SOCIAL PERFORMANCE MANAGEMENT
IN MICROFINANCE:TRANSLATING YOUR MISSION
INTO PRACTICE
Lalaine M. Joyas, MCPI
18 October 2007 / Quezon City, Philippines
Asian Forum for Solidarity Economy
Context of the Microfinance Industry Broader context:
• Increasingly commercial approach to microfinance • Professionalization of the sector• Focus on Social Performance:
– Has it been lost? – Is it taken for granted? – Is there “mission drift”?
• The effective translation of an institution’s mission into practice in line with accepted social values that relate to:
– reaching poorer and excluded clients;– improving the lives of clients and their families;– widening the range of opportunities for
communities.
What is Social Performance?
Intent Operations Results
Social Performance Pathway
Common Framework for Social Performance Assessment
Social Performance Pathway
Social Performance Pathway: Strategy and Operations
• Goals
• Objectives
• Range of products and services
• System use
• Service delivery
• Human resources
Dimensions of Social Performance
INTENT AND DESIGNWhat is the mission of the institution?Does it have clear social objectives?
INTERNAL SYSTEMS & ACTIVITIESWhat activities will the institution undertake to achieve its social
mission? Are systems designed and in place to achieve those objectives?
OUTPUTDoes the institution serve poor and very poor people?
Are the products designed to meet their needs?
OUTCOMEHave clients experienced social and economic improvements?
IMPACTCan these improvements be attributed to institutional activities?
Common Framework for Social Performance Assessment
Social Performance is defined in terms of both processes and results
Translating mission into practice is a deliberate and intentional process
Desired change in the lives of clients is the goal of this process and it is not automatic
Social Performance Social Performance ManagementManagement
The process of translating mission into practice, including
setting social objectives, tracking Social Performance, and using
information to improve practice.
What SPM is…•SPM is about having a clear strategy for reaching target clients, meeting client needs, as well as focus on the social outcomes of the MFI’s work.•SPM is about decision-making, looking at why certain decisions are made, and the impact on clients.•SPM is related to the overall performance management of the organization and the dynamics between social & financial objectives.
What SPM is not…
•SPM is not simply client-centered microfinance.
Where MFIs are client-focused, there is a danger of focusing on particular products and services, or changes in methodology, without linking these to an explicit understanding of how MFI operations lead to benefits for clients.
•SPM is not simply providing non-financial services.
1.Developing social goals and objectives
2.Monitoring and assessing performance
3.Improving operations
Social Performance Management Components
1.1.Developing social goals and Developing social goals and objectivesobjectives
2.Monitoring and assessing performance
3.Improving operations
Social Performance Management Components
Types of Social Goals
• Reaching target clientsWho will the MFI reach?
• Meeting target-client needs How will the MFI meet the needs of its clients?
• Change in target clients’ lives What positive changes will the MFI contribute
to in the lives of its target clients?
People’s Bank Case Study: Mission
Improve the well-being of large numbers
of poor women and their families
by providing long-term access to quality financial services
Reaching target clients: Who will the MFI reach?
Meeting target client needs: How will the MFI meet the needs of its clients?
Change in target clients’ lives: What positive changes will the MFI contribute to in the lives of its target clients?
Improve the well-beingof large numbers of
poor women and their families by providing long-term accessto quality financial services
People’s Bank Case Study: Social Goals
SMART Objectives
SSpecific MMeasurable AAchievable RRelevant
TTime-bound
People’s Bank Case Study: Social Goals and Objectives
Social Goals Social Objectives
Reaching target clients:Poor women and their families
• In each of the next 3 years, deepen outreach of services to poor households, reaching at least 50% “poor” and 10% “very poor” among new clients
Meeting target- client needs:Providing quality financial services
• Reduce client exit rate by 20% in the next 3 years
• Increase client satisfaction by 15% in the next 3 years
Change in target clients’ lives: Improving their well-being
• In each of the next 3 years, reduce poverty level of clients and their families by moving at least 50% of clients up one level of the poverty scale
Clarity of purpose and strategy
Clearly defined mission statement and goals and strategy to achieve it
Holistic view of poverty – goals relate to:• Food security• Assets• Literacy• Education• Life-skills & self-confidence
Strategy: • ‘Accompanying out of poverty’• Suite of programmes• Financial and non-financial services
Clarity of purpose and strategy
Targets rural agricultural households• Risk and seasonality
AMK attempts to minimise risks: • Analysis of household cash flows• Small loan size• Group loans - complete flexibility of repayment • Individual loans• Savings• Emergency loans and micro-insurance (planned)
Leadership and culture
Does ‘passion for mission’ compensate for lack of systems? • Organisational leadership and culture is key• Commitment and leadership is not enough – needs to be systematised• Many of partners have strong founder- leaders
1.Developing social goals and objectives
2.2.Monitoring and assessing Monitoring and assessing performanceperformance
3.Improving operations
Social Performance Management Components
• To understand patterns and trends, you need some information on a routine basis, which we refer to as monitoring
• To understand the reasons underlying a trend, you may need additional information from time to time, which we refer to as assessment
Stakeholders and Information Uses
Stakeholders
Roles in SPM
Uses of Information
for SPM
Clients
Field staff
Management
…etc…
• You already have many sources of information
• Start with what you have, and expand from there only when there is a clear need
• Let your Social Performance Management system evolve over time, instead of trying to build from scratch
Information system
Alignment with goals?
