Memoire Online - Human capital management in rwanda: challenges and prospects for microfinance institutions

Asked whether they would resign as soon as they have got enough experience, 25% agreed while 75% strongly agreed. At DUTERIMBERE IMF SA, almost every body is ready to quit as soon as a better alternative comes by.

In UNGUKA, on the contrary, 65% are not ready to quit, 5% would consider exploring new opportunities while 30% strongly agree that they will quit as soon as they have new opportunities.

IMF UNGUKA seems better than its competitor. Whatever the case, having 30% of employees ready to resign is not something that a serious employer should aim at. These figures send a message that microfinance employees are in most cases there to look for experience and then look for employment with other organizations. This means that, other factors remaining constant, MFIs are like nurseries. They are good at attracting employees without experience, they develop them - in the limits of their meager resources - and see them adjourning, which is detrimental.

When one looks at the organizational structures of both companies and asks how many vacancies are there, one tends to think there has massive resignations, which is not true. Rather, not all the posts are occupied. For example, currently 8 posts are being advertised at DUTERIMBERE IMF SA. These posts are HRM, Operations Director, Marketing, Legal Officer and 5 accountants. As for UNGUKA IMF SA, some 5 vacancies are there. These include the Lawyer, Marketing Director, Research and Product Development officer.

Surprisingly, these posts were never occupied before. This sends a message that MFIs are still growing. They have not yet reached their maturity stage. They keep hiring as need arise according to their business plans which they keep updating to accommodate current realities. To manage their meager resources, they hire only for urgent posts to meet the current demands of the organization and market.

The data presented and discussed above show a point of view of employees who participated in this study. What is the view point of management? Let us look at the following pages.

4.3. DATA FROM MANAGERS' 4.3.1. Some management Practices

STATEMENT	IMF UNGUKA SA	DUTERIMBERE IMF SA
Statement 1	5	5
Statement 2	5	3
Statement 3	4	5
Statement 4	3	4
Statement 5	5	4
Statement 6	5	5
Statement 7	2	1
Statement 8	4	4
Statement 9	1	1
Statement 10	5	4
Statement 11	1	2
Statement 12	2	3
Statement 13	5	1

Various statements were written and managers were asked to show to which extent they agree or disagree with them.

Both institutions strongly agree that they recruit qualified employees as evidenced by score 5 for both institutions. However, their claims seem to have no strong basis. It has been seen above (in section 4.3.4) that majority of employees recruited by MFIs are young and majority have no professional experience by the time they join MFIs as evidenced in section 4.3.2. It seems that being qualified means, among other things, to have the required degree, but microfinance experience is not an issue.

Human capital management in Rwanda: Challenges and prospects for Microfinance Institutions Statement 2: Your institution always motivates its employees

In IMF UNGUKA SA, they claim to always motivate employees as evidenced by score 5, while in DUTERIMBERE management seems to be honest they do not motivate to their best as evidenced by score 3. This may be backed by the information from employees. In fact, when one compares information from employees, levels of satisfaction in IMF UNGUKA SA are better than in DUTERIMBERE IMF SA.

How do MFIs motivate? These companies have different ways of motivating their employees: At UNGUKA, there is a claim that managers are good coaches. While it is agreed that «paycheck is not good, they offer the «13^th month» bonus as decided by the general assembly. This is done only when they make good profits. So, employees do not want to miss it⁹»

They offer other advantages as well. For example, «each employee has a medical insurance with RAMA. We may also offer preferential loans to our employees. Above all, top management is transparent in all the endeavors. Employees know about every thing being planned¹⁰».

At DUTERIMBERE IMF SA, they also motivate employees through «performance based bonus. While this was started with loan officers, management reported that there are plans to extend this to everybody and that there was software which was going to help track individual performance¹¹».

IMF UNGUKA SA agrees they train to their best as evidenced by score 4 while in DUTERIMBERE IMF SA management strongly believes that they train their employees as evidenced by score 5. However, «their training is limited by a lack of availability of resource people and their financial capacity»¹².

