UFI Organizational Appraisal
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Transcript of UFI Organizational Appraisal
UFI Organizational Appraisal
April 21, 2007
Impact Assessment Objectives
• Determine the impact of the program to primary stakeholders
• Identify accomplishments of program objectives against targets
• Assess the balance between financial sustainability and social responsibility of microfinance institutions
• Craft recommendations to make the programs more effective and efficient
Sample Size Formula
Where:• Z = 1.96 (the value of the normal variable for a reliability level of
95%. This means having a 95% reliability in obtaining the sample size
• p = .50 (the proportion of getting a good sample)• 1-p =.50 (the proportion of getting a poor sample)• d = .05 (sampling error)• N = population size• n = sample size
N = NZ2p(1-p) Nd2+Z2p(1-p)
Sample Size
Ugyon
Actual # of Respondents 103
Minimum Sample Required 94
Sampling error 10%
Confidence level 90%
Areas of Impact Assessment
• Household level• Enterprise Level• Diet and Coping with Difficult Times• Product and Service Delivery• Gender and Violence
Profile of RespondentsSex Ugyon
Female 83.5%
Male 16.5%
Age
< 25 years old 7%
26-35 years old 19%
36-45 years old 30%
46-55 years old 32%
56-65 years old 10%
>65 years old -
Profile of Respondents
Civil Status Progressive Ugyon
Married 85% 81%
Single 4% 7%
Widow 7% 12%
Separated - 1%
Educational Level
Literacy 100% 100%
Elementary 27% 41%
High School 46% 40%
College 24% 18%
Profile of Respondents
Loan Cycle Ugyon
1st 44%
2nd 16%
3rd 16%
4th 16%
5-15th 5%
>15th -
Length of Membership
<1 year 41%
1-2 years 58%
3-5 years -
>5 years -
Significant Findings
• Findings that have significant correlation shall be given focus and emphasis
• Pearson’s formula for correlation with a confidence level of 99% and 95% were used
• Sample size was determined using 92.5% confidence level
Correlation CoefficientCorrelation Coefficient Interpretation
1.00 Perfect positive correlation
0.75 – 0.99 Very high positive correlation
0.50 – 0.74 High positive correlation
0.25 – 0.49 Moderately small positive correlation
0.01 – 0.24 Very small positive correlation
0.00 No correlation
-0.25 – -0.01 Very small negative correlation
-0.50 – -0.26 Moderately small negative correlation
-0.75 – -0.49 High negative correlation
-0.99 – -0.74 Very high negative correlation
-1.00 Perfect negative correlation
On Correlations
• Correlation does not establish cause and effect relationship.
• A positive correlation only means that the relationship moves toward the same direction.
• A negative correlation means that the relationship moves toward the opposite direction.
• A positive or negative correlation does not mean that the correlation is good or bad respectively.
Significant Correlations
• No significant correlation for Ugyon Foundation
Diet and Coping with Difficult Times
Diet Ugyon
Diet Improved -
Diet stayed the same 80%
Diet worsened 20%
HH ate less due to lack of money 97%
Difficult Times – borrowed fr:
Friends and relatives w/o % 26%
Left area to seek employment 32%
HH member got employed 13%
Enterprise Level
Expenditures from Business Income
Ugyon
Food 100%
School 72%
Reinvest in business 6%
Invested in new business
Health-related 9%
Invested in new products
HH expenses/Bought HH items 76%
Hired employees 5%
Savings and PurchasesPurchases to Improve Business Ugyon
Purchased small accessories worth 2,500 92%
Bought major tools 9%
Bought vehicle 2%
Improved business site 1%
Improved storage 1%
Savings and Investment
Have savings for investment 24%
Increase in savings 14%
Savings stayed the same 9%
Decrease in savings 2%
SavingsUgyon
Save frequently
Where do clients save?
