SOCIAL PERFORMANCE MANAGEMENT (SPM) …...MicroSave – Market-led solutions for financial services...

MicroSave – Market-led solutions for financial services

Offices across Africa, Asia

and Latin America

www.MicroSave.net

[email protected]

SOCIAL PERFORMANCE MANAGEMENT (SPM)

TOOLKIT MANUAL

Prepared By:

Matt Leonard

With: Chris Linder, Meryem E. Faris, Neeraj Lal and Alice-Mary Meggs

November 2009

http://www.microsave.net/

mailto:[email protected]

Social Performance Management Toolkit Manual 2


Table of Contents

I. Introduction: Putting Social Performance Management into Context .................... 1 What is Social Performance? .......................................................................................... 1

What is Social Performance Management? .................................................................... 3 What are the Various Tools used in Social Performance? .............................................. 3 What is MicroSave‘s SPM Approach and How is it Different? ..................................... 6 Why Opt for Social Performance Management? ............................................................ 8

II. MicroSave’s Social Performance Management Approach ..................................... 10 Mission and Governance............................................................................................... 10 Understanding/Responsibility to Clients ...................................................................... 12 Improving Performance: Client feedback ..................................................................... 13

Client Services .............................................................................................................. 14 Alignment of Strategy and Systems .............................................................................. 16 Strategic Business Planning (SBP) ............................................................................... 16

Understanding/Responsibility to Staff .......................................................................... 19 Other Key Categories .................................................................................................... 20

Responsibility toward Community & Environment ..................................................... 22

III. Preliminary Work: Determining the Role of Social Performance Management in

an MFI’s Institutional Strategy ................................................................................ 23 Creating a Socially Performing Institution? ................................................................. 23 Considering the MFI Expectations and Wishes ............................................................ 24

Assembling a Social Performance Management Team ................................................ 24

IV. The Process: Diagnosis and Analysis ...................................................................... 25 Auditing Internal Documentation ................................................................................. 25 Assessing Current Performance .................................................................................... 27

V. The Process: Analysing the Results .......................................................................... 37 VI. The Process: Developing a Strategic SPM Action Plan ........................................ 39

ANNEXURES 1. SPM Visit Programme Guide ................................................................................ 46 2. Social Performance Management Indicators ......................................................... 48

3. Social Performance Management (SPM) Indicator List ........................................ 51 4. Inventory of Staff and Client Interaction Tools ..................................................... 54

5. SPM Glossary ........................................................................................................ 55


1

I. Introduction: Putting Social Performance Management into

Context ―Whenever you are in doubt … Recall the face of the poorest and weakest man

whom you may have seen, and ask yourself if the step you contemplate is going to

be of any use to him. Will he gain anything by it? Will it restore him to a control

over his life and destiny?” M.Gandhi

Microfinance is a double bottom line industry, aiming to provide the poor and the underserved

with permanent access to an appropriate range of financial services.1As the core of a

Microfinance Institution‘s (MFI) activities is to provide financial services, this mainly implies

that financial results must ensure sustainability. However, the provision of services to the poor

and underserved who are clearly vulnerable should be addressed with responsibility and due care.

Moreover, the sector is facing new challenges, especially in India where microfinance is a

growing industry. Many MFIs must adapt their structures in India, passing from an NGO/Trust

model to an NBFC one. Competition is increasing, as well as financial pressures. New

partnerships including private investors, commercial banks and other service providers are

emerging. This evolving context increases the MFIs‘ exposure to risks (described well in the

2009 Microfinance Banana Skins report).2 Consequently, the double bottom line of microfinance

is not guaranteed anymore. Now, social performance of MFIs cannot be taken for granted, and

the risk of mission drift is real.

This manual is designed to assist MFIs, Investors, Donors, MicroSave staff, other consultants and

stakeholders in conducting the initial SPM diagnostic and action planning visit. Do note, that this

does not mean one must follow this manual exactly, nor that one should be prescriptive in what

SPM is or should be for an MFI. It is up to the MFI to define what is important, and any outside

consultant or stakeholder must simply help guide the MFI to discover potential solutions for

achieving that vision. One must therefore be open to new ideas and flexible in the application (or

adaptation of the tools) depending on context. Subsequent versions of this manual may be further

tailored to be shared with MFI staff directly so that they may conduct the assessment and action

planning themselves.

What is Social Performance?

In the microfinance industry, social performance (SP) is commonly defined as the ability of an

MFI to ―the effective translation of an institution's social goals into practice in line with accepted

social values‖3. This definition, which can be applied to all levels of performance in all

operational aspects of an MFI, means that an MFI first should ―do no harm” & second ―is

proactive in fulfilling its

mission” (rather than

assuming it will happen

without action).

1 Adapted from Robert P Christen, Richard Rosenberg & Veena Jayadeva. Financial institutions with a double-bottom

line: implications for the future of microfinance. CGAP Occasional Paper, July 2004, pp. 2-3.

² Microfinance Banana Skins 2008 - Risk in a booming industry, Centre for the Study of Financial Innovation (CSFI )

sponsored by CitiGroup & CGAP. 3 Inspired by the definition put forth by the Social Performance Task Force: www.sptf.info

http://www.sptf.info/



Do no harm simply means

that the client should not have become worse off now due in part to the MFI‘s intervention than

the level where s/he was before. This includes avoiding client indebtedness, not adding

unnecessary administrative burdens on the clients, and stopping short of transferring risk to the

clients.

Proactive in fulfilling the mission aims to: 1) extend financial access to the underserved; 2)

improve the quality and appropriateness of services; 3) create needed benefits for the clients, their

families and communities, in line with the MFI‘s own capacities and strategy; and, 4) being

socially responsible to all stakeholders, especially the MFIs‘ own employees.4

These concepts should be part of the raison d‟être of any MFI. MicroSave views social

performance as about doing what you do well in a way that is more accountable to those you are

already serving. This is why social performance – similarly to financial performance – should be

expressed, assessed and managed. It should be expressed in the mission of the MFI through

articulation of concrete goals. It should be assessed because it is the responsibility of any

organisation to evaluate the effectiveness of its intentions and goals. And finally, it should be

managed because desired results do not simply appear because they are written down or were part

of a management discussion on one or two occasions. MFIs must actively implement actions,

monitor achievements and make adjustments on a continual basis to see results. While each of the

three components (express, assess and manage) are equally important and are all covered in

MicroSave‘s approach, the latter of the three – managing social performance – will be the primary

focus in this manual.

Social Performance Process (Social Performance Map, SEEP Network et al, 2009)

The figure above uses a framework defined in the SEEP Social Performance Map as a ―causal

chain‖ with several different yet closely linked aspects. The first step is the ―Intent and Design‖

of the organisation, pertaining to the social mission, strategy and objectives and whether each is

clearly stated. Second are the ―Internal Systems‖ of the organization which covers the policies,

various operational processes and activities undertaken by the MFI (from Operations to Internal

Audit and HR) and whether these systems are aligned with their ―Intent and Design‖. This can

include listening to clients better and designing/improving products and services that are

appropriate to client needs. The third aspect covers ―Outputs,‖ which refers to general outreach,

customer profile and retention statistics, usually readily available in the MFI‘s MIS, and can give

4 Adapted from the SPTF Letter; http://www.sptf.info/page/sign-on-letter.

http://www.sptf.info/page/sign-on-letter



a first window into how well the MFI is targeting those who are mentioned in the mission and

how well they are being served. Finally, ―Outcomes‖ focuses on measuring whether clients are

improving their social and economic status (or well-being), and ―Impacts‖ attempts to establish a

causal link between the MFI‘s intervention and clients‘ progress in overall well-being.5 The

rationale being that providing appropriate services and reaching target clients, and achieving

concrete changes in client‘s lives (outputs/outcomes), can only happen when an MFI‘s systems

are well aligned with its intent.

What is Social Performance Management?

While social performance is the effective translation of an MFI‘s social mission into practice by

achieving certain goals/performance standards set out by the MFI itself, social performance

management (SPM) focuses on: 1) setting clear objectives and creating a deliberate strategy to

achieve them; 2) designing and implementing systems that are aligned with social objectives; 3)

monitoring and assessing progress towards achieving the social objectives; and, 4) using social

performance information to improve overall performance and decision-making.6

MicroSave‟s SPM is a client-focused approach that helps an organisation to align its key systems

with its mission, including Strategic Planning, Operations, MIS, Human Resources, Customer

Service, Market Research, Product Development and Internal Audit and Control, thus helping the

organisation achieve its desired outcomes. Going beyond microfinance, some organisations may

also include non-financial services, as well efforts to be responsible to the environment and

community at large, as aspects of SPM if these are both of importance to the organisation and in

alignment with its mission.

What are the Various Tools used in Social Performance?

Source: Social Performance Map, p. 133

5 Social Performance Map, SEEP Network, AED, and USAID, 2008. 6 Adapted from Putting the ‗Social‘ into Performance Management, Campion et al, Imp-Act

Consortium/IDS, 2009 and the SPM Principles



As the social performance ‗industry‘ has evolved and a myriad of social assessment tools have

emerged. These can be divided into five groups7:

1. Social Audits/Assessments (blue section in figure above)

These tools help institutions evaluate their intentions, systems and actions to determine whether

they have the capacity and have addressed the internal processes adequately to attain their social

objectives. These tools are often used for internal purposes only, for the MFI to improve their

systems and processes. These tools focus on the ―Intent and Design,‖ ―Internal Systems,‖ and

―Outputs‖ stages of the social performance framework.

CERISE Social Performance Indicators Initiative: The CERISE Social Performance

Indicators (SPI) tool assesses the social performance of institutions by evaluating their

intentions and actions.

MFC Quality Audit Tool (QAT): The QAT was designed by the MicroFinance Centre

(MFC) in Poland in conjunction with the Imp-Act Consortium to correspond with social

rating methodology used by M-CRIL and Microfinanza Rating.

ACCION SOCIAL: The ACCION social diagnostic tool is a framework through which it

assesses social performance in order to evaluate the success of the MFI in fulfilling its

social mission and contributing to broadly accepted social goals.8

USAID Social Performance Audit (SPA) Tool: The USAID social audit tool uses a

"process auditing" approach that evaluates the MFI in reference to its stated social

mission.9

2. Social Ratings (red section in figure above)

Social Ratings are generally used by MFIs for external purposes to be shared with donors, lenders

or investors and focus on the same three areas as Social Audits but also include outcomes.

Several rating agencies have developed tools to complement their financial ratings to fill the

expectations of social investors. These include:

M-CRIL: Based in India and affiliated with EDA Rural Systems, M-CRIL pioneered the

social rating concept. According to M-CRIL, the purpose of the social rating is to assess

―the likelihood of an MFI achieving its social mission in line with accepted social

values.‖ The analysis focuses on several dimensions of social performance:

1. Social mission and systems

2. Policies and systems for social responsibility

3. Outreach

Microfinanza: (Italian-based, global rating agency) The MicroFinanza social rating is

based on the audit of the social performance management system of an MFI and on a

detailed assessment of its social results.

7 This section draws from Social Performance Map, pp 144-156

8 Microfinance Gateway: http://www.microfinancegateway.org/p/site/m/

9 SPA is an audit tool that falls under the red section of the framework as it also focuses on outcomes but is

primarily used for internal purposes and has therefore been positioned in this section.

http://www.microfinancegateway.org/p/site/m/template.rc/1.11.48260/1.26.9232/p/site/m/template.rc/1.11.48260/1.26.9220/






Planet Rating: The rating agency of Planet Finance offers a tool that provides an opinion

on the capacity of the MFI to achieve its social goals. It relies on evaluating the quality of

MFI‘s social accounts coupled with an analysis of country data. They focus on the

institutionalisation of the mission, outreach, service offerings, and social responsibility.

