Managing growth : the organizational architecture of microfinance institutions

This document uses the metaphor of "organizational architecture" to examine three interrelated aspects integral to growth management: institutional culture, human resource development, and organizational structure. Chapter 1 examines why growth is important to MFIs and discusses appropriate growth patterns, stressing the need for MFIs to determine optimum size as well as the appropriate speed of growth. Chapter 2 describes the importance of ideology and vision in the corporate culture of a growing organization, then considers cultural characteristics that can create an environment conducive for growth, including commitment, leadership, communication, quality, customer service, and innovation. Chapter 3 focuses on human resource issues, such as hiring, training, and motivating staff, thereby emphasizing the importance for a growing firm to invest in its employees so that they can grow with the business. It also shows the role of field staff in managing growth at the branch level, and introduces several theories on middle management in microfinance. Chapter 4 discusses and applies to MFIs important theoretical issues in organizational design -- maintaining a simple and flexible structure, maximizing information flow, staying responsive to stakeholders, and organizing staff members into teams. A concluding chapter 5 discusses some of the lessons from the business literature on the three dimensions of organizational architecture as they pertain to the three levels of institutional development: Level I, at which a business has limited initial growth potential because it is constrained by lack of resources; Level II, at which a business has achieved operational, but not complete, self-sufficiency; and Level III, at which a business has achieved excellent results in terms of portfolio quality, customer service, and client retention, and is also profitable. Only at this latter stage is a business ready to replicate its model in numerous sites.