T. A.

PAI MANAGEMENT INSTITUTE, MANIPAL

Human Resource Management Case Study

Janalakshmi Financial Services’ HR Dilemma

PGDM CORE- Section 1

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Submitted By: FAS Group B2
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Aarohi Mujumdar 19F102

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Armaan Ashwani Duggal 19F112

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Disha Somani 19F120

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Rakshit Sadanand Shetty 19F143

Sree Charan Reddy Talla 19F154

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 Summary
Janalakshmi Financial Services, a full-fledged non-banking financial service provider primarily to the urban
poor has proved its significance ever since its inception. Nationwide it has 313 branches spread across 18
states and a customer base of 3.6 million. Ninety percent of its revenues comes from its Retail Financial
Services. Large part of it consists of Small Loan Groups. However, lately, the firm is undergoing a problem of
declining productivity and a high, above-market average attrition rate. The case discusses in detail the set
of recommendations provided by the HR, in order to overcome this crisis and the viability of its implications

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Problems faced by Janalaxmi Financial Services:

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High Attrition rate of 41%, which is higher than the industry average of 32%

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Improvement in the reward and compensation scheme right now present in the firm with low salaries for sales
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officers.

They have uniform pay structure across the branches, whether it is rural or urban area branches.
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Compensation system was more focused on the creation of the Small Group loan alone and not selling other financial
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services like the competitors.

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There is proper recognition model of the employee contribution to the firm.

They had deployed many personnel for the loan sales and collection system and customers were somewhat feel
disconnected with this approach.
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Also, the sales productivity per employee was low and continually decreasing. This could have been due to various
reasons ranging from low salary to lack of communication regarding various benefits including the non-cash benefits
that JFS offered to its employees.
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Penalizing of high performing branches by raising their targets and in the process decreasing the salesforce.
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The Major focus for the compensation redesigning needs to be there keeping in view the CRES and CREC employees
as, when compared to Bandhan whose Revenue to Employee cost Ratio is a at a higher 7.515 than JFS’s 6.17 which
means our Employee costs are higher when compared to competition. But still the company has higher attrition rates
at this level, which means the company is not doing spending at the right places.

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 SWOT Analysis:

STRENGTHS
*The employment generation with the base employees
are from the section of the society they are dealing as
clients.
*Targeting the urban poor population in Tier 1, 2 and 3
cities and villages across the country.
*Unique approach towards banking and social inclusion
*Some profits are channeled towards non-profit
activities
OPPORTUNITIES
*A large percentage (45%) relied on the
informal lending to meet their financial
WEAKNESSES
*The culture of the organization lacks engagement,
communication and information sharing among the
employees.
*High attrition rate and low motivation among junior
management.
*Proper recruitment and training strategy are missing.
THREATS
*JF has an attribution rate of 41% which is more than
the industry average of 32%

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needs. The industry has a great potential
to grow which opens immense *The competitors in the NBFC sector with same

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opportunity for the company. positioning has better market share than JFS. Bandhan,
the largest player in microfinance sector has double the

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*The penetration of financial institutions in size of JFS and has received a bank license.
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the Indian market is very low with only
53% of the population having accounts in
the financial institutions.
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Solutions recommended
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 Combine both the jobs, the salesperson and the collection job. Since Janalakshmi’s main concern was the
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familiarity of the customer with the sales executive, having a different person for collection completely
defeats that purpose. The people would be less comfortable paying to a different person than the one who
approached them for the loan. It also increases the expense since there are multiple jobs.
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 Instead of setting the target on a quarterly basis, JFS should look to pay the bonus of the employees on a
monthly basis. The main concern of people from small income groups is the requirement of cash. Paying on a
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quarterly basis delays the cash received by the people and paying them monthly would motivate them more
to work.
 Provide benefits in not just education loan but also other loans like housing loans. Many people would like
assistance in loans which would help their family.
 Base the bonus not on the size of the portfolio but on the market potential. Basing the bonus on market
potential would not increase the pressure on the branches which are present in the small areas of
performing and it would not be unfair on them as markets with small market potential do not have much
scope for recruiting new customers.
 Provide medical benefits to the employees in case of certain cases
 A minimum threshold should not be set as it would demotivate the employees to work.
 Setting higher targets for cross-selling so that major revenue is not from the SGL.
 Link CRES targets based on the employee experience as well as the Branch Age that they are working out of

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  Providing realistic targets to the salesforce, with the intent of growing the customer base for the bank while
ensuring that the target audience remains the urban poor and not be driven by money but rather be driven
by their desire to make changes in the society.
 Enabling the sales officers to cross-sell various products to their client base.
 Rewarding the high performers with Non-cash benefits to motivate them and align them with the cause of
JFS.
 Improvement in communication between management and employees in the process..

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