MicroRate: Their Social Rating combines an assessment of the MFI‘s social performance

with an assessment of social risk defined as ―the risk that the MFI deviates from its social

mission and fails to produce forward looking outcomes‖.

4. Poverty Assessment Tools (green section)10

Poverty assessment tools typically consist of those tools used by MFIs (particularly those with a

focus on poverty) to understand if it is reaching its target market and/or predict the likelihood of

poverty. They include:

Progress out of Poverty Index (PPI): Developed by Grameen Foundation, it is a set of

country-specific poverty scorecards. Based on statistical analysis of national household

expenditure surveys, it uses a small set of simple, easily observable, and objective

indicators, and estimates the ―poverty likelihood‖ of a person or group of persons,

defined as the probability that they fall under an identified poverty line.

USAID Poverty Assessment Tool: It is a set of country-specific surveys to predict the

prevalence of extreme poverty within a group of people. The surveys include between 16

and 33 poverty questions derived from national household surveys. The tools make

poverty calculations based on an aggregate group of people but are less accurate (and not

explicitly designed) for measuring poverty on an individual basis.

FINCA Client Assessment Tool: This is an open source tool that employs a set of 13

individual screens to record income sources and dependents, monthly household

expenditures, daily per capita expenditures, and documenting spending on 6 social factors

(food security, housing, education, etc).

The Food Security Survey: This a nine-question survey developed by Freedom from

Hunger that measures household access to food through available resources to purchase

or barter for food.

Housing Index: The housing index implemented by Cashpor uses the structure of the

house, and sometimes the housing compound, to differentiate between economic levels of

households and identify those who are poor.

CGAP Poverty Assessment: CGAP collects rigorous data on poverty level of clients by

using a survey on 200 randomly selected clients and 300 non-clients, but takes about four

months to complete.

4. Impact Assessments

The purpose of an ―impact‖ measurement is to provide an in-depth understanding of changes

occurring in microfinance clients, and to further assess whether they can be attributed to (or are

caused by) the MFI itself. It involves conducting research with the objective of attributing

10

The FFH Food Security Survey, Cashpor Housing Index and CGAP PAT are not mentioned in the SEEP

Performance Map



observed outcomes to organisational activity. Impact is determined by the counterfactual, which

requires comparing a treatment group to a valid control group. There are several academic

institutions and individuals that conduct impact assessments but are all constructed differently

(and having evolved significantly over the years).

SEEP/AIMS Tools: This tool is a quantitative impact survey based on a questionnaire

applied to both sample and comparison group. It is important to note that the SEEP/AIMs

toolkit uses many other tools that consist of in-depth individual interviews (Client Exit

surveys, Client Empowerment, Loan use over time), and group discussions (Client

Satisfaction survey) that can assist with outcomes.

What is MicroSave’s SPM Approach and How is it Different?

As opposed to the popular view that an organisation must conduct a social performance

assessment as an obligation to donor agencies or investors, MicroSave‟s approach is one that is

more focused on social performance

management being very practical and better

linked to financial performance. Rather than a

one-off social assessment or audit, SPM

focuses on integrating social performance into

the day-to-day management practices of an

MFI. It should be market-driven in the sense

that MFIs see the value and need to better

achieve their double bottom-line and thus an

SPM visit (or use of the toolkit) is undertaken

at the behest of the MFI itself.

MicroSave has designed a comprehensive SPM toolkit that consists of an audit of internal

systems, processes and policies at the head office level, a diagnostic at the branch level with staff,

and a particular focus on field visits and understanding an MFI‘s clients. All of this feeds into an

overall diagnostic which helps an MFI‘s senior management design an action plan that includes

identifying quick wins that can be rapidly implemented and integrated into the MFI‘s overall

management systems. The approach also gives the organisation a wide range of client- and staff-

focused tools to choose from that it can adapt as per its needs through a composite of qualitative

interviews and PRA methodologies. More than an assessment, MicroSave‟s SPM approach is a

participatory and dynamic process. Furthermore, knowing and serving your clients well is where

MicroSave sees the overlap between social and financial performance and where the most benefit

The Core of SPM

Visit Overview

MicroSave's Approach to SPM:

• Quick

• Low Cost

• Participatory

• Client-focused

• Practical

• Enhances both social and business

performance

a. Clarify social objectives and set clear goals

b. Align, Monitor and Review systems and

goals regularly

c. Understand clients‘ needs and preferences

d. Improve staff satisfaction and customer

service

e. Communicate and use information on social performance



A preparatory phone call with the CEO or key staff person (or SPM Champion) is first made to

understand the MFI‘s history, background, mission and to strategise and choose goals of the visit

based on that MFI‘s interests. The MicroSave team also reviews key documents (business plan,

manuals, MIS data, etc.) of the organisation ahead of time. Then, a five day visit is organised to

check the systems and practices actually being implemented by the MFI on a day-to-day basis.

The first day consists of meeting with senior management, key staff members and board members

to discuss an overview of SPM, to plan out the week (including deciding on team members) and

to conduct individual interviews. The next two and a half days are spent in the field with a strong

focus on interaction with clients and field staff using Focus Group Discussions (FGDs), surveys

and Participatory Rapid Appraisal (PRA) tools. On the last day, the findings of the visit and

diagnostic are presented by the team to Senior Management and the Board. The latter half of the

day is spent on assisting MFI leadership in the creation of a draft action plan for addressing those

SPM areas needing focus (as decided by the MFI itself). A largely qualitative report on

MicroSave‘s findings would follow the next week.

MicroSave‘s team should return at least once in the first three months to help recalibrate the

action plan, check-in on progress and assist in implementation of any major tasks. Ideally, the

MicroSave team would also return after six months to monitor the effective implementation and

progress of the MFI around social performance, helping them to adapt or evaluate the tools and

solutions if needed. (See Annexure 1: SPM Visit Programme Guide)

MicroSave SPM Deliverables

An SPM visit by MicroSave typically includes the following key outputs:

Improved Stakeholder, Management and Staff Awareness of Social Performance

Social Performance Management report

o Comprehensive assessment of how well the MFI is

achieving its Mission

o Client data on profile, product and service preferences,

satisfaction levels, reasons for dropout/not-joining, etc.

o Aggregate data on staff satisfaction levels, highlighting any

areas of concern

Strategic SPM Action Plan for ways to improve overall performance

and ensure better achievement of the Mission.

Mainstreaming SPM through MicroSave Toolkits

MicroSave also believes in the notion that SPM should not become a separate, stand-alone set of

activities (or department) but should be integrated into each and every key policy, process and

system the MFI has, creating a more holistic view of performance management overall.

MicroSave has already begun to integrate SPM content and approaches into several of its toolkits:

Strategic Business Planning

MIS

Human Resource Management

(Basic and Advanced)

Governance

Internal Audit & Control

Customer Service

Staff Incentives



Why Opt for Social Performance Management? The need to invest in social performance may not be evident for everyone, especially for those in a

growing market with investors and lenders demanding sustainability above all else. Nevertheless,

considering the roots of microfinance and most MFI‘s stated missions, assessing and improving an MFI‘s

social performance should be a priority. Due to the dynamic growth and transformations of MFIs in

recent years, many are now concerned about mission drift away from the original purpose of microfinance

– improving access to high quality and needed financial services to the underserved. For example, many

MFIs do not know if they are reaching the stated target market from their mission, nor are they concerned

with developing or providing high quality, needed services.

By instilling a long term vision and focus attention on staff and clients into the core of the business, the

MFI can boost overall performance. One of the most important outcomes of social performance

management is that it can reinforce both social and financial performance. Indeed, strong financial

performance can be seen as a means to assist in achieving social mission objectives (and vice versa).

As Social Performance Management (SPM) aims to help the MFI fulfil its social mission by improving its

systems, products and outreaches, each stakeholder must have an interest. The section below summarises

the principal benefits of SPM to various stakeholders11

:

1. Managers / Board

• To position itself publicly as a socially responsible organisation. This will also help link with the

local communities and increase their support

• To help attract socially-minded investors

• To balance financial & social goals for a sustainable performance. Too much focus on the

financial goals may make the institution drift from its mission and away from the needs of its

clients

• To mitigate political risks, e.g. community backlash, by increasing transparency, protecting

clients better, etc.

• To assess if the institution is achieving its mission and measure, track and improve its overall

social performance

• To align & improve systems, e.g. HR, etc

2. Clients: Improving Outreach, Services & Products

• Improve client targeting by setting up objective indicators, such as client poverty levels, and

tracking performance

• Monitor how clients use services and what their needs are

• Create new products or adapt existing products (or processes) to match the needs of the clients

• If desired, track progress as to the MFI‘s impact on the clients‘ lives (and make changes as

needed)

• Give clients greater voice in the microfinance programme and better protection of privacy, rights

and livelihood

3. Investors: Improving operational and financial performance

• Better retention of clients/lower drop-outs

• Higher client growth

• Lower PAR due to more appropriate products and more satisfied

clients.

• Higher staff productivity and lower turnover

• Improved financial performance and profitability

11

Simanowitz et al, Social Performance Management in Microfinance Guidelines. Imp-Act Consortium / IDS, 2005



If done correctly, and with the right amount of attention, many believe that a focus on social

performance need not negatively affect operational or financial performance. At the very least, it

should have a neutral impact on financial performance. Researchers in the corporate world have

found a correlation between social performance and financial performance across a wide

variety of industries and contexts12

. Likewise, for microfinance, a CERISE study (42 MFIs in

Latin America) did find that a social performance focus may create additional costs in some ways

(e.g. targeting the poorest), but other social performance factors, such as better tailoring

products/services or reinforcing social capital, had a positive effect on financial results13

.

4. Staff

• Improved work environment and staff satisfaction levels

• Better understanding of and involvement in implementing the MFI‘s mission

• Will feel more motivated upon seeing clients more satisfied and benefiting

5. Local Community

• Improved engagement with the community for inputs around needs, e.g. non-financial services, if

deemed important by the MFI

• Possible collaboration with other service providers or government agencies depending on areas of

expertise

• Improved focus on the environment, if deemed important by the MFI

12

Orlitzky, Schmidt and Rynes. Corporate Social and Financial Performance: A Meta-analysis. Sage Publications. 2003. 13

SPI and Financial Performance Brief No.7: Studies of links between social (SPI) and financial performance (Mix) for 42 Latin

American MFIs. CERISE. 2008



II. MicroSave’s Social Performance Management Approach

MicroSave‘s appraisal of an MFI‘s social performance management assesses the alignment of its key

systems with its mission and its level of responsibility towards its staff, clients, and the community. The

categories and questions below are derived from the SPM questionnaire that MicroSave suggests is useful

to perform an SPM diagnostic. The questions are largely aligned with the mainstream of social

performance indicators, as embraced most recently by microfinance industry reporting pioneer, the MIX

Market. MicroSave has included these indicators to both ensure its alignment with the social performance

industry, and to provide added flexibility to ensure that the toolkit is adaptable to an MFI‘s unique

mission and context, and above all practical.

There are four key areas of focus of the SPM toolkit constituting the baseline of the SPM visit.

• Mission and Strategic Intent

• Understanding/Responsibility to Clients

• Alignment of Key Systems

• Understanding/Responsibility to Staff

These four key areas make-up the architecture of the questionnaire/checklist that guides the SPM

diagnostic and from which the Debriefing Presentation depends and leads to the Action Plan (and the final

report). (Note that the questions (Q:) refer to the SPM Questionnaire/Checklist which is included in full in

the Annexures).