IMF UNGUKA SA is not satisfied by the level of customer care (score 3) they extend to their clients while DUTERIMBERE IMF SA agrees they do their best (score 5). How does customer care link with human capital management? Employees are the first customers of any organization. Front office employees send more messages to customers than CEOs. The fact that IMF UNGUKA SA honestly is dissatisfied with the level of customer care may mean that they are not satisfied by the level of professionalism among their employees, they need more from their employees and management tries their best.

The same applies to DUTERIMBERE IMF SA but in a different degree of dissatisfaction. Linking this to strategic goals; may be its management believes that their customer care is enough considering the competitors' in real microfinance.

In IMF UNGUKA SA, management was in a strong agreement with the statement (score 5) while in DUTERIMBERE IMF SA management was in agreement (score 4). The reason why DUTERIMBERE IMF SA was just in agreement might be that by the time interview was conducted there, the strategic plan was still a draft pending to be validated by the general assembly in the near future. In any case, business planning done in microfinance sector, implying that they plan for the future of their business.

In both cases, MFIs strongly believe they have good human resource management policy as evidenced by score 5. This implies that, MFIs understand the importance of the HR manuals. This is a good starting point for employers who want to systematically manage their resources. The challenge is to translate them into real action.

IMF UNGUKA SA is in disagreement (score 2) while DUTERIMBERE IMF SA is in a strong
disagreement (score 1). This implies that MFIs level to attract many employees is low or at least

non - existing. That is the reason why management thinks it is not worthwhile accepting unsolicited applications.

Statement 8: You target candidates who are still at university/ fresh graduates

In both cases, employers agree that their target potential employees are fresh graduates as evidenced by score 4. This implies their low capacity to attract employees with many years of professional experience.

In both cases, MFIs strongly disagree with the fact that they employ people with experience in microfinance. When asked why, one manager at IMF UNGUKA SA had this to say «We do not require employees with previous experience. After all, there are none in the Rwandan labor market, expect those from the bankrupt microfinance institutions. We do not need such experiences since they did not help their former employers¹³».

This implies that MFIs do not have people with the specific skills and experience to contribute to their mission and vision. They hire people with some generic experience to be trained as they are doing their jobs. If there were some few people with these skills, MFIs would not be able to attract them since they would charge high salaries and benefits for their scarcity.

In IMF UNGUKA SA the statement is strongly agreed with (score 5) while in DUTERIMBERE IMF SA it is agreed with as evidenced by score 4. MFIs often use on - the job training rather than off - the job training since the latter are expensive. Some exceptions happen, however, when training is sponsored by partners.

Statement 11: You train outside your work premises / off - the - job training

In IMF UNGUKA SA, the statement is strongly disagreed with (score 1) while in DUTERIMBERE IMF SA it is disagreed with as evidenced by score 2. In any case, it implies that MFIs capacity to train off the job is very low. That explains why they train more on -the - job (Statement 10).

The issue of labor turnover was worth investigating. At IMF UNGUKA SA, management thinks it is not remarkable (score 2) while at DUTERIMBERE IMF SA management is indifferent as evidenced by score 3. However, as can be read from what employees feel, microfinance are likely to experience high rates of turnover after employees have had good professional experience.

IMF UNGUKA SA strongly agrees (score 5) while DUTERIMBERE strongly disagrees with the statement as evidenced by score 1. This means that though both companies are in microfinance and enjoy the same legal status, either their target customers are not necessarily the same or DUTERIMBERE IMF SA does not face competition in its areas of intervention because its clients need typical micro loans or these companies are not targeting the same customers because they are at different levels of growth.

Lack of enough capital was reported to be «one of reasons as to why MFIs may loose customers to commercial banks in some instances since they cannot satisfy the big amount of loans they require when they grow their businesses¹⁴

¹⁴ Interview with the Director of Operations and Banking Transactions at UNGUKA

Human capital management in Rwanda: Challenges and prospects for Microfinance Institutions 4.3.2. Why employees resign from MFIs

STATEMENTS	IMF UNGUKA SA	DUTERIMBERE IMF SA
Statement 14	3	2
Statement 15	3	4
Statement 16	4	4

Statement 14: Microfinance is not a popular industry in Rwanda, so employees do not feel proud to be associated with it. At IMF UNGUKA SA, management is not sure about the truth in this statement as evidenced by score 3. At DUTERIMBERE IMF SA, management is rather in disagreement with the statement (score 2). This implies that the popularity of microfinance sector plays no role either in attracting or in retaining skillful employees. In fact, this is in agreement with what employees said that they did not apply for jobs in MFI as a consequence of having dreamt to have such jobs with current employers.