Commercial bank 15%
Rural Bank 85%
NGO -
Purpose of Savings
Emergency 88%
Re-invest in business 65%
Education 76%
Medication
Buy new assets 15%
Savings
Ugyon
Amount of weekly savings
PhP 5-10 12%
PhP 11-20 8%
PhP 21-50 70%
Php 51-100 11%
Desired Interest on Savings
3-4% -
5-6% 12%
7-8% -
>8% 88%
Client Management Capacity
Ugyon
Currently Perform
Perform before membership
Separate business from personal finance 10% 100%
Record income and expenses 100% 100%
Identify which product is most profitable 100% 100%
Lack capital to do business 93%
Gender and ViolenceUgyon
Area of Decision Making Both Wife Husband
Business 65% 21% 9%
Household Expenditure 48% 44% 5%
Education of Children 55% 29% 7%
Access loans w H consent 100%
Shared loan with Husband 39%
H used to loan benefit HH 30%
H physical strength to W 0%
Feminization of Debt
Foregone exp. to pay 100%
Foregone bus. Opp. 96%
H vice increased 1%
Loan Use: Type of BusinessUgyon
Invested part of loan in business 99%
Type of Business
Trading 66%
Manufacturing 10%
Service 13%
Farming 3%
Animal Raising 23%
Loan Use: Loan Proceeds
Ugyon
Food 99%
Pay other debts 78%
Clothes or HH items 27%
Emergency 19%
HH improvement 21%
Celebration 1%
Loan to Others 1%
Income TrendIncome Trend Ugyon
Increase 4%
The same 46%
Decrease 51%
Increase in Income
Expanded business 1%
Increase in demand 3%
Decrease in Income
Natural disaster
Poor agricultural season 5%
Poor sales 26%
Delinquency and Difficulties
• Reasons for delinquency– Decrease in sales
– Self or Household Member got sick
Delinquency Ugyon
Reported at least one missed payment 0%
Difficulties Ugyon
Experienced evacuation due to calamity 26%
Received relief operations from MFI 0%
Members Like Best
Features Ugyon
Benefits and other products and services 54%
Low interest rate 24%
Efficient and fast processing 68%
Access to capital 32%
Training -
Group dynamics 8%
Members Like Least
Features Ugyon
Insurance scheme and pre-deductions 100%
Forced savings
High interest rate
Dislike loan officer
Product Design
Loan Amount Ugyon
< 5,000 15%
5,000 – 10,000 57%
11,000 – 20,000 26%
21,000 – 30,000 -
Loan Term
1-2 months
3-4 months 15%
5-6 months 84%
Product DesignAvailable Collateral Ugyon
HH Assets 81%
Chattel
Livestock
Co-maker 19%
With resigned members 49%
Other Service
Emergency loans other loans 100%
Client Exit InterviewUgyon
# of Resigned Members 5
Decided to leave by themselves 60%
LOAN USE
Helped to start up a business -
Helped keep the business 100%
Helped expand the business -
IMPACT OF LOAN TO HH
Improved family diet 100%
Education of children 100%
Improved housing 60%
Purchased furniture, appliances etc. 20%
Reasons for Resigning
Ugyon
Center Problems
Personal problems with the member -
Disagreements with the center officers -
Not willing to attend center meetings -
Cannot follow center policies -
Problems related to policies
Loans are too small -
Problems with MFI personnel -
Found another program that is better 20%
Reasons for Resigning
Ugyon
Business-related reasons
Seasonal business. Will apply again. -
Low sales and profit 60%
Closed down business 20%
Personal reasons
Used for family crisis 40%
HH member left, I cannot maintain bus. -
Got pregnant -
I am moving away 20%
Economic and community-related
Business was destroyed by catastrophe -
Repayment Experience and Change in Income
Ugyon
Experience in paying last loan
Good 100%
Easy to repay 20%
Difficult 20%
Change in income
Increased substantially -
Increased slightly 40%
Remained stable 60%
Group Dynamics
Ugyon
How did the center help you?
Make loan payments 100%
When I had personal problems 80%
By providing business ideas and contacts 100%
Make friends 100%
Develop my leadership skills 80%
Receive training 100%
Center weekly meetings
Very helpful 100%
Did not help very much -
Didn’t like them -
The Future
Ugyon
Will you return to the program?
Yes 60%
Maybe 40%
No -
Only if there are changes made -
Encourage relative/friend to join?