Mission and Governance

Mission Clarity

Clarifying your organisation‘s social objectives by understanding its mission is the 1st step to aligning

social performance with an MFI‘s overall goals. An organisation‘s mission acts as its very foundation. A

strong mission sets out:

• Goals;

• Vision; and,

• Values

It defines who the MFI is and what the MFI aims to accomplish.(Eg. Who it aims to serve, how it will

serve them and what outcome it expects.)

For example:14

Serving the rural poor, especially women and youth

by promoting and strengthening a self reliant, sustainable institution

to develop their capabilities and improve their quality of life

Mission is thus a logical place to start the SPM assessment – not only to understand an MFI‘s intent and

what is being measure, but also to then tailor the intervention to suit what is important to that MFI. Some

of the questions asked include:

Q: What is your MFI's mission?

Ideally, the mission should be known from top management to junior field staff. More than the words of

the mission, people should have a clear understanding of the social concept it contains.

14 Inspired by an example in Imp-Act‘s Social Performance Management in Microfinance Guidelines (2005)

Who you serve

How they will be

served

Outcome



Q: Is the mission communicated to all levels?

Staff must be able to define in their own words what key terms mean. For instance, if the mission contains

word such as ―improve livelihoods‖, ―empower women‖, or ―reach the low-income households‖, they

should have in mind a clear example of what these terms mean and how it affects their daily activities.

Q: Has there been any change in vision/mission?

This question in appearance may be simple, but it is in fact a tricky one. An MFI‘s true mission may

change unconsciously as growth ensues, new people are brought on board and new opportunities

explored. In the case of such ‗mission drift‘, an MFI should either realign the operations and human

resources to meet the original mission or the MFI should re-examine the mission. This may entail

adapting the mission to circumstances, but should not just be done because it is convenient. Nevertheless,

objectives should be maintained and the mission should reflect your vision over the long term. It is up to

the MFI and its key stakeholders themselves to appraise if an adaptation of either the operations or the

mission is necessary and feasible.

Q: What is the target market of your institution?

All staff, especially field staff, should be able to clearly understand and to identify who the target market

is, how to identify them and how to cater to their needs. There should be some follow up or monitoring to

determine if an institution is reaching their target market, with adjustments made as necessary. For those

MFI‘s with a focus on the poor, there is a further question concerning what specific poverty level they are

targeting.

Q: Are you meeting your social goals presently?

This question aims to determine if an MFI: 1) has clear social goals; and, 2) if it knows how well it is

achieving them. If so, then how do they know?

Governance

Social Performance Management logically begins at the top with effective

Governance, which can be defined as ―a process by which a board of

directors, through its management, guides an institution in fulfilling its

corporate mission‖15

. Despite the fact that most microfinance institutions

(MFIs) were established to reduce poverty and possess social missions,

many are beginning to resemble traditional financial institutions. To expand

their outreach and loan portfolios, they tap into commercial and quasi-

commercial sources of finance, which require them to demonstrate

consistent profitability to their investors. Given this reality, and the risk of

mission drift, a Board has to make sure that there is consistency between

various aspects of its social mission and its activities.

When assessing and/or managing social performance, an MFI should pay particular attention to three

important factors:

Q: Is there a diversity of backgrounds and expertise on your board?

Critical to governance of any institution, board members should have diversified backgrounds and skills

(financial, legal, business and social) in order to effectively guide an MFI. In a socially-oriented

institution, it is also important that some members have a background and passion for social issues. If not,

then an MFI needs to build its Board and further diversify its range of expertise and experience, all the

while trying to maintain a balance among social and financial ‗voices‘. At one MFI in southern India,

there was a Board Member who never failed to bring up the client‘s perspective, for instance, when the

15

Jacobs, Ruth et al. Board Governance Training for MFIs Toolkit. MicroSave. August 2007



question of raising interest rates arose during Board meetings. These voices are critical to an MFI

maintaining focus on meeting its double bottom-line.

Q: Does your board monitor the achievement of mission’s goals and objectives?

To perform its oversight role effectively requires timely and credible information, not only on the

financial aspects of performance, but social aspects as well. Social indicators must be woven into the

management information and reporting systems (with requisite data collection) and may include cross-

cutting indicators like client dropout rate or staff retention, as well data on client outreach. This lets board

members know if it is meeting client and staff needs or whether it is reaching its target market.

Furthermore, if the organisation‘s mission is to improve the lives or incomes of women, data should be

collected to determine if it is meeting that goal

Q: Do your social objectives influence the setting of policy and strategic objectives at the board level?

If you were to sit in on most board meetings at an MFI, you would here frequent talk of profitability,

costs and efficiency, alongside other financial indicators - and very little about its social goals. Often

times MFIs are actually capturing data on client households or other parameters but fail to process and

analyse this information over time –which simply requires adjusting the MIS. If an MFI has a social

mission, then it is the responsibility of the Board to not only review information pertaining to its social

performance, but to act on such information to revise/update policies and strategic objectives. One way to

verify whether social objectives influence these areas is by reviewing board meeting minutes.

Group Systems

Attention should also be paid to governance matters at the client or group level, depending on the model

of an MFI. In an SHG model, governance tends to be a critical issue. As the group-level operations are

often led ‗by members and for members‘, we should carefully observe if the MFI plays its role of a

moderator and avoids any abuse of power or corruption.

Q: Do all members participate in governance and normal operations of the self-help group?

The MFI should provide mechanism not only to ensure its accountability to the JLG/SHG groups but also

to ensure the accountability of group leaders to members. One way to avoid this is to impose regular

rotation of group/centre/federation leadership through democratic mechanisms or any activities building

capacity of groups.

Q: Are members, or member representatives, involved or consulted in some way in the decision-making

and management of your institution?

As a representative model, one should check the effective involvement of the members‘ representatives in

the management decisions of the MFI. Some MFIs consult monthly with SHG leaders whereas others

may include SHG members on the Board or an advisory committee.

Understanding/Responsibility to Clients

Responsibility to Clients

Client Protection

Client protection refers to a set of principles that should guide a financial institution serving low-income

clients and include the following, as embraced by the Campaign for Client Protection in Microfinance16

:

Avoidance of Over-Indebtedness

Transparent Pricing

Appropriate Collections Practices

Ethical Staff Behaviour

16 http://smartcampaign.org/

http://smartcampaign.org/



Mechanisms for Redress of Grievances.

Privacy of Client Data

Q: Do you have policies or practices designed to protect clients? An MFI should maintain the privacy of client data (for instance, from prying husbands or local

politicians) unless they have permission otherwise. Likewise, policies or practices should be put in place

to ensure proper treatment and a non-discrimination of the clients from your field staff. A code of

conduct, signed by each loan officer might be used, as well as proper training and supervision of staff.

Q: Do you take measures to ensure Client Protection?

Clear instructions in the operations manual, well-informed and trained staff, as well as good supervision

of staff demonstrate an MFI‘s desire to protect its clients. These measures should be backed up with

interactions with clients and grievance policies to monitor actual adherence to client protection norms.

Transparency and Communication

Q: Are product terms and conditions, as well as the rights and responsibilities of clients, communicated

to them in a way that illiterate clients can understand and remember?

All documents and communication should be clear and, ideally, written in the local language, especially

in receipts and passbooks for one. The loan officer must understand (and be incentivised accordingly) that

ensuring clients understand the product and terms is just as important as disbursing the loan. This may

include communicating everything in a simple, clear verbal manner to those clients who are illiterate.

Q: Do you have a policy for supporting clients who face repayment difficulties due to factors outside of

their control?

One of the major risks in microfinance is an inability to pay due to illness, death or natural disaster. How

an MFI handles clients in these circumstances may tell a lot about its ‗social‘ orientation. There needs to

be a balance between maintaining credit discipline and working together with clients – through things like

insurance, an emergency fund, grace periods, advising and - in some cases - loan rescheduling.

Q: Do you have a policy to help avoid and monitor over indebtedness?

Over-indebtedness can be due to multiple borrowing (from formal and informal sources) or due to

loan/instalments size poorly fitted to clients‘ capacities, and can lead to tragic situations such as those that

occurred in Andhra Pradesh recently. It is the responsibility of the MFI to avoid this situation and conduct

a strict screening of the client as well as to create appropriate products. A client who can get a loan by

simply filling up a form is not sufficient, even with a group guarantee in place. Policies may be devised

that prohibit lending to those with multiple loans outstanding or insufficient income stream to support a

new loan. If operational needs, capacity and/or the situational (and competitive) context permit, an

income and cash-flow analysis is the best way to avoid client default and over-indebtedness.

Improving Performance: Client feedback

Regular Client feedback is the best way to ensure that an MFI ―does no harm‖ and is part of the customer

service culture an organisation should adopt for better social performances and transpose into effective

processes, internal audit and training of staff.

Q: Does your institution have client feedback and complaint mechanisms in place?

Clients should be able to point out poor service, product and transaction issues, etc. An effective

grievance mechanism –not just a suggestions box in a branch office that no one ever uses- should be

available. MFIs can provide a help line, give out the phone number of the branch manager, etc.



Cost of Services

According to Chuck Waterfield, founder of MFTransparency.org, microfinance - though highly

transparent in some areas – has not been always consistent when it comes to accurately reporting the true

costs of its services. Perhaps, this is ―due to complications of market conditions and lack of regulation‖,

but the true price of loans, for instance, has rarely been accurately measured or reported. MFTransparency

believes there is a need to present information on credit products and their prices in a clear and consistent

fashion17

.

Q: Do your clients know the interest rate they are paying for their loans ? MFI prices will usually be higher than normal banks; however, it is important not to charge more than is

necessary or pass on the costs of inefficiency unduly to the clients. This may be particularly relevant in

areas with a charged political climate – where local politicians, activists or religious leaders may seize on

this as an example of an MFI charging ‗usurious‘ rates.

So many times, when one asks a client how much does he/she pays for interest rates, fees, premiums, etc,

he/she does not know the answer. Marketing materials and communication should give clients full

information about the true costs they are paying for loans and transaction services, and how much they are

receiving for savings. While all clients understand that paying a low interest rate on a loan is better, few

can calculate the effective interest rate when factoring in a declining (rather than ‗flat‘) rate of interest,

and associated fees such as loan origination charges, membership fees, compulsory loan insurance, etc.

Client Services

Special attention should be given to the lending methodology used by the MFI as well as the number,

variety, and features of products it offers. An MFI is considered to be performing better from a social

point of view when it offers a range of high quality financial products, including insurance and savings or

flexible services (terms, size, grace period and top up loans)to its clients and not just credit.

Understanding Client Needs Understanding clients‘ needs (e.g. market research) is one of the most important ways an MFI can

improve both its social and business performance. It helps to understand client needs and preferences, so

as to better tailor products (types, terms) and services. In a competitive market, it is also a way to

differentiate; while in a nascent one, it is a way to attract clients and deepen outreach. In any

circumstance, understanding client needs should be built into an MFI‘s institutional culture and it will

likely pay dividends in client retention, financial performance and growth. MicroSave‘s SPM approach

draws from its Market Research for MFIs and Customer Service toolkits, including the following tools:

ServQual/customer satisfaction surveys, Focus Group Discussions (FGDs), Drop-out

FGDs/questionnaires, Product Attribute Ranking (PAR), Relative Preference Ranking (RPR) and Simple

Wealth Ranking.

Q: Has ways to understand Client Needs / Preferences

This question is to understand the ways that MFIs learn from and understand their clients. While, formal

market surveys may provide the most comprehensive feedback, most MFIs do not have the training or

resources to conduct these on a regular basis. However, client feedback may be obtained in numerous

17 http://www.mftransparency.org/about/

MicroSave Resources:

Market Research for Microfinance Institutions

Customer Service

http://www.mftransparency.org/about/



ways more informally, including: monthly/quarterly meetings with clients, feedback mechanisms like a

drop box or phone line, informal client visits by supervisors, weekly/monthly debriefing with field staff

about client issues.

