The Daily Business News

While daily reports of cost-cutting measures across the economic spectrum
defined the global economic slowdown in 2009, the human capital-intensive
microfinance industry has shown itself to be resilient as measured by trends
in employee compensation practices according to the Unitus-Hewitt
Compensation & Benefits Survey released today. However, while microfinance institutions (MFI) revenues have grown, the Survey also shows management forgoing salaries nearly three times larger in other sectors in exchange for an opportunity to make a genuine impact in the lives of India’s working poor.

“Compensation and benefits practices provide a unique lens through which
we can assess the health of the microfinance industry and the motivations of
its leadership,” said Sandeep Chaudhary, Hewitt Associates’ Rewards
Consulting Leader for South & West Asia. “Today and in times to come, we
believe the insights offered in this report will influence HR strategy,
organisational structures, and compensation and benefit design throughout a
sector in constant pursuit of a balance between financial stability and
social impact,” Chaudhary said.

Designed as a platform for MFIs in India to learn, share and network on
human capital issues, the Survey is an aggregation of data collected through
individual evaluations that, when compiled, provides valuable insight into
key trends and comparisons across the sector.

Available for download at http://advisory.unitus.com, the report
highlights 12 key compensation and benefits considerations currently shaping
the microfinance sector, and profiling its place in the overall national
economy. The study examines three key areas from which larger conclusions
about the state of the sector can be drawn, specifically:

- How Microfinance Compares With the Broader Financial Sector,
contextualizing the now INR12,000 crore microfinance sector against the
backdrop of comparable industries across India.
- Compensation Costs, examining the costs associated with such
a human resource-intensive industry with a need to maintain a balance
between social mission and financial viability.
- Incentive Design, a look at the structures and how individual
motivations can influence an organisation’s ability to reach unserved
populations.

“In looking at the aggregated information and data, we can now
confidently say that the industry has taken positive initial steps in
professionalizing the management of human capital,” said Ganesh Rengaswamy,
India & South East Asia Country Director for Unitus. “However, all players in
the sector need to build upon that foundation to codify effective HR
practices for sustainable success in serving India’s working poor,” he said.

Among the findings, the Survey reveals interesting–and sometimes
surprising–conclusions about the sector, including:

- Despite the economic slowdown globally, the sector continued to realize
steady growth and, as such, there was no urgency for drastic measures
to be taken in 2009 to control salary costs.
- While the rate of salary increase becomes steeper while moving up the
MFI management scale, Senior Management salaries are between one-half
and one-third of comparable positions in the larger finance sector.
Furthermore, employee stock options are found in one out of three MFIs.
- Most MFIs have structured incentive programs that are working well from
an MFI operations perspective, however some MFIs are experimenting with
the idea of no incentives for field staff as a means of affecting
measurable performance on social objectives.

The study comes at a critical time for the sector as a decade of
explosive growth has brought increased attention to the impact of
microfinance on the lives of borrowers and the manner in which MFIs
compensate staff.

“We hope that the findings will allow for a more equitable and honest
public discussion of key issues in the development of the microfinance
sector,” Rengaswamy continued, “given the industry’s potential to offer
opportunity to those who might otherwise not have access, it is too important
an issue to not be addressed effectively.”

The survey provides a snapshot of the sector through study of 15
participating MFIs representing over 10 million clients across India. It
examines compensation and cash benefits for 25 critical positions at eight
organisational levels, as well as looking at 10 popular non-cash benefits.
Following the survey, participants received detailed customized reports and
participated in an implementation workshop discussing results and
recommendations.

The Survey is the successor to the 2009 Benchmarking study that provided
participants with valuable insights into their operations and was identified
as a key industry HR initiative in “Microfinance India: State of the Sector
Report 2009.”

For more information or to speak with the Survey managers, please
contact:

Steve Schwartz                            Sushil Bhasin
Unitus                                    Hewitt Associates
+1.206.926.3709                           91.124.415.5000
sschwartz@unitus.com sushil.bhasin@hewitt.com

About Unitus
Unitus empowers the world’s working poor by advancing financial access
and economic opportunity. Our work pushes the boundaries of existing
microfinance by catalyzing the growth of emerging enterprises and markets to
create new financial pathways for the poor. Together with our partners on the
ground and supporters around the world, we are dedicated to creating a future
free of financial exclusion and economic hopelessness.

Unitus is a 501(c)(3) nonprofit organisation with offices in Seattle
(USA), Bangalore (India), and Nairobi (Kenya). In less than a decade, we’ve
helped our microfinance partners grow to serve more than 10 million families
throughout the developing world.

About Hewitt Associates
Hewitt Associates (NYSE: HEW) provides leading organisations around the
world with expert human resources consulting and outsourcing solutions to
help them anticipate and solve their most complex benefits, talent, and
related financial challenges. Hewitt consults with companies to design and
implement a wide range of human resources, retirement, investment management,
health management, compensation, and talent management strategies. As a
leading outsourcing provider, Hewitt administers health care, retirement,
payroll, and other HR programs to millions of employees, their families, and
retirees. With a history of exceptional client service since 1940, Hewitt has
offices in 33 countries and employs approximately 23,000 associates who are
helping make the world a better place to work. For more information, please
visit www.hewittasia.com