“Drive to Perform” of Operational Employees of MFIs – Evidence from Satin Credit Care Network Ltd

Abstract from M2i & Satin's paper 

Challenging Work Environment for MFI Field Staff Members...

The operational employees of MFIs have challenging work life which includes extensive work in the field as well as back-office work. A typical loan officer in an Indian MFI may spend well up-to eight hours in the field performing the activities such as – Collection meetings, Training of new clients, Verifying “Know Your Client” or KYC documents of clients, Verifying loan eligibility of potential clients, Follow-up on delinquent clients. Then once s/he comes back to the branch office, the Loan Officer needs to deposit the cash collected during the meetings, prepare files for disbursements planned during the day, update MIS, and complete documentation for those loan applications that are in process. Add to this the risks that they face while performing their duties like robbery, and attacks from vested local interests such as money-lenders, small time leaders etc.  Branch Managers, who are one rank above loan officers also face a similar work environment.

Still, performance has been good

At the same time, these employees are the key to an MFI’s success as their efforts are responsible for the growth as well as the quality of MFI loan portfolios. More importantly, they are responsible for MFI’s relationship with its clients. The fact that MFIs have been able to achieve sound growth suggests that the operational employees have been able to operate with a degree of competence despite physically and mentally demanding job profiles.

However, so far, the factors that drive the operational employees of MFIs to perform have not been adequately explored.

Satin Creditcare Network Limited (Satin) and Prime M2i Consulting Private Limited (M2i) have performed a research to look at the factors that determine the “drive to perform” of operational employees of Satin.

Satin is a leading MFI operating in North and Central India with around 800,000 active loan clients and over 900 operational employees. M2i is a consulting, research and assessment company with microfinance and microenterprise development being its core objectives.

Research, Model Building and Statistical Testing...

465 operational employees of Satin participated as respondents in this research. This included 49 Branch Managers, 295 Customer Service Officers and 121 Trainee Customer Service Officers. The findings of this research are quite revealing:

Eight important indicators that influence their drives emerged. Further we were able to test whether these indicators reflected latent factors through a confirmatory factor analysis. The statistical evidence strongly supports the existence of two latent factors as presented below:

The factor “Better Human” is reflected in indicators such as:

1.       Working at MFI gives us a chance to work to make society better (Q1)

2.       Working at MFI gives us a chance to learn about the banking system (Q2)

3.       Working at MFI gives us a chance to learn financial management (Q3)

4.       Working at MFI gives us a chance to learn punctuality (Q4)

The factor “Benefits Desired” is reflected in indicators such as:

1.       Working at MFI gives us a chance to earn good salary (Q5)

2.       Working at MFI gives us a chance to exhibit leadership (Q6)

3.       Working at MFI gives us a chance to work and interact with people belonging to different cultures (Q7)

4.       Working at MFI gives us a chance to progress professionally without any discrimination on the basis of caste or religion (Q8)

...Provide Some Insights

While the research was performed on Satin’s field staff members, given the sound model fit, the results may be generalised to other MFIs as well. Some key insights emerged from this analysis:

•          Presence of latent factors such as “Better Human” and “Benefits Desired” influence the drive of operational employees to perform well

•          Need to ensure that employees have opportunities to become “Better Human” in addition to getting “Benefits Desired”

•          Historically, while MFIs have been good at providing “Benefits Desired”, there is scope for them to improve upon the “Better Human” factor.

•          At the time of recruitment of field employees, their propensity to become “Better Human” may be an important determinant of their performance in the organization subsequently

•          Trainings on functional and technical aspects address the “Better Human” factor

•          Communicating MFI’s successes in the operational and social performance domain and attributing these successes to operational employees may also address the “Better Human” factor

•          Recognition should be provided to employees who perform well on “Better Human” aspects