Q: How often does your institution use such means?

In order for an institution to be truly attuned to client needs and preferences, and particularly in a

competitive landscape, an MFI should obtain client feedback continually – not as a one off or rare event.

Q: Do you tailor your products to reflect those needs/preferences?

As with most areas of Social Performance Management, it is not enough that information is being

collected. It may actually be unproductive if so much data is captured about clients, but ends up gathering

dust. Information pertaining to client needs and preferences should be used to inform key decisions in

policy and strategy, and may eventually be utilised to further develop/tailor products (after a more in-

depth market analysis and product development process!) and services.

Client Outreach

This section deals mainly with the way an MFI targets its clients. A precise and qualitative selection

process is always valuable by helping an MFI reach the client it wants to reach per its mission statement.

Collecting outreach data often involves (but is not mandatory) assessing the level of income or the

standard of living of prospective clients during the application process. Here again, the alignment with the

mission regarding the geographic targeting (rural/remote area, urban/slums) as well as the population

targeting (low-income, entrepreneurs, active poor, etc.) is of strategic importance while appraising social

performance.

Q: Is there a clear selection process for geographic areas based on criteria that match your mission?

Not all MFIs need target the poorest of the poor. Some may target rural or urban areas, some those living

below the poverty line and others the vulnerable non-poor. What is important is that: 1) the target market

matches with what is stated in your mission; and, 2) that client/geographic selection operational processes

are aligned with successfully reaching this market. This will not only help an organisation to meet its

mission, but become more efficient operationally.

Q: Are you reaching who you think you are?

The question follows, for senior management and even branch managers, as a way to understand how

successfully they are reaching their target market and whether client composition reflects its mission. Do

they periodically check client applications, monitor field staff‘s weekly planning, guide or train staff in

outreach, or visit the field to meet clients and verify information? If not, then an MFI may not really know

who they are reaching. At one small MFI in central India, field staff had a habit of ticking off the ‗poor‘

category on client application forms regardless of income levels, simply because management wanted to

serve the poor.

Client Retention

Your client retention is your capacity to keep your clients after product cycles have concluded and

depends mainly on the quality of your products and services and the level of service they receive. Happy

clients obviously help the MFI‘s financial performance and sustainability in the long-run, but the

retention rate, or inversely exit rate, can also be an important indicator of social performance. If clients

are leaving an MFI‘s programme, then it is missing a chance to improve their well-being and serve their

MicroSave Resources

• Institutional and Product Development Risk Analysis

• Product Roll-out



true needs. Furthermore, seasoned clients taking bigger loans are more profitable from a financial

standpoint - the cost of recruiting and training new clients is so much higher. For instance, Mibanco in

Peru estimates that it takes four loan cycles to recover the cost of attracting a new client18

.

Q: Do you calculate and report the exit/dropout rate?19

Retention rate = active clients at the end of the period

(active clients at the beginning of the period+ new clients)

Dropout rate = 1- Retention Rate

Source: Social Performance Standards Report, MIX Market. 2009

Calculating and reporting client dropout rate can be an easy way to put client retention on the

management dashboard. Furthermore, conducting Exit Surveys might be very useful – particularly when

client dropout spikes during a particular month or at a particular branch. By monitoring who is leaving the

programme and the reasons why, one can better adjust products and services to retain the bulk of the

MFI‘s clients and can also give MFIs a sense of how well staff is treating its customers!

Alignment of Strategy and Systems

Strategic Business Planning (SBP) The SBP process should ensure that social as well as financial aspects and objectives are covered. This is

the key document that reemphasizes the mission and vision of the MFIand, as such, forms the base of our

analysis. The mission should contain social concepts, and the business plan, through its key objectives,

should aim to fulfil the mission‘s stated goals. Every MFI has a different mission, and therefore, the

social performance analysis (and the tools to be used) will be different. For instance, for an MFI targeting

the poor, Poverty Wealth Ranking may be used, whereas for an MFI targeting women and aiming to

empower them, the Empowerment Focus Group Discussion may be used.

Q: Do you set targets based on social objectives?

The business plan should help the MFI act on the mission by setting objectives and determining measures

to achieve it. To probe this question, it is necessary to examine the KOGMA20

of the MFI. The MFI‘s

KOGMA should reflect the social objectives of the mission statement. If no social objectives are

established yet , a review of the SBP should be included in the SPM Action Plan (Day 5).

Q: Is performance against your social objectives monitored?

Setting objectives is one thing, monitoring their actual implementation and results is a far more difficult

to do. If performance is being measured, it demonstrates that the MFI already has a strong social focus.

However, equally importantly is what is done with the monitoring of social performance or of

achievement of its social objectives. This information should not sit on a desk, but rather it should be used

18 Campion et al. Putting the „social‟ into performance management. Imp-Act/IDS. 2008 19 Note: ―A drop-out is any client who has had no transaction with the MFI for the last 6 months.‖ Technical Note #1: Estimating

Client Exit Rate. M-CRIL. 2007. 20 KOGMA: stands for Key Objectives, Goals, Measures/targets and Activities – which together provide a clear, simple

framework for he implementation of your Strategy. From MicroSave‟s Strategic Business Planning for Market-led Financial

Institutions Toolkit



to inform key decisions, form an integral part of regular reporting, and adjustments should be made if

performance is off target.

Human Resource Management Human Resource Management (HRM) tools and systems are critical in finding, training, managing,

motivating, and developing a team of staff who will effectively carry out an MFI‘s mission. By building

strong, well functioning human resource systems and tools, your institution will be poised for growth,

ready to manage the challenges of an evolving environment, and responsive to the needs of your clients.21

All employees, regardless of their position in your MFI, need the same things to be successful. Everyone

needs to:

1. Identify with your MFI‘s mission

2. Understand their role, and how that contributes to the mission

3. Know specifically what is expected of them

4. Have the capacity, resources, and environment that make success possible

5. Receive encouragement, constructive feedback, and opportunities to develop and improve

The job of the Human Resources Department is to implement systems and tools that will provide these

key elements to help the individuals within your MFI to be highly motivated and successful. In addition

to mission fulfilment and keeping employees happy, this will ultimately contribute to improved

efficiency, productivity and ultimately reduced costs.

Q: Does your induction / training include an emphasis on mission and social performance?

An MFI‘s staff members are the face of the organisation to clients and should mirror the MFI‘s values. A

social mission reiterated during induction, trainings, and staff communication help to create a strong

social performance culture in the MFI and encourage staff to ingrain this culture in their behaviour.

Q: On which areas of social performance does training focus?

If social performance is important to the MFI, then beyond an organisation‘s mission and values, training

may be designed to include modules on how to prevent client over-indebtedness, clear communication in

pricing and terms, and proper treatment of clients.

Q: Do your institution's staff performance appraisals of staff relate to social objectives?

In order to ensure that staff are following an organisation‘s social objectives and enacting them in the

field, staff performance appraisals should include such categories (e.g. reaching the rural poor, providing

client-friendly services). This gives a signal to staff that they are being measured in these areas and should

work towards those goals and objectives as part of their day-to-day activities.

Q: Does your institution have in place a staff incentives scheme related to its social objectives?

In the same way, an organisation‘s staff incentives should be well aligned with its mission. Many MFIs

reward staff for client outreach (number of new clients) or portfolio size (or interest income), but may

also wish to consider social parameters (customer satisfaction) or at least client retention (or total number

of clients) as a way to ensure strong social performance alongside financial performance.

Management Information Systems An MFI‘s management information system is the lifeline of effective management. Because good

information is essential for the institution to perform in an efficient and effective manner - the better the

information, the better the institution can manage its resources22

. An MFI should design and/or adapt its

21

MicroSave/MEDA. Human Resource Management Toolkit. 2007 22

Prakash, L.B. et Babu, S. Management Information Systems – A Practical Toolkit. MicroSave. 2008



MIS to collect and report on those indicators of value to stakeholders and that match the institution‘s

overall mission. While oftentimes MFIs are reporting on key financial parameters - client outreach,

portfolio at risk, portfolio outstanding, etc. – social indicators which are linked to the mission are rarely

included in management reports. This has large implications, for if an MFI‘s senior management lacks

timely information then it cannot monitor achievement its mission. Social performance management

involves including social indicators in management‘s ‗dashboard‘ (or MIS and reporting systems) to

allow them to make informed decisions.

Q: Does your MIS contain social indicators linked to your mission? An organisation‘s MIS should be aligned with its mission and strategic plan. Possible indicators will vary

depending on the mission and region, but may include:

• Client dropout/retention statistics

• Client and staff satisfaction levels

• Outreach:

• Analysis by region – poorer or underserved districts

• Usage of products and services by client demographic categories, such as women, poor,

entrepreneurs

• Income or socio-economic level (if part of mission)

• Delinquency analysis by client type, industry, region, etc.

• Client outcomes such as client poverty assessment and/or trends out of poverty

• Women‘s empowerment (or # of women accessing health services, engaged in community

activities, etc.)

Q: Is social data properly analysed and used in decision-making? In many cases, an MFI may actually be gathering client level data on socio-economic status during the

intake or loan application stage. However, the data is usually left idle, even if entered into the MIS.

Adjusting the MIS‘s technical parameters to enable analysis of these parameters can be relatively easy.

For social performance management, one must follow the same process as when they are designing an

MIS: interviewing key stakeholders, determining what information is needed, deciding at what frequency

it should be reported; and collecting the necessary data. What is critical is that the information is properly

analysed and actually informs decision-making.

Some additional questions on MIS may be: Are reports covering SPM readily available, even at the field

level? Are the reports available based on institutional-wide, regional, branch and staff member levels?

Internal Audit and Controls Although the domain of internal audit and control in microfinance has typically

placed an emphasis on financial control and associated risks, mechanisms to

oversee and protect an organisation‘s social objectives and values is equally

important to an organisation‘s reputation and long-term sustainability23

.

Having internal controls in place relative to SPM can be evidenced in the

following key areas:

Client Protection: Proper internal controls play a key role in ensuring

strong mechanisms for client protection. Auditors or Supervisors should

ensure that client documents are complete and up to date, that clients are aware of product and

service terms and conditions, client privacy is maintained, and that no frauds are being committed

by field staff or group leaders

23

Campion et al. Putting the „social‟ into performance management. Imp-Act/IDS. 2008



Timeliness of loan disbursement: Likewise, monitoring the timeliness of loan disbursement –

through talking to clients or reviewing loan documentation at the branch – is another key aspect

of internal controls

Proper treatment of clients: Just as an Internal Auditors and Supervisors ensure adherence to key

processes and procedures, they should also pay close attention to proper treatment of clients.

Appropriate behaviour with clients can be included in the code of conduct, but may also form a

part of training (through role plays, etc.). This includes how to treat clients who are delinquent or

absent to meetings– areas where pressure from senior management to meet targets may leave

room for abusive behaviour. Treatment of clients may be monitored through field visits and

talking to clients, but also may be checked if a functioning client feedback and grievance

mechanism is in place at the MFI.

Social Audits: Finally, an organisation may wish to do periodic social audits, ratings, or SPM

visits (done either themselves or through outside consultants) or integrate a robust social audit

into regular internal audit and control systems. This may include verifying the accuracy of data on

client outreach, poverty levels, impact or any other relevant indicators.

Q: Are social objectives and criteria integrated into the institution’s internal audit and control system? By integrating social criteria into an internal control system, not only does this help an organisation

manage social risk (or the risk of not adhering to its mission) but helps institutionalise social performance

management across core systems. Critical to integration is that findings are not only included in internal

audit/control reports, but that changes and follow up is done to ensure implementation.