Yes 100%
No -
Organizational Assessment
• Governance• Information System Evaluation• Capability Needs Assessment for Top
Management and Key Management Staff• Organizational Development• Financial Evaluation
Responsibilities of MF BOT
• Legal obligations• Relationship between board and executive• Setting policy and providing strategic direction• Fiduciary obligations• Board assessment of its own performance
Skills (8.09)
8.56 Read FS
7.82 Environmental Scanning
8.19 Leadership
8.55 Mktg/PR
7.91 Rules and Regulations
7.47 Knowledge in MF
7.98 Knowledge in banking
7.83 Analytical skills and decisiveness
8.48 Communication
Knowledge and Skills of MF BOT
• Business Sense• Microfinance Experience• Finance• Legal and Regulatory• Marketing• Public Relations• Technology• Fundraising
Behavior (9.09)
8.08 Professional work habits/ethics
8.92 Moral ascendancy
8.87 Receptive or open minded
6.60 Visionary
8.40 Honest
9.21 Humble
9.30 Patient
8.88 Dedicated and committed
9.16 Responsible
9.27 God-centered
9.41 Good business sense
8.55 Resourceful and cost-effective
8.55 Initiative/proactive
8.92 Optimistic
Characteristics of Good Information Systems
• Timely• Reliable• Accurate• Easy to Use• Appropriately Detailed Reports with just ‘enough’
information• Meet needs of various user categories• Secure• Good internal controls built in• Benefits of having information exceeds investment costs
Capability Needs Assessment
Respondents Ugyon
Field Staff 12
Middle Management 2
Top Management 1
Support Staff -
Fundamentals of Microfinance (Ugyon)
• Described microfinance as provision of financial services (27%) for the poor (87%)
• 67% provision of credit
• Benefit of MF – (67%) access to savings, loans and insurance; (20%) improve the quality of live; (20%) job creation; (7%) low interest; (7%) empowerment
• Challenges – (33%) client relations and delinquency; (20%) deal with different attitudes of clients; (20%) risks such as hold-up; (13%) client drop-outs; (13%) reach vision and targets; (7%) leadership; (7%) incentives; (7%) not viable products; and (7%) competition
• MF Clients – (33%) entrepreneurial poor; (13%) good payer; (7%) women; (7%) poorest of the poor; and (7%) willing to abide with the rules and regulation of the MFI
Product Design (Ugyon)• Market Research
– 87% conducted market research
– 67% area/community survey; 20% study of clients’ needs; and 20% study for product innovation
– 47% market research is done before entering an area
– Promotion is through (33%) seminars/CGT and (20%) courtesy call
• Character-based lending– 73% familiar with character-based lending; however
only 20% adequately described this
– Loan analysis done by 3-5 persons; equated with CIBI
DQ Rating SystemScore Description
35 Congratulations! Your organization has all the necessary systems, policies and procedures to prevent delinquency. You probably don’t need to attend this training.
26-34 Your MFI has adequate systems, policies and procedures to prevent delinquency. Just a little improvement and you already have adequate safeguard to delinquency.
16-25 Your MFI may be exposed to delinquency problems OR you may be in the midst of a delinquency crisis.
6-15 Your MFI has serious delinquency problems. Systems, policies and procedures invite delinquency.
1-5 Re-think your MFI’s presence in the microfinance program.
DQ Rating Scores
• Overall – 29 points (Ugyon)Your MFI has adequate systems, policies and procedures to
prevent delinquency. Just a little improvement and you already have adequate safeguard to delinquency.