Statement 15: Microfinance salaries are not competitive. After employees have gained some banking experience they seek jobs with classic banks, where salaries are higher. In IMF UNGUKA SA, management is not sure again (score 5). However, DUTERIMBERE IMF SA' management is rather in agreement with the statement (4). This implies that among other factors employees attraction and retention depends on the MFIs' level of salaries and other benefits. Employees' reasons to resign may be that the level of pay does not meet the market standard or they feel their professional experience is not worth what they are earning.

Statement 16: The career path in microfinance is not clear or is not attractive. Employees seek employment with other organizations where career path looks clearer. In IMF UNGUKA SA, management is in agreement with the statement as evidenced by score 4. In the same line of understanding, DUTERIMBERE management is in agreement. This implies that clarity of the career path in microfinance is one of factors that play a role in retaining employees with professional experience. As a consequence employees who have gotten some professional experience would rather like to join employers with more challenging positions.

Human capital management in Rwanda: Challenges and prospects for Microfinance Institutions 4.3.3. Strategic planning in MFIs

STATEMENTS	IMF UNGUKA SA	DUTERIMBERE IMF SA
Statement 17	4	4
Statement 18	5	3
Statement 19	5	2
Statement 20	5	4
Statement 21	5	4
Statement 22	5	4

Strategic planning is a practice in the microfinance sector. In fact, in both cases, there are business plans (2010 - 2014). What issues do their business plans address?

First of all, both companies agree that they address competition issues (Statement 17) as evidenced by score 4. In microfinance, two levels of competition may be addressed. For example, IMF UNGUKA SA believes that its competitors are not MFIs rather commercial banks. This is the reason why, their business plan reads «We want to increase our social capital and thus be an intermediary bank¹⁵».

This is not the same in DUTERIMBERE IMF SA, after all they reported not to loose customers to commercial banks. While both recognize the funding issue, they also are set to attract donors and investors.

Secondly, they address marketing issues (Statement 18) at different levels. IMF UNGUKA SA strongly agrees (score 5) while DUTERIMBERE IMF SA thinks it is just an issue (score 3). Why is it that UNGUKA wants to market seriously? One of reasons may be that IMF UNGUKA SA' s management reported «to be competing with commercial banks¹⁶». In DUTERIMBERE IMF SA,

however, they do not think it is a serious issue. After all management reported to be «loosing no customers to commercial banks¹⁷»

Thirdly, in the studied, it was revealed that business plans do not address the human resource issue at the same extent (Statement 19). IMF UNGUKA SA takes this with a serious note as evidenced by score 5 while at DUTERIMBERE IMF SA they do not think it is an issue as evidenced by score 2. This again may explain what their «human capital mindset is» and who their competitors are.

Fourthly, strategic plans address funding issues (Statement 20). IMF UNGUKA SA, with a target to be an intermediary bank seems to be in a more acute need as evidenced by score 5. However, DUTERIMBERE IMF SA agrees to be in need of funding too (score 4). This implies that microfinance institutions are in need for more funding. This means that their way of doing business today and their human capital management in particular is affected by availability of enough funds.

Fifthly, their strategic plans address shareholders attracting issues (Statement 21). UNGUKA, with a target to be an intermediary bank seems to be in a more acute need of more shareholders (score 5) while DUTERIMBERE IMF SA agrees to be in need of shareholders too (score 4). This implies that microfinance institutions are in need for more shareholders to respond to their funding needs.

Sixthly, their strategic plans address donor attracting issues (Statement 22). Like in Statement 21, UNGUKA is needier than DUTERIMBERE. The difference in the seriousness of their needs has a link with their different strategic goals.

Human capital management in rwanda: challenges and prospects for microfinance institutions

4.3.8.9. Probability of resigning after gaining enough experience Table 4.34: DUTERIMBERE IMF SA Employees leaving probability

4.3. DATA FROM MANAGERS' 4.3.1. Some management Practices