Understanding/Responsibility to Staff

Responsibility to Staff

Q: Do you have a clear HR policy to ensure fair and equal treatment of staff?

First of all, the HR Policy should be clear and fair. An MFI should maintain and truly implement its HR

manual as a fundamental first step. It (or at least relevant portions of it) should be readily available for all

employees, in the relevant vernacular language. HR policy should also ensure all staff have an exhaustive

and detailed job profile, including social responsibilities and goals to help the MFI meet its mission

Q: Do you have a clear salary scale that reflects competitive or market rates?

Q: Does your institution provide staff with a full range of benefits (that truly provide benefit to your

employees)? Competitive salaries (for the marketplace and/or sector) and benefits are the minimum expectation an

MFI should address to take care of its employees. These steps help ensure staff retention (one of the most

difficult and costly challenges facing MFIs) and may also lead to higher staff performance levels. Many

MFIs in India in particular provide ―housing benefits‖; however, much of what is on offer is crowded and

sub-standard. Benefits that attract and retain staff may include things from health insurance, provident

fund/pension, vehicle allowances, staff personal/vehicle loans and other non-financial benefits (staff

picnic, awards, etc.).

Q: Are there clear policies for staff development (training plan, performance reviews, promotions)?

A performance appraisal and promotion policy aligned with your social objectives, is a good way to boost

staff efficiency as well as social performance. Ideally, a staff incentives scheme based on social indicators

is the best way to entertain a corporate culture around social performances.

Staff Feedback

Ensuring that staff can give inputs and have a voice in the MFI, and that their problems and concerns are

taken seriously, should be given due importance at an MFI and are assessed as part of an SPM visit. By



monitoring employee satisfaction, implementing a grievance procedure, and monitoring staff turnover,

and MFI can help to retain and motivate its employees – thereby improving business as well.

Q: Do you have a grievance process in place to allow employees to report any misbehaviour in a non-

threatening, anonymous way, such as for cases of sexual harassment?

It is important to have a fair and functioning grievance mechanism for staff. This shows them that

problems need not fester, but can be resolved equitably at the organisation. There should be clear

procedures on who to approach, as well as ways to go around an offending party (such a supervisor) to

report an incident to a higher authority or even anonymously if necessary.

Q: Do you monitor employee satisfaction on a regular basis? How often do staff members receive

feedback and performance reviews?

One of the best ways of gathering feedback from staff is through regular staff satisfaction surveys. Staff

Satisfaction Surveys on a regular basis, an MFI can:

Assess the level of satisfaction of your employee

Convey the message that they being listened to

Get constructive feedback and suggestions

Such surveys take a barometer of staff feeling, and adding open ended questions may allow them to

pinpoint problem (or success!) areas. Likewise, staff themselves often want to understand how well they

are performing, what they do well and what they need help on. That is why regular staff performance

reviews are important to an MFI‘s ability to be responsible to its staff. Again, it‘s not enough to merely

collect such feedback/information. Senior management must take action based on any issues –include

increasing positives and decreasing negatives – in order to use such information effectively and make the

staff feel that their opinions are truly valid.

Q: Does your institution monitor staff turnover rates? High staff turnover can negatively impact an MFI‘s operational costs and sustainability. Staff turnover

rates thus offer a glimpse into how well an MFI is treating their staff and/or whether or not it is hiring the

right people for its positions. By keeping track of staff turnover – for instance, in monthly reports – MFI

senior management can quickly catch any abnormal movements and investigate/fix them (possibly by

using a staff satisfaction survey or analysis of exit interviews)

Q: Do you regularly perform exit interviews with departing staff?

Exit Surveys can provide useful information about your organisation when an employee leaves the MFI

for any reason and it becomes urgent particularly when staff dropout levels are abnormally high. Exit

surveys can help the MFI:

Have a clear diagnostic of what went wrong (or not)

Take measures to correct/improve certain practices

Avoid the situation happening again

Other Key Categories

Gender Approach/Non-discrimination

For those whose mission focuses on women, or whose clientele is predominantly

women, it is important to consider the gender policies and/or practices of the MFI.

For instance, some MFIs ensure women‘s rights to apply for and take on loans independently of their

husbands or apply zero tolerance policies for sexual harassment. Equally as MFI‘s often focus on those

excluded from formal financial non-discrimination is often another key area to assess during an SPM

intervention. However, as not all institutions have an exclusive focus on women, it is not a mandatory

field in the MicroSave SPM toolkit.



Q: Do you have any gender policies/strategies to address gender inequality in your institution?

Gender equality and non-discrimination policies and practices towards staff should address not only the

organisation‘s hiring/recruiting, but also equal pay, training, promotion. These should be open to all,

male or female, and not be discriminatory based on caste, class, religion, tribe, sexual orientation or other

criteria. Likewise, there should be equal access to management and board positions, and no tolerance for

any form of sexual harassment. For instance, if most of the middle and senior management posts are held

by men and your MFI serves women clients, you may not have a strong policy of promotion and

advancement catered to everyone, regardless of gender.

Q: Do you have any policies/strategies to address gender inequality in society?

Gender equality and non-discrimination policies and practices is also very relevant when it comes to

treatment and outreach to clients. An MFI can reinforce its values by appropriate client targeting (what

time of day are meetings held – and is this convenient for women or outside of times for household

duties?), products (unsecured loans backed by group guarantee, school or house loans, emergency or

consumption loans, Islamic products, etc.) or methodology (e.g. group-based may be appropriate in some

cultural contexts, women loan officers in others).

Non-financial Services

Some MFIs provide a variety of additional services to enhance the provision of financial services and help

bring people out of poverty or exclusion. These are not a mandatory aspect of MicroSave‟s SPM

diagnostic, nor should MFIs necessarily try to do anything other than provide financial services, but it

may showcase an MFI‘s attention to its social objectives. The key to assessing such services is that they

are in line with the overall mission and objectives of the MFI.

Q: Does your institution offer any non-financial services to meet clients other needs?

The MFI may choose to provide non-financial services directly, through an affiliate, or through a third

party if the MFI feels that it does not have the capacity and that it should not overlap other service

providers. These services can include the following:

• Education: trainings dispensed by the MFI to increase the skills of its borrowers, sometimes

integrated in a value-chain project (e.g. sewing courses, etc.)

• Health services: nursing and hospital services

• Business development: helping the borrower to run a sustainable business

• Women‘s empowerment through social activities and trainings

• General empowerment programs of the poor and excluded, e.g. lower caste groups/tribals

It may be good to ask, if an organisation is providing such services, whether it is achieving maximum

leverage for the resources that are being utilised in these programmes.

Client Impact This section deals with how the services of an MFI may affect – or benefit – its clients in tangible ways,

through the asking of such questions as:

• Are you making an impact on client households and livelihoods?

• Are clients‘ lives improving or leaving poverty behind?

• Are they becoming empowered? Are more children in school?

Q: Does your institution track the changes in poverty (or any other socio-economic outcomes) over

time in its clients?

Again, the MFI‘s own mission will dictate what is set as objectives for impact and what should therefore

be measured or monitored. True impact assessment requires preliminary work whereby the MFI collects

all the baseline information that will subsequently allow monitoring of the evolution and appraisal of the

changes against this baseline. Often, measuring impact depends on the efficiency of the MFI‘s targeting

BEWARE! There is much evidence that impact studies and client tracking are fraught with issues

and often inconclusive. An MFI may want to let the clients define impact rather than use an

academic, quantitative approach based on assumptions made in an office rather than in the field.



policy: a rigorous quantitative and qualitative client screening will help the MFI to evaluate properly

impact further on.

Responsibility toward Community & Environment

Responsibility towards both Community and the Environment is fast becoming a

norm across the social performance industry. Although not considered mandatory,

MicroSave has included it as a possible measurement in its SPM toolkit. Because

the borrower is himself/herself involved in a larger community, the MFI should

remember that all of its activities have an impact on the whole community.

Likewise, the environment may be affected by those activities undertaken by an

MFI.

Q: Do you have a policy for responsibility to the community? Or undertake other activities or initiatives

that benefit the community?

Responsibility to the community may take the shape of a lending policy prohibiting compromising or

damaging activities, such as child labour, liquor business, etc., or may also take the shape of sponsoring

activities that give benefit to the community (sponsored community events, health clinics, etc.).

Q: Do you have a formal/informal policy for responsibility to the environment for the type of client

enterprises/activities for which you give loans or internally, how you manage your resources?

Responsibility to the environment is applicable to those organisations that consider microfinance as a

―Triple Bottom Line‖ activity that has financial, social and environmental objectives. Although loan

utilisation can be difficult to monitor accurately, an MFI can protect the environment by monitoring the

kind of client businesses it funds (e.g. prohibiting activities that pollute and promote eco-friendly

activity). Likewise, it may become more ‗environmentally-friendly‘ by internally undertaking green

practices (e.g. conserving water/electricity, using clean/solar energy).

Remember: Community and Environment activities should be aligned with the MFI‘s mission

and institutional capacity. The MFI cannot fix all the world‘s problems but can work with

other organisations to accomplish tasks beyond its own capacity.



III. Preliminary Work: Determining the Role of Social Performance

Management in an MFI’s Institutional Strategy

Creating a Socially Performing Institution? 24

There are several steps that can be taken to ensure alignment between your Mission, Vision and Values

and the MFI‘s actual social performance:25

Have senior management articulate the SPM Policy: The role played by senior management in

creating and maintaining a social performance culture within a financial institution is critical. The

importance that management places with social performance is quickly telegraphed throughout an

institution. Thus, management should articulate the role and importance of Social Performance

Management in what they say and in what they do. This means developing and communicating

social performance strategies and maintaining mechanisms for listening to both clients and staff.

Involve different levels of staff: All levels of staff are ultimately involved in producing

responsive and responsible financial services, directly or indirectly. Therefore, all staff should

have mechanisms for contributing to the development of the SPM Strategy and mechanisms for

providing feedback on the Social Performance.

Have SMART objectives: Focus the strategy on Specific, Measurable, Achievable, Realistic,

Time-bound (or Track-able) objectives.

Hold people responsible for achieving those objectives: If everyone in your institution is

supposed to be responsible for social performance, make sure your performance appraisal and

reward systems are designed to hold everyone accountable for their contributions to social

performance. This can go beyond mere individual performance to include the signalling of

problems and the identification of solutions.

Build on existing capacity: Few financial institutions have the capacity they need to implement an

efficient SPM strategy, especially when they are still in a growing phase. By necessity, financial

institutions need to build gradually. Their strategy needs to be grounded on a realistic assessment

of current capabilities and capacity will need to be grown as required to create better alignment.

Nurture an institutional culture: The culture of the institution needs to be shaped and nurtured so

that it embodies an appropriate social performance attitude and approach. This can be especially

challenging for financial institutions which have grown quickly.

Put commitments in writing: It is very necessary that the senior management commitments

relating to social performance should be placed in writing.

24 Adapted from Campion et al. Putting the „social‟ into performance management. Imp-Act/IDS. 2008 25 Adapted from MicroSave‘s Customer Service Toolkit Manual.



Considering the MFI Expectations and Wishes

1. Preliminary call Since every organisation has a specific mission, the social performance management strategy of each MFI

will be different. MicroSave‘s SPM toolkit takes this into consideration and every visit starts with at least

one preliminary call with the CEO. This call aims first to present the objectives of the Toolkit and then, to

consider the MFI‘s vision of SPM. This will be strengthened later during the informal discussion

surrounding your introductory presentation on Day 1 of the assignment.

