> Posted by Saquiba Aziz, Social Responsibility Associate, Pakistan Microfinance Network
Loan officers, who form the base of organizational hierarchy of a typical microfinance organization, are instrumental in expanding the outreach of microfinance and building goodwill with microfinance clients. Hence it is extremely important that the right kind of social and financial message is conveyed through them. However, despite the critical role that loan officers play in an organization, their voices and their challenges in the field are largely ignored when it comes to literature on microfinance.
Realizing the need to study and document the ground realities and perspectives of this fundamental human capital of microfinance providers, the Pakistan Microfinance Network (PMN), with financial support from the State Bank of Pakistan and the Pakistan Poverty Alleviation Fund, recently undertook a qualitative study on loan officers, titled, “Loan Officers’ Voices: Perspectives and Lessons from the Foot Soldiers“. For the research, PMN conducted focus group discussions and in depth interviews with loan officers from 10 institutions that volunteered to participate.
Some very interesting findings emerged from the study. Most of the loan officers were found to be aware of the vital role that they were entrusted with, i.e. the growth and risk management of their institutions. Their work, primarily based in the field, is premised upon assumptions of self-surveillance, monitoring, and discipline to achieve the targets set for them. Loan officers shared diverse visions about the job at hand: responses differed from helping the underprivileged to seeking experience in client handling. Another group viewed their jobs in terms of the authority and social power it brings to them as they monitor clients’ usage of loans. This improves their self-esteem as they feel good about the fact that they are in a position to oversee and help people.
“Going to the field to meet clients, recovering loans from them, confirming their installments and everything else related to it is the job of a loan officer. We get to know a lot about our client while carrying out these activities.”
– Loan Officer, Lahore
In terms of career aspirations, many officers were cognizant of the career pathway from loan officer to senior management, which indicates that microfinance organizations are investing significantly in communicating lucrative incentives and potential for growth to their employees.
Overall, however, the interviewed loan officers seemed to have a low job satisfaction and expressed little emotional attachment to their work. Many loan officers reported to be on the lookout for a better opportunity, a finding which partly explains the high turnover rate among people in this profession. Some of the reasons that emerged for this low job satisfaction included lack of morale building efforts at the loan officer level, and lack of transfer of the institution’s mission from branch management to the loan officer level.
From our focus groups we saw that loan officers draw motivation from many factors – from appreciation during every day work, to financial motivations to uplifting of their social esteem (due to the work being seen in terms of clients’ well-being).
“We get a bonus on Eid which is very beneficial for me. Similarly we get bonuses when we meet certain targets. This policy serves as an incentive for us, motivating us to perform our job better.”
– Loan Officer, Nawabshah
On the other hand, lack of formal career counseling and inadequate knowledge and understanding of the microfinance sector were found to be leading factors contributing towards high turnover. Some of the challenges quoted by loan officers in their daily work lives included extreme weather conditions, problems commuting to far flung areas, inappropriate client behavior, difficulty in finding new clients in a competitive environment, gender based challenges, and constant pressure to achieve their targets.
Although most of the organizations conduct preparatory orientations for the loan officers prior to sending them to the field, periodic on-the-job capacity building programs were found lacking among most of the organizations in the sample. According to the focus groups, although monthly meetings are held with loan officers at the field offices, they tend to focus on targets and achievements of the loan officers. Training and coaching needs are seldom discussed.
It was also found that loan officers have limited understanding of the objectives of the microfinance sector and the philosophy behind its existence. None of the interviewed loan officers could explain the benefits of direct engagement with the underprivileged, and none of them referred to microfinance as a form of financial inclusion for the unbanked. A few even confused the microfinance sector with regular banking, the only difference being the percentage mark up.
These findings speak to the need for regular training sessions for the foot soldiers of the industry to develop a sound understanding of the essence of microfinance. This would not only help the industry maintain the mission it was established for, but it would also help increase the clientele by serving clients better.
As highlighted earlier, the loan officers do not have enough association with their job to turn it into a career and most of them seem to come into this line of profession because they are unable to find a better job. Their work lives are tough because of the crude circumstances faced in field, and the poverty and illiteracy they confront; however this tough work environment is not the only reason for high turnover. The branch managers should be trained in retention of employees and team building activities. Such activities will help develop a work bond that can increase efficiency and retention within the field. In addition, there is a need for formal career coaching, which is currently lacking. Immediate supervisors should be made responsible for communicating the importance of their work to the loan officers, as appreciation in their daily work motivates the loan officers to perform better.
It was encouraging to see that at an industry level, efforts are being made to retain the field staff by offering them rich monetary incentives. Some microfinance providers are actively undergoing structural changes in a bid to improve the incentive schemes in order to retain staff. Attrition is a big issue for the large institutions due to increasing competition in a booming microfinance industry, and this issue needs to be dealt with in a holistic manner instead of isolated interventions.
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Image credit: Accion
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