the role of hr and internal audit in supporting social ...€¢bonus system and incentives ......
TRANSCRIPT
The role of HR and internal audit in supporting
social performance
Thursday 23 November 2017
12.00-12.45
- Caroline Lentz | EMN | [email protected]
- Kinga Dabrowska | MFC | [email protected]
• EMN has supported various SPM activities over the
years:
➢ EMN Working Paper: “European microfinance and social
performance: where do we stand?” bit.ly/2fymWrR
➢ Workshops in previous EMN Annual Conferences
➢EMN-MFC Think Tank on SPM focusing on integrating a “more
social lens” into the Code of Good Conduct.
EMN and the initiative
Do you have any questions?
You can leave your comments or questions in this chat box. They will be visible to presenters and organisers only.
What are the key issues around HR and IA in SPM?
Webinar objectives
1. Discuss the key issues around HR and InternalAudit/Control in SPM
2. Discuss examples
3. Identify technical resources
Human resources – key SPM issues
• Candidate’s profile matters
• Staff education and regular reporting on SP results
• Bonus system and incentives
• Social institution and unfair treatment of staff?
Which candidate for LO is better?
Target group: poor farmers and entrepreneurs from rural areas of Italy
Candidate 1 Candidate 2 Candidate 3
Gender, age Male, 32 Female, 28 Female, 25
Marital status Married with one child Married Single
Education Economy graduate(University)
Development studies graduate (University)
Accounting & management graduate (collage)
Work experience
Commercial bank: 4 yearsSocial work office: 2 years
Local NGO 2 years 4 years of work in family business (grocery)
Background Capital city Capital city Local community
Staff education
• Introduction training
– Classroom
– On the job
• On going training
Example 1:Bonus stands for up to 60% of salary
Bonus =
Example 2:Bonus stands for up to 60% of salaryPrecondition to receive bonus: [PAR<30 days] must be lower
than 1,0%
Bonus= PAR < 30 days
0,5 %* 0,5 +
# rural clients
# clients
New portfolio disbursed
Planned new portfolio disbursed* 0,35 + * 0,15
PAR < 30 days portfolio disbursed
planned portfolio disbursed* 0,6 + * 0,4
0,6%
What does the bonus formula tell us?
Staff incentive system
Staff do what they are compensated for
Balancing bonus system
What are the key issues around internalaudit in SPM?
• Verification:
✓ procedures and practice
✓ quality of data collected
✓ social performance criteria integration into regular activities
Key aspects
Examples of tasks (1)
• At client level:✓ Check average loan processing time
✓ Spot-check loan officers’ repayment capacity calculations
✓ Spot-check loan collection approaches
✓ Interview clients to assess their knowledge of service terms and conditions, and soliciting feedback on client–staff relationships
✓ Check how complaints are resolved
Examples of tasks (2)
• At Staff level:✓ Check diversity of selected candidates against
applicants
✓ Check salaries for gender and other biases
✓ Check compliance with local law and transparency of salary scale
✓ Check staff awareness about the Code of Ethics and other procedures
The role of IA in preventing over-indebtedness –example from Partner, BiH
• IA questionnaire for clients:✓ Did the loan officer visit you before loan disbursement? ✓ Who are the guarantors of your credit?✓ Did you personally sign the contract?✓ Did you personally collect the loan disbursement?✓ Have you been using the loan yourself or jointly with
other people?✓ Did you have to pay any charges besides the loan fee and
installment?✓ What was the purpose of the loan? What did you invest
money in?✓ What problems are you having repaying the loan (if not
repaying on time)? ✓ Does anyone in your household have other loans from
Partner? For how much?
The challenges for Audit in SPM
• A representative sample of clients
• Focus on Internal Audit on « mistakes » (identifying problems, risks, violation of rules, etc.)– one MFI created a « compliance team » focusing in
general on clients’ feedback (negative, but also positive)
Questions?
Еxperience to share?
Consult the SPTF Resource Center!
http://sptf.info/resources/resource-center
• Smart operation: see chapter on HR: Appropriate roles for 11 areas of microfinance operations.
• http://www.smartcampaign.org/tools-a-resources/796
• Videos– Auntie needs a loan: https://www.youtube.com/watch?v=k0uv7n591as – Ugafode: illustration of the benefits of SPM, for staff buy-in
• http://www.sptf.info/videos/financial-services-providers/208-ugandan-mfi-ugafode-puts-the-universal-standards-into-practice
• Imp-Act Guidance Note on Incentives: Integrating social performance into staff incentive systems
• Case studies:– VF Azercredit's Code of Ethics: Putting Values Into Practice– FinDev Azerbaijan: Retaining key staff through a “pay for performance”
culture– Muktinath Bikas Bank group (Nepal) training manual: Supporting informed
client decisions
Specific resources on HR
Specific resources for InternalAudit/Internal control
Universal Standards Implementation guide
http://sptf.info/spmstandards/universal-standards
Smart operation: see chapter on Operations: Appropriate roles for 11 areas of microfinance operations.
http://www.smartcampaign.org/tools-a-resources/796
Smart Note: Facing Over-indebtedness at Partner Microcredit Foundationhttp://smartcampaign.org/storage/documents/Tools_and_Resources/Over-indebtedness_Partner.pdf
Imp-Act Guidance Note: Internal controls and audit: Integrating SPM into microfinance capacity buildinghttp://sptf.info/images/internal_control_guidance_note.pdf