Keep in mind that the SPM visit requires the attention of every key member of the MFI. Choose a date

during which maximum of people are available, especially the management and a few board members.

Remember that Social Performance Management begins at the top. So, the team needs the CEO‘s support

during the week to facilitate access to all the information requested. The team will also need to meet the

board, senior managers, branch managers and field staff. Avoid weeks preceding big team meetings,

meetings with bankers or founders as well as the training weeks.

This call should also include a request of all the strategic documentation for the ―audit‖: Strategic

Business Plan, Operations Manual, HR Manual and any other useful document (see in section IV.A.2.).

The team should also submit the Staff Satisfaction Survey to the CEO or HR manager at this time, which

will need to be translated into the language of the institution and administered to every staff anonymously

(i.e. without writing names on the survey to allow staff to express themselves freely) prior to the visit.

2. Informal discussion The introduction presentation held on Day 1 of the visit often generates lots of discussion and is the

perfect moment to confirm the expectations of the management into account. If the participants are

proactive, they will already have a myriad of requests and ideas which should be your priority and area of

focus during the coming week. If not, the team‘s role is to lead the discussion to some strategic points

relevant with the organisation‘s mission.

Assembling a Social Performance Management Team

After the introduction presentation on Day 1 has been done and the objectives of the visit determined,

MicroSave will need to create an ―SPM team‖ composed of MicroSave‘s technical staff and two to three

of the MFI‘s employees who will participate during the visit, coordinate the entire field visit and local

language interpreter as needed. Ideally, this person can be the Operations Manager, the Area Manager or

HR manager.



IV. The Process: Diagnosis and Analysis

Auditing Internal Documentation

One of the first steps in diagnosing how well an institution‘s social objectives are

included in its management systems is by reviewing its internal documentation,

existing written policies and the actual systems themselves. Often times, much of

this work can be done off site (if externally reviewed) and ahead of time by

requesting and reviewing documents and policy manuals before arriving at the

institution.

The core of the SPM toolkit revolves around reviewing the following critical systems. It begins with the

Strategic Business Plan (the vision which lays out key goals and objectives of an institution) and moves

into Operations (how these plans are operationalised), Human Resource Management (how well staff are

directed and managed towards achievement of key goals), and the Management Information System

(what data is collected and analysed in order to take decisions).

1. Key Systems

Strategic Business Plan: (Mission Clarity, Alignment of Strategies and Systems, Outreach,

Services, Responsibility to Client) The SBP is a key guiding and management document for any

institution. It should be reviewed with an aim to clarify the direction of the organisation, and to

determine if the mission is reflected in the setting of organisational goals, objectives, strategy and

activities. Clear indicators and targets in the SBP may reflect a desire to measure the

achievement of the mission.

Likewise, an institutions‘ mission can be evaluated on how well it balances the social and

financial goals. If the objectives are strictly financial, but the MFI also has a social objective,

then the guiding ‗system‘ is not properly aligned. To realise any goal, a plan should clearly

articulate the objective, the activities necessary to accomplish it, persons responsible, and the

targets. Then, these need to be measured, monitored and made a part of the management feedback

loop and decision making.

Human Resources- HR Manual / Training materials: (Systems Alignment, Responsibility to

Staff) Human Resource Management is central to an MFI‘s ability to mobilise its resources

effectively. An organisation‘s employees are the face of the organisation, and retaining them

(and keeping them happy and motivated) is a key part of effective service to clients. Not only

must staff be treated properly, but they must also understand the organisation‘s mission and social

goals as well as their own roles and responsibilities in achieving these objectives.

HR,in the context of social performance, encompasses recruitment and hiring, HR policies, salary

and benefits, performance appraisal and incentives, and employee exits. Some of this information

can be gathered from documents, e.g. the HR Manual or policy documents or any other staff

training material (induction, etc.) or appraisal/performance review (templates and completed).

The objective is primarily to see if employee hiring (staff selection), training (induction and

ongoing) and performance review, as well as staff incentives, are aligned with mission and social

objectives or not.

For example, an MFI that has social objectives may wish to cover the objectives in its orientation

training (e.g. a focus on mission, vision and values; proper treatment of clients). Likewise, they



may also wish to include social criteria (e.g. customer service) in the appraisal and incentive

systems, rather than just the financial targets (e.g. number of new clients, portfolio outstanding,

PAR, etc.). To further assess how an institution fares in its responsibility to staff, one may also

review: job descriptions (what aspects of the job are emphasised), staff development / promotion

policy (what opportunities for growth are given to staff), salary and benefits (how the MFI fares

vis-a-vis its competition), and documents that show how effective are feedback and grievance

mechanisms (if relevant).

Operations Manual: (Responsibility to Clients, Services, Outreach) The Operations Manual is

critical for two reasons: 1) to understand the MFI better (for external evaluators) and 2) to study

the specifics around products and services, treatment of clients, delinquency management, and of

course - loan processes. The SPM team looks at the Operations Manual to better understand the

client targeting strategy along with village/area selection. This can then be cross-checked during

field visits and audits. For instance, if the target clientele is low income women living in rural

areas, and the clients one visits have higher incomes and many are living in urban or suburban

areas, then the alignment is off. An MFI may wish to redefine its target clientele or reassert its

targeting strategy through a combination of monitoring and incentives.

The Operations Manual can also give insight into the presence (or lack) of clear, standardised

systems and processes for efficient service to clients. For example, it can be useful to determine

time/steps from application to disbursement in ―should be‖ processes, and then cross-check this

with client feedback in the field. Furthermore, the SPM Team should look into whether or not

there are policies for proper conduct with clients, delinquency management, communication of

terms and conditions, and whether there are receipts or signatures in passbooks for all

transactions. This, when corroborated by field visits, can represent an MFI‘s responsibility to its

clients.

Management Information System (MIS)(Alignment of Strategies and Systems): An effective MIS

is key to monitoring both the social and financial progress of an organisation over time. It should

also provide information related to the achievement of the MFI‘s key strategic goals and

objectives. The SPM team should examine the MIS to determine: what information is being

tracked and reported on a regular basis, and whether this matches with what is articulated in the

mission and SBP. This will also help to determine if social, or only financial, information is being

analysed and used to inform management decisions. Typically, the MIS may include data entered

from loan applications on outreach (characteristics of clients), but may not have this data in an

analysable form and is not used in decision-making regardless.

Likewise, while measuring impact (changes in characteristics over time) may be a desirable

element in the MIS of an institution that aims to improve the status of its clients, it is not the only

way to integrate social objectives into its MIS.

Other indicators that may be relevant, depending on the context, can be: client dropout rates, staff

retention rates, scores on client/staff satisfaction surveys, effective (true) interest rates,

geographical or caste distinctions, percentage of female borrowers, etc. Overall, the MIS should

be analysed to assess not just which data is being collected and not used – but also, which may be

useful to improving services. It can also identify the data that is necessary to understand clients

and improve performance. Finally, if there is time, it could be useful to determine if information

is accurate and transparent for reporting to funders and other stakeholders.



2. Other Relevant Documents

The following list of documents, policies and systems are also reviewed as part of a social performance

management visit – to the extent that time is available and comprehensiveness desired. Each, where

available, can give insight into the social performance of the institution and can be used to triangulate (or

‗cross-check‘) data given by senior managers and staff during interviews and focus groups.

Articles / Bylaws (Mission Clarity, Governance): To see if the objectives and activities of the

organisation make specific reference to the organisation‘s social mission.

Board Meeting Minutes (Alignment of Strategy and Systems, Mission Clarity, Governance): To

understand strategic management and direction of organisation (e.g. the Board‘s commitment to

its mission and if any decisions are taken based on a concern for meeting social goals –

particularly those expressed in the mission).

Credit Meeting/SMT/Branch meetings: (Mission Clarity, Alignment of Strategy and Systems,

Outreach, Responsibility to Client) To see which credit committee/branch/SMT decisions are

taken regarding social categories/indicators; to determine consideration of targeting and outreach

strategies; and, to ensure that clients are taking an appropriate amount and are not over-indebted.

Loan Documents (eg. member enrolment/application forms, passbook, receipts, registers)

(Alignment of Strategies and Systems, Responsibility to Client, Responsibility to

Environment/Community, Outreach): To determine if the client profile matches matches the one

expressed in an organisation‘s mission and its client targeting strategy; to assess the financing

requirements and community/environmental impact of business activities; to ensure clients are

getting proper documentation of transactions, that such documentation is consistent, signed, up-

to-date and cross-checked by a supervisor; to ensure that documentation is complete and accurate

so that there are less opportunities for fraud or errors.

3. Systems Internal Audit and Control Systems (Responsibility to Clients, Alignment of Strategy and

Systems): To determine if there is an internal audit and control system (even if informal – eg.

composed of cross-checking and random visits, client grievance channels) in place to ensure that

no fraud is occurring and clients are protected. The presence of some sort of control or process

monitoring system may also help ensure improved adherence to standard processes, system

functioning, client protection and thus, professional and customer-friendly service delivery.

Assessing Current Performance 1. SPM Diagnostic – Head Office The process of doing an SPM diagnostic on-site begins with determining

who are the key stakeholders (typically, the senior management team

and Board, but also staff, clients and community members) and meeting

with them at the head office. Although the SPM team actually begins its

diagnostic off-site through documentation, the SPM presentation on Day

1 can be a useful way – through informal discussions – to gather further

insights into the social performance of an institution. This may occur

during discussions around what Social Performance or Social

Performance Management is or what it means to the organisation, or

while speaking of its mission, social objectives and strategic planning.



However, the main technique that MicroSave‟s SPM team utilises is a one-on-one interview. (See SPM

Guide to Tools for Interview Guides)

Alternatively, if the stakeholders present during the introductory meeting and presentation have the time

to spend, then a group-style interview may be possible. Otherwise, to minimise the time each key person

must spend, one can schedule short 30-45 minute interviews with each person separately. These are

designed to provide answers to the questions/indicators listed in the SPM questionnaire. Therefore, it is

critical to review and be well-versed in the questionnaire, so as to be able to lead an interview in a more

conversational manner. Oftentimes, particularly if you are reading from an interview guide, staff may

feel nervous –as if an exam or rating is occurring. The spirit of an SPM diagnostic should be one of

collaboration, in such a manner so as to better identify methods of improving social performance

management of the institution. If there is time, community members may also be interviewed.

Board Member: Interviewing 1 or 2 board members (particularly the Chairman and/or members of the

executive committee) provides an opportunity to learn about the role of its mission and social objectives

in an institution‘s governance, as well as other key stakeholders. Beginning with how the member

understands the mission and purpose of the organisation, the interview proceeds to questions related to:

diversity of the members and expertise on the Board, frequency of meetings, board committees (e.g. is

there a social performance or client committee?), how they monitor achievement of mission and

implementation of the strategic business plan, which data/information that the Board reviews, and finally

examples of how mission/social objectives influences the Board‘s guidance, setting of policy and strategic

decision-making (e.g. through discussions held or examples of decisions taken on SPM areas like

responsibility to client, staff, etc.).

CEO: The interview with the CEO or Microfinance Managing Director is focused on similar areas. It

begins with an understanding of mission, communication of that mission across the organisation and any

specific social objectives and target clientele/market. The discussion should also cover on governance,

monitoring achievement of mission/social objectives, and examples where these factors have influences

decision-making at the senior level. The interview reviews strategic business planning (setting of goals

and monitoring), and briefly touches upon HR and MIS issues (alignment of systems to the mission/social

objectives). The team should also discuss clients – eg. market research, responsibility to clients, etc.