Tools applied but not systematic in relation to social goals• Impact assessments• Client satisfaction interviews• Client default study • Client loyalty study• CGAP social indicators• SPI assessment• MCRIL social rating
Information systemAppropriate & cost effective information – fit for purpose?
Progress out of Poverty Index (PPI) – integrated into MIS:• Data from all clients/every loan cycle• Segmentation and performance management
1.Developing social goals and objectives
2.Monitoring and assessing performance
3.3.Improving operationsImproving operations
Social Performance Management Components
Decision-Making Key Points
• When managing Social Performance, it is important to understand the potential trade-offs or tensions that may exist between the pursuit of social and financial goals
• It is most important to consider short-term trade-offs if you consider that, as a social enterprise, your MFI’s mission, reflected in social goals and objectives, are ends, and financial sustainability is the means to achieving those ends
Organizational Areas to Review 1
Leadership: senior management and board
Organizational culture
Management approach & decision-making
Gender awareness among board members, managementand non-management staff
Organizational policies and procedures
Design of service delivery
Range of products & services offered
Organizational Areas to Review 2
Client targeting Service delivery
Terms and conditions of products & services offered
Human resources
Management information system
Marketing and product development
Finance
Partnership
Communications
Social Performance Management Benefits and Costs
• What are the benefits of Social Performance Management?
• What are the costs and resources required?
• How do you verify that the system is cost-effective?
Benefits of Social Performance Management Information
• More appropriate products and services for clients
• Better service for clients
• Higher retention of clients
• Program growth
• Lower operational costs
• Demonstrate Social Performance to external stakeholders
CostsThe cost of what?• Management processes• Information systems• Product development: (Health protection: $15,000)• Mini-surveys: Costs part of operations• Monitoring: Costs part of operations• Market research (Health protection: $3,000)• Impact assessments: $4,500; $20,000
Costs and Resource Requirements for Social Performance
Management
• Impact survey: high cost in terms of time and money
• Focus group discussions: low cost, but requires trained and experienced personnel
• Individual interviews: cost depends on number of interviews; requires trained personnel
Integrating Social Performance Management Into an Organization
• It is important to have a systemic view of Social Performance. It relates to your entire way of working and to the design of your organization
• Create an enabling internal environment for Social Performance Management by building buy-in, aligning systems, and establishing an organizational culture that supports the achievement of your mission
Alignment (systems)Governance• AMK: SP committee reports to board• Fonkoze: Two boards (Foundation and Bank)• Prizma: Push within Board
Human resources• AMK: Induction spirit of mission• AMK: Perf. assessment incl. behaviour with clients
Staff incentives• AMK: Increased in more difficult areas (low population density, more agricultural, flood or drought prone, poverty)
• SEF: Client retention
Tools for Assessing Social Performance
Intent and Design
Internal systems/ activities
Outputs
Outcomes
Impacts
CERISE SPIMFC Social Audit
SPA ACCION SOCIALPlanet Rating
Triodos/GRI - TSFFMO E&S Risk Audit
M-CRILMicrofinanza
Rating
CGAP/Ford/Grameen PPIUSAID/IRIS PAT
FINCA FCATOxfam Novib
SEEP/AIMS tools
Common Framework for Social Performance Assessment
Social Performance Assessment Tools
Tools that focus on Process:CERISE SPIMFC Social AuditSPA AuditACCION SocialPlanet RatingMicrofinanza RatingTriodos/GRIFMO E&S Audit
Tools that focus on Outcomes:M-CRIL Social RatingCGAP/Ford/Grameen PPIUSAID/IRIS PATFINCA FCATSEEP/AIMSOxfam Novib
Tools that are Self Administered:CERISE SPIMFC Social AuditTriodos/GRIFMO E&S AuditCGAP/Ford/Grameen PPIFINCA FCATSEEP/AIMS
Tools Externally Administered:SPA AuditACCION SocialPlanet RatingMicrofinanza RatingM-CRIL Social Rating
Common Framework for Social Performance Assessment
For more information on Social Performance Management,log on to the following websites:
www.microfinancecouncil.org
www.Imp-Act.org
www.cgap.org
www.microfinancegateway.org
Learn more
Thank you!Thank you!
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