Financial Analysis (Ugyon)
• Financial performance description– Very limited ‘elevator’ style of description
– 73% was not able to answer the question
• Examples of indicators– No one was able to give financial indicators for
quality, efficiency, profitability and financial structure
– 40% was able to give some standards for portfolio quality but none for the remaining indicators
Internal Control (Ugyon)• 47% expressed that there was
fraud; 47% said no fraud occurred
• 100% of those who expressed that there was fraud were able to describe it
– Over riding the loans– Not remitting
collections– Hold up– Juggling
• Supervisors check their files (100%)
– 13% daily; 13% weekly and 73% no answer
• 80% said that internal control was conducted but was unable to provide adequate description of internal control function
• 67% does collection and bookkeeping at the same time
• 93% reported that they are covered by cash bond
Remuneration and Incentives (Ugyon)Remuneration
20%13%
7%13%
53%
33% 27%33%
0%
10%
20%
30%
40%
50%
60%
<4K 4-6K 7-9K 10-12K 13-15K 16-18K
Actual Desired
Desired Monthly Incentives
7%13%
7%13%
47%
-0000000001
1K 1.5K 2.5K 3K 4.5K 5K >5
Organizational Development
Organizational Development (Ugyon)
• Vision and Mission– UFI
• Helpful and progressive
• Challenging and risky
– Important in UFI• Relationship between clients and AO
– Uniqueness of UFI• Ugyon means “unity / cooperation”
• Professionalism of AO – wear right uniform with high heels
Organizational Development (Ugyon)
• Training and Development– With limited skills to perform well
– Do not know root cause of problems encountered – want guidance and support from supervisors
– Very few are sent to trainings identified by the head office
• Mostly Job-related
Organizational Development (Ugyon)
• Leadership– Management style
• Lacks consultation
• Lacks consideration
• Too much pressure that causes resignation
• Top Management is easier to talk to
• Do not really know BOD
– Promotion• Good performance in job
• Of senior status
• But not clear what the real indicators are
Organizational Development (Ugyon)
• Career Development and Planning– Willingness to be OIC
• Yes to BM, AM, or unit head positions
• No to CEO position
– Lack of cross-trainings and job rotations
– Lack of knowledge about the responsibilities of other positions
Organizational Development (Ugyon)
• Performance Management– AO evaluated by supervisors monthly and by area
head quarterly; no performance evaluation for support staff
– No Feedback
– All do not feel justly compensated
Organizational Development (Ugyon)
• Rewards Management– Behaviors
• Performance-based
– Rewards• Cash incentives for AO and Supervisors; none for
Support staff
• Tour to other country for mid to top-management
Organizational Development (Ugyon)
• Employee Relations – Treatment like a family / friends
– Resolution of conflict during informal talks
– Open communication lines only on same level personnel, not so much on vertical positions
– Seeming gap between AOs and Area Head
– Coordination is being improved between areas and branches, and the head office
Organizational Development (Ugyon)
• Employee Well-being – Reason for staying
• Relationship among co-workers
• Excitement of work
• Some were expecting different kind of work when they applied
– Little time for family and other interests
– Manifestations of care• Treatment of top-management (sir Red)
• Privileges such as staff loan
Organizational Development
• Planning (Ugyon)– Yearly
– For change and development• Training and capacity building for staff
• Salary and other benefits
• Management of Area Head
Training and Mentoring Assistance
Training and Mentoring Assistance
• Customized training to management staff and board of directors– readily applicable tools that could be implemented
immediately
– recommendations to improve in policies, systems and procedures
– could be credited towards a diploma course with the Ateneo de Manila University
• On the job and real time application of learning• Less disruption in day to day operations
Training and Mentoring Assistance
• Regular and intensive offsite performance monitoring– Open communication lines between the executive
director, chair of the board and SEDPI
• Affordable– More number of staff participating
– On site
– Performance-based
• Could be credit towards a diploma course
TAMA
• 6-18 months program depending on the organizational appraisal result
• Partnership– SEDPI recommends. SEDPI will never impose.
– UFI is free to choose
TAMA for UFI
• Financial Product Design and Development• Character and Capacity Based Lending• Delinquency Management• Financial Analysis• Human Resource• Internal Control and Audit• Strategic Planning
Financial Product Design and Development
1 2 3 4 5 6 7 8 9 10 11 12
Competition analysis
Developing the product prototype
Planning for pilot test
Monitoring pilot test
Developing the product manual
Developing promotion materials
Product launching
Character and Capacity Based Lending
1 2 3 4 5 6 7 8 9 10
11
12
Lending policy and practices review
Training for loan officers
Training for branch managers
Designing new or revising forms
Finalizing flow chart of processes
Monitoring CBL Changes
Delinquency Management
1 2 3 4 5 6 7 8 9 10
11
12
DQ Training
Delinquency Management Workshop
Remedial management
Monitoring progress
Financial Analysis
1 2 3 4 5 6 7 8 9 10
11
12
Financial analysis training for Mgt
Financial analysis for BOT
Asset Liability Mgt for Top Mgt
Monitoring performance
Governance and Human Resource
1 2 3 4 5 6 7 8 9 10
11
12
Designing Incentive Schemes
Strategic Planning Workshop
Organizational Architecture
Supervision Training
Strategic Plan Analysis & Docu.
Internal Audit
1 2 3 4 5 6 7 8 9 10
11
12
Conduct of Internal Audit
Installation of Internal Audit