Operations Manager: The interview with the Operations Manager is much more wide-ranging in scope,

dealing more with the operational policies and practices. It covers topics related to mission clarity and

systems alignment (training, performance appraisal, MIS) but then moves into topics related to services

and products, target clientele, communications with clients, staff performance and appraisal, grievance

and feedback mechanisms for staff and clients, HR policies, client protection/internal control practices

and market research.

HR Manager: The HR Manager is interviewed to triangulate with the policies and practices described in

the organisation‘s Human Resources handbook or manual. As such, most of the queries pertain to those

contained in alignment of systems (HR) and responsibility of staff (salaries and benefits, performance

appraisal, communication of policies, incentives, staff training and advancement, etc.). It provides a good

opportunity to follow up and review documents such as completed appraisal forms or training materials.

The interview should also involve discussing the preliminary results from the staff satisfaction survey, if

available.

MIS Manager: The interview with the MIS Manager revolves primarily around alignment of systems

(MIS). Specifically, the SPM Team should look into the MIS at what data is collected, what is analysed

and what is reported regularly –with an aim of determining what social objectives or mission-related

items are contained within.



2. SPM Diagnostic - Branch In order to assess current social performance management and to better understand the difference between

policies and procedures, or spoken of by senior management in the head office (―Should-Be‖), and what

is actually occurring in the field (―As-Is‖), branch visits are essential. MicroSave‟s SPM team spends at

least two and a half days meeting and talking to staff at the MFIs branch offices. Given time and distance

limitations, teams are typically limited to visiting usually 2 or 3 branches. Branches may include the head

office branch (if such exists), and possibly 1-2 others during the next two days, respectively. This may be

altered and adapted depending on the information most needed by the MFI.

There are three basic techniques that MicroSave‟s SPM Team uses to collect branch level information:

1. A Discussion Guide-driven FGD: Written discussion guide prepared in advance

2. Surveys and Questionnaires: Surveys and questionnaires that staff can fill out themselves

3. Review of Loan Documents / MIS: Review of loan documents and branch level MIS (see above)

Branch Manager

Interview with Branch Manager:

The Interview with the Branch Manager is designed to help complete the SPM diagnostic by

looking at different levels across the organisation. First, the discussion aims to assess how well

the Branch Manager understands the mission of the organisation. Secondly, it is also useful for

understanding a mid-level, supervisory perspective on how the branch fares in terms of its

responsibility to staff and clients.

For example, for client-related issues, the interview questions concern how the Branch Manager

verifies: proper treatment of clients during collections and delinquency management; if the code

of conduct is enforced; effective communication of terms and conditions; prevention of fraud

through systems and internal audit & control mechanisms; if there is a client grievance or

feedback system, how it functions and what are the common client inputs; and, proper client

targeting and prevention of over-indebtedness.

For staff-related issues, the interview questions cover regularity and design of performance

appraisal, feedback and grievance systems, staff satisfaction levels, why staff leave, and so forth.

(See SPM Guide to Tools for Branch Manager Interview questions)

Staff

Focus Group Discussion (FGD)

SPM Staff Focus Group Discussion:

This focus group discussion guide is designed to complement the

SPM staff satisfaction questionnaire. It essentially aims to

triangulate data received at Head Office through documents,

systems or interviews with senior management. The discussion

cross-checks staff‘s understanding and acceptance of the mission,

as well as a range of policies and practices that reflect the MFI‘s

responsibility to its staff: their knowledge of job responsibilities,

familiarity with HR policies, training content and frequency,

performance appraisals, advancement opportunities, opinions

about the competitiveness of salary and benefits, as well as any

other issues that arise in Staff Satisfaction Surveys.

Likewise, the guide aims to cross-check operational practices relating to responsibility to clients:

communication of product/service terms and conditions, existence of a code of conduct, protocol



for delinquency management, prevention of over-indebtedness, client feedback – needs and

preferences.

Survey Tools

Staff Satisfaction Survey:

Surveys should be administered to staff, collected and analysed prior to arrival of the SPM team to the

branch. This will allow the team to pinpoint any recurrent issues which can then be explored during

the FGD. (See SPM Guide to Tools for Staff Satisfaction Survey)

The survey is a simple-to-administer survey designed to evaluate levels of staff satisfaction across

the organisation and can be grouped and analysed according to branch, support or field staff, or

aggregated for a total picture. MFIs may wish to utilise the survey, in a modified form,

periodically (e.g. quarterly, every 6 months) to ‗take the pulse‘ of the organisation. This can be a

useful way to address any issues before staff members decide to leave the organisation – costing

an MFI valuable time, money and investment. The overall goal of the survey is:

1. To learn what is working well at the organisation, and what could be improved;

2. To understand the current staff morale and attitudes;

3. To shape policies and initiatives for the next fiscal year;

4. To present an opportunity for staff to give anonymous feedback

Before taking the survey, the SPM Team or administrator should take care to emphasise its strictly

confidential and anonymous nature – and that staff should respond freely. The team should explain

that the organisation seeks to know more about what it is doing well and what it is not doing well –

with an aim of addressing any issues and making the workplace more satisfying for staff.

3. Social Performance Diagnostic - Clients

One of the most important elements of MicroSave‘s approach to social

performance management is its emphasis on clients. Most MFIs lack a

structured mechanism for collecting and analysing qualitative client data.

However, understanding your clients, and maintaining high levels of

customer service are two of the most important elements of maintaining

high social and financial performance. When clients have access to

appropriate products and customer-friendly service delivery, they are

more likely to remain with an MFI over subsequent loan cycles. Client

retention is one of the most effective means of lowering costs and

improving profitability. MicroSave can help your institution design

specific tools that are appropriate for different institutions and contexts.

For example, it helped one MFI in south India develop stress test tools to

determine the relative health of its self-help groups.

Field visits are also an important means by which the SPM team may better understand the difference

between policies or spoken of by both the management and staff (―Should-Be‖), and what is actually

happening in the field (―As-Is‖). MicroSave‟s SPM Team spends at least 2 - to - 2 1/2 days of its 5-day

visit meeting and talking to clients. Given time and distance limitations, teams are typically limited to

visiting 4-6 groups and 3-5 dropout clients at 2-3 branches. This may be altered and adapted depending

on the information most needed by the MFI in question (e.g. dropouts, groups with high delinquency),

and whether or not a recent SPM diagnostic was already performed – in which case, more attention can be

given to field visits.



There are two basic techniques that MicroSave‟s SPM Team uses to collect information:

1. A Discussion Guide-driven FGD: Written discussion guide prepared in advance

2. A PRA Method: The discussion is driven by the PRA or survey tool (e.g. wealth ranking, relative

preference ranking, ServQual)

3. Survey and Questionnaires: This is a simpler form of data collection but requires extra time and

proper explanation of how to complete them properly.

Some Questions You May Want Answers To

Although the objectives of client visits may vary according to what is most important to an institution, the

SPM diagnostic typically focuses on the following range of questions:

Client Feedback

Who are the clients, their characteristics, activities and socio-economic status?

Why do they join the programme and why do they leave?

What qualities do they like and don‘t like about the MFI‘s products and services?

What is important to clients? Product and Service preferences.

What do staff think is important to clients? (Does this differ from what is important to the

customers?)

What quality of service is the MFI currently delivering to its customers (internal and external)?

What has already been done in an attempt to improve service quality?

What can we do now to improve client retention?

Responsibility to Clients

Do client feel that their data privacy is safeguarded?

Do clients understand basic terms and conditions of financial products (interest rate/fees, loan

term, insurance premium/benefits)

Do clients get signed receipts or passbooks for each and every financial transaction? Are there

surprise visits by management to verify adherence to policy?

Do staff treat clients with courtesy and respect?

Does the MFI have responsible collection and delinquency management practices?

Do women clients have any special preferences (meeting times, female staff, etc.)?

SPM Focus Group Discussion (FGD) Guides:

In order to better understand clients‘ needs, preferences, profile, and level of satisfaction with the

products and services provided by an MFI, the following FGD guides have been created or adapted.

Client Outreach: To understand client profile – what

categories of clients the MFI is reaching out and not

reaching out (missing). To understand why people

join and the cause for dropouts with a view to

identifying steps the MFI might take to retain good

clients.

Client Satisfaction: A focus group version of client

satisfaction to assess clients‘ level of satisfaction

(probing around the 8 P‘s – people, product, price,

promotion, physical evidence, place, processes, and

positioning), as well as to obtain clients‘ ideas and

suggestions on customer service and how the MFI

can improve on the same.

Attention!

It is very important that the MFI staff

or consultants that administer the

focus groups and PRA tools are

properly trained.

Proper facilitation of a focus group or

PRA discussion requires experience

and knowledge of how to interact with

clients and put them at ease, how to

probe for answers, how to involve a

diversity of those in attendance, and

how to gather the most accurate and

useful data.



Client Dropout: This is a guide for understanding the characteristics of dropout clients, and the

primary reasons behind why they are leaving (are they pushed out because they are poor or leave

because they have access to other sources of credit).

Client Interaction: The client interaction template contains other short FGD guides around service

quality, other product/service needs and preferences, and questions designed to validate

information obtained at the Head Office or through documentation (e.g. client understanding of

terms and conditions, delinquency management practices, etc.). These short sections or FGD

guides can be used as a short complement to an exercise focused around one of the PRA tools or

customer surveys.

Empowerment: The empowerment focus group guide aims to determine if clients have grown

more confident and gained more self-esteem while participating in the program. Also, it tries to

identify how those qualities have translated into specific changes in behaviour that demonstrate

empowerment.

Focus Group Discussions Facilitating effective FGD requires training and experience. Without such a background, there is a risk

that focus groups will not reveal interesting or valid information, and worse – may even be harmful by

raising client expectations for new products and better service benefits or stirring passions around a

particular grievance (e.g. high interest rates). Therefore, members of the SPM Team, whether MFI staff or

consultants, should not attempt to lead FGDs before receiving training – and particularly MicroSave‟s

acclaimed ―Market Research for Microfinance‖ toolkit.

Sampling Strategy During an SPM diagnostic, the sampling strategy generally followed is one of maximum variation to

allow for a representative sample that adequately showcases the diversity of clients and branches.

Usually, to accomplish this aim, the SPM team

selects both branches and client groups that are at

opposite ends of the spectrum of diversity: e.g.

near and far, urban and semi-urban/rural, new and

old, high performing and low performing, poor

and non-poor, and dropouts. Often times,

diversity may be sacrificed to some degree if there

are time/distance constraints (e.g. branch is 300

km away on poor roads during monsoon season!)

and depending on the availability or existing

meeting times of clients and groups.

Other focus group sampling strategies that may be relevant, depending on the context:

Client recommended clients (chain) to identify who knows the most about a particular

phenomenon

Semi-random: by location, meeting day/time, etc.

Extreme or deviant cases (outstanding successes or notable failures) e.g. defaulters 30 days in

arrears, the very poor in a programme.

Maximum Variation in Client/Branch Selection:

Near and Far

Urban and Rural/Semi-Urban

New and Old

High/Low Performing

Poor/Non-Poor

Dropouts

MicroSave Resources

Market Research for Micro Finance Toolkit



Obvious cases that clearly demonstrate the phenomenon you want to access – e.g. persons with

excellent repayment record in high loan cycles, clients with high savings balances (SHG)

Participatory Rapid Appraisal (PRA) / Survey Methods

Another powerful, qualitative method for collecting data involves the usage of Participatory Rapid

Appraisal tools, in which clients are more actively involved in shaping and creating knowledge. The

following tools have been borrowed from MicroSave‟s internationally acclaimed ―Market Research for

Microfinance‖ toolkit, as well as the SEEP/AIMS tools. They have been adapted where needed to the

aims of the SPM toolkit.

