effort for loan officers to overcome these social constraints and convince potential clients of the merits of joining an MFI.
The job is also often physically and mentally exhausting considering the rough terrain, long distances covered and large portfolios (the average gross loan portfolio per loan officer in India is $143,550 and the average number of clients per loan officer is 467). Many loan officers are under a lot of pressure related to meeting deadlines, portfolio targets, powerful hierarchical pressure and managing delinquencies. They often end up working very long hours, sometimes living away from family in office premises. These types of pressures have the potential to lower productivity, create job dissatisfaction, lower confidence, hamper relationships and even adversely affect personal life.
Being a field officer for a woman is even more challenging due to additional social and cultural constraints. For example, a male loan officer’s forceful demeanor may be acceptable to female clients because of socialization with gendered behavioral norms, but the same behavior by a female loan officer could put her at risk of being rejected by her clients and called uncultured and insensitive. Women also face discrimination in the workplace as their male counterparts often feel that women are not suited for this type of job in a challenging and rough work environment.
While it is crucial for MFIs to understand the needs of their clients, in order to do so, they first need to understand and support their own staff.
Field staff anxieties can affect an MFI’s bottom line
A 2015 M2i study on MFI field staff anxiety in India showed that the top three anxiety-provoking issues for field staff were their physical safety while carrying cash, loss of cash in transit and fake currency notes. These security-related issues were closely followed by difficulty in finding eligible new clients and inadequate salaries. Anxieties and challenges such as these can lead to productivity loss, high absenteeism and high client drop-out – all issues which can affect an MFI’s bottom line. Unrealistic portfolio targets, and the resulting anxiety about meeting them, may lead loan officers to ignore proper procedures, which can adversely affect an MFI’s reputation and business. Taken to extremes, these issues can also lead to staff misbehavior with clients - talking rudely, shouting at clients, levying undue penalties and even threatening clients with cutting off their access to credit.
While it is crucial for MFIs to understand the needs of their clients, in order to do so, they first need to understand and support their own staff. As MFIs promote women’s empowerment and financial inclusion, it is essential that they begin from within, starting with their own staff and setting precedents for others to follow.
Six steps all MFIs should take to improve working conditions
Now that we’ve seen the importance of our field staff’s motivation and well-being, what can we do about it? Here are six steps all MFIs should take to improve working conditions for loan officers:
Conduct staff surveys to help understand the anxiety levels, job satisfaction and motivation among staff. Continue conducting staff surveys on a regular basis to gauge progress and re-evaluate measures taken.
Respond to survey results with concrete actions to improve motivation and job satisfaction. For example, staff may need more support when facing genuine field level problems such as overdue loans. They also need to see that promotions and raises are given fairly. In addition, small measures such as inspirational words or recognition by more senior staff can go a long way to helping field staff feel motivated.
Create standards for work-life balance. Define maximum working hours or provide special allowances and compensations for over-time, holidays or odd working hours. Provide timely leave in case of emergencies. Implement family-sensitive transfer policies.
Set up a Staff Grievance Line and Whistle Blower Policy. The Staff Grievance Line should be an effective internal communication channel that allows field officers to voice their problems without hesitation, with a responsive system designed to take necessary steps to address their grievances.
Ensure proper capacity-building for staff. Identify key gaps and training needs and ensure a sustained and continuous learning process. Need-based trainings, workshops and specific learning sessions focused on the emerging digital ecosystem are key. Training is an investment not just in one’s own staff, but also helps to build a cadre of groomed staff for the industry as a whole.
Build a gender-sensitive work environment. Address the issue of women staff underrepresentation in this industry through policy reforms and holding open conversations about gender issues in the industry.
A workforce which is respected and well-treated will be able to empathize with the underprivileged clientele they work with. Setting the above-mentioned precedents can do a lot to lower employees’ anxiety and control many of the risks and threats the microfinance industry currently faces, such as staff poaching, staff attrition and fraud. In the process, MFIs will be able to set examples on managing human resources for other industries to follow.
The Smart Campaign's new standards and guidance for digital finance mark a profound shift for the sector - from a previous focus on staff behavior towards clients, to the increasing importance of product design and delivery, as well as data protection.
Water.org explains why water and sanitation loans have high repayment rates and should be prioritized by MFIs, and makes a call to all microfinance professionals to reject the misguided labeling of loans as either productive or for consumption only.
Learn more about this innovative business model which is helping more low-income customers access essential services such as electricity, water and cooking fuel. Explore FinDev Gateway's latest publications, webinars and blog posts on PAYGo financing.
September is on the horizon, and with that the return of conference and training season as we finish out the year. In this guide, we compile a list of key upcoming events that could help you connect with others in your field and contribute to your professional development.