Simple Wealth Ranking (SWR): This form of wealth ranking provides a rapid way of segmenting

a community into three or four basic categories, and is useful in situations where you have many

households in a community to rank. This is useful for targeting. If, for example, you want to

interview only poor people, this

exercise will give you a good

indication of which households to

focus on. This exercise can also be

useful in a rough impact

assessment, and for examining the

socio-economic characteristics of

people who chose to join (or do

not join) the MFI and also those

who leave or whose accounts

become dormant.

Example: Simple Wealth Ranking for an MFI

Wealth

Rank

Name of

Head of

Household

Notes

1st Saleem In what ways are they wealthy ? Wife has own business working in market;

man has own welding business; own personal house; has several rental units;;

has essential household items e.g radio, TV; has another business harvesting

and selling rain water to the community.

Why are they wealthy? They had access to credit from a friend and they were

trustworthy enough to return money and then keep borrowing. Hardworking

2nd

Jyoti What? Has 15 one room rental units; has own tailoring business making

women‘s dresses; own sewing machine; has other rental units in Kabowa; has

TV, radio, bicycle etc

Why are they relatively wealthy? Worked hard in the days of her youth to

plant cotton, sell, save and investing; handles her assets very well.

Product Attribute Ranking (PAR): PAR is a method for finding out what participants view as the

key elements/criteria/attributes in financial services and how relatively important each is.

Alternatively, it can be used to understand clients‘ satisfaction/dissatisfaction with different

elements of the MFI‘s financial services.

Example: Product Attribute Ranking

Criteria/component Rank Comments



Customer Service 1 Clients value the customer-friendly and professional

services delivered by staff

Repayment Period 2 Monthly instalment amount is well connected to

income levels of clients (ability to repay)

Treatment by Staff 3 Whether clients are on-time or late with a payment,

staff treat them with proper respect

Timeliness of Loan 4 Clients want a loan fast – particularly at the time of

emergency. Loans should, at the very least, be given

consistently within the prescribed time

Communication 5 Clients are aware of terms and conditions, as well as

any changes in policy

Relationship w/staff 6 Behaviour of staff creates and sustains the MFI‘s

relationship with clients

Relative Preference Ranking (RPR): RPR allows us to see how clients perceive the financial

service providers and components of the financial services they provide. This tool is particularly

informative in a competitive environment and as part of knowing your clients better. It also helps

challenge pre-conceived notions about poor people‘s attitudes towards financial service

providers, what matters to them, and why they have those preferences.

Example: Relative Preference Ranking for SHG MFI

Product Attribute Bank MFI 1 MyMFI Opportunities for innovation and change

Customer Satisfaction 3

1

2

May consider training staff in better customer

service and providing incentives

Repayment Period 1

3 2

Tailoring repayment period to fit client needs

Communication 3

1

2

Client have to be clear on terms and conditions,

through documents and verbally

Timeliness of Loan 2 1

3

Look at process mapping to cut the long delays

for disbursement

Relationship with

staff

3

2

1 MyMFI should continue to high importance is

given to proper treatment of clients

Customer Service Attribute Ranking: To measure the importance of service factors for customers,

and then evaluate the institution‘s performance on each factor. This version of the ServQual is run

very much like a Product Attribute or Relative Preference Ranking. First, clients select the

customer service attributes that are important to them, and then they rank them in the order of

preference. Finally, they place items next to each attribute and rank the MFI in each of the

categories.

Example: ServQual (PRA version)

Criteria/component Rank Comments

Trustworthiness of Staff 4 Clients feel that they can trust staff MyMFI

Friendliness of Staff 3 Staff are courteous most of the time with clients

Communicates Terms

and Conditions

3 Clients remember being explained terms and conditions but

cannot remember exact details anymore

Timeliness of Loan 2 Occasionally there are delays in accessing follow up loans

Accurate Recordkeeping 4 Records seem accurate and receipts are given

Professional staff 4 Staff behave in a professional manner



• Household Generation, Receipt And Spending Of Cash Analysis: This tool is useful in

determining which sources of income are generated, received and spent by men, by women and

by both, and why. This can help MFIs understand the intra-household dynamics in the context of

income flows and begin to assess risk profiles associated with lending to specific income

generating activities and/or households.

Division of Labour Receipt of Cash Decision Over Use of Cash

Men Women Men Women Men Women

Source of income:

***

**

**

****

*****

**

***

*****

***

*

*****

*****

*****

**

****

*****

*****

***

*

**

*****

*

**

*

***

***

*****

***

*****

****

**

Cow Fattening

Coffee

Vegetables

Groups

Casual labour

Salary

Surveys/Questionnaires

Surveys and questionnaires are a simpler form of gathering useful client data, requiring less facilitation

skills than focus group discussions and PRA tools. However, for the most honest responses, it is best not

to use the same field staff that work with said clients to administer them. Senior management staff,

middle management staff and branch staff other than their own are the most appropriate persons to

administer the surveys and questionnaire.

ServQual: To evaluate the institution‘s performance on each service factor included in the survey

and pinpoint areas of strength and weakness in customer service. Categories of customer service

include Reliability, Empathy, Efficiency, Responsiveness, and Assurance.

Reliability - Your ability to perform the promised service dependably and accurately

Empathy - Care and attention the organisation provides its customers

Efficiency -The speed/appropriateness of your product/processes

Responsiveness - Your willingness to help customers and provide prompt service

Assurance - Knowledge and courtesy of your employees and their ability to inspire trust and confidence

Customer Service Questionnaire: A short questionnaire that clients can fill out either in the field

or when visiting the branch office. It is used to measure the level of customer satisfaction around

a few basic indicators and obtain recommendations for improvement. (See SPM Guide to Tools

for sample Customer Service Questionnaire)

Example: Selection from Customer Service Questionnaire

Please rate our performance and service level. Indicate your opinion by circling the mark,

which corresponds to your views as indicated in the choices below.

Rating Scale: 1 - Very Poor; 2 - Poor, 3 – Average; 4 – Good; 5 - Excellent

a) Speed of service 1 2 3 4 5

b) Willingness of the institution to listen to me and respond to my needs 1 2 3 4 5

c) Friendliness of staff 1 2 3 4 5



Product Attribute Ranking / Relative Preference Ranking:

The PAR and RPR tools can be used with staff as well as

clients. This exercise often provides a thought-provoking

contrast, when results of what staff think is important to clients

is contrasted with what clients themselves think.

Exit Survey: The purpose of the Client Exit Survey is to find out and track the following

information:

1. When the client left the program

2. Why the client left the program

3. What the client thinks about the program‘s impact on her and her business

4. What the client thinks about the program‘s strengths and weaknesses, and

5. When (or if) the client will rejoin the program and/or recommend the program to friends

and family26

.

(Refer to SEEP/AIMS Tools – available online – for sample Exit Surveys)

26

Nelson, Candace and Garber, Carter. Learning from Clients: Assessment Tools for Microfinance Practitioners. The SEEP

Network. DC.



• Discuss each subtopic in turn,

• Tabulate the information to

pullout key information

• Summarize the results, and

• Draw conclusions

• Cross-check your findings and

conclusions (e.g. with clients,

field staff)

• Use diagrams, matrices, ranking

methods, and other analytical

tools.

V. The Process: Analysing the Results Once the data gathering is complete, the SPM team must take some time to analyse and present the

information effectively. Typically on Day 4, the SPM team will spend time filling in any gaps or missed

information, and/or attending to further client- or staff-level research. However, the main purpose of this

time (entailing 1/2 to 1 full day) is analysing the results of the data gathered in order to complete the SPM

diagnostic.

1. Analysis is Ongoing27 Analysis is a continuous process of reviewing the information as it is collected, classifying it, formulating

additional questions, verifying information, and drawing conclusions. It is a process of making sense of

the collected information. It should not be left until all information has been collected. Indeed, the initial

analysis should influence the on-going SPM diagnostic process. For this reason it is essential to write

up your field notes at the end of every day - this will help you remember better, identify gaps/issues for

follow-up and prepare for the following day‘s work.

Every day, the SPM team should organise their notes using the analysis templates provided for

Interviews, Focus Groups, and PRA tools. Analysis should focus on emphasising key findings and key

divergences among the different team members. The overall basis for organising findings is the SPM

questionnaire. Each team member, on an ongoing basis, can answer and comment beside each of the

defined SPM categories and indicators. On subsequent days, the SPM team can revise and adjust based on

new findings (triangulation) from field and branch visits.

Prepare a list of key issues and arrange your findings according to this list. Rearrange, break up, and

reassemble pieces of information. Sort and sift through information and look for patterns, differences,

variations, and contradictions. Weigh the relative importance of the information. Be self-critical.

2. Preparing for Debriefing Strengths and Social Risks

The SPM team members, once they have completed there

individual analyses, should have a debate and discussion

concerning the findings based on each of the main SPM

questions and indicators. Based on the consensus around

findings, the team should then decide on what are the

principal strengths and social risks for the MFI in each of the

15 SPM categories.

Debriefing Preparation

The debriefing presentation is formulated around the most

important social strengths and risks identified in each of the

SPM categories. There needs to be time and attention paid to

effectively synthesising and analysing the information

gathered, as well as presenting SPM findings in a useful and engaging manner. Differing from more

formal audits, ratings or assessments, findings that are presented during an SPM visit are not meant to be

a fixed judgment, but may be further modified following the debriefing presentation and discussion with

the various MFI stakeholders present (usually senior management, some staff and Board members).

27

Adapted from MR4MF toolkit / PRA



Debriefing Presentation

The debriefing presentation should at the very least involve those

who attended the introductory presentation about SPM on Day 1.

These stakeholders – possibly consisting of board members, senior

and middle management, field and support staff, and even clients –

will want to learn the outcome of the SPM diagnostic. It should be

conducted in a spirit of discussion and openness, and focus on

strengths to highlight and risks that feed into actionable items or

―quick wins‖. The structure of both the initial presentation on

SPM, and the debriefing and analysis, is such that it readily lends

itself to ideas around what the MFI may choose to do next. For

instance, many of the tools used doing the SPM diagnostic can be

utilised and applied by MFI staff going forward – e.g. staff

satisfaction surveys, customer service questionnaires. The next

phase, the SPM Strategic Action Plan, depends upon how

effectively findings are presented in the debriefing presentation and

the level of discussion around each of them.

Who should attend? Stakeholders such as senior and middle management

(CEO, OM, AM, BM), field staff and support staff.

How long should it take? 1-2 hours with discussion



VI. The Process: Developing a Strategic SPM Action Plan

The final, and one of the most important, stages of an SPM exercise is the formulation of an MFI‘s

Strategic SPM Action Plan and thus adequate time (at least 2-3 hours) must be allocated to SPM planning

at the end of Day 5. If the team is not able to finish on Day 5, the group should decide to continue this

during a 2nd weeks or plan a second strategy planning/finalisation visit of 1-2 days after the MFI has had

a chance to consult with key stakeholders.

1. Why Develop a Social Performance Management Strategy? A Social Performance Management exercise is not concerned primarily with producing an assessment,

audit or rating. These may also be of use to a donor and even some organisations, but do not necessarily

lead to practical changes that can improve the social and overall performance of an organisation. Thus,

the purpose of the diagnostic is to identify opportunities to improve social performance and identify any

social risks or shortcomings. These should feed into the creation of a strategic plan to integrate SP

initiatives into the organisation‘s management systems.

2. How to Develop a SPM Strategy There are two primary ways of developing your SPM strategy:

1. Integrate SPM planning into the organisation‘s Strategic Business Plan: A business plan can be

modified and adjusted according to any new initiatives. This may be the most effective strategy

for institutionalising SPM and weaving into an organisation‘s DNA, particularly if an

organisation develops and monitors indicators and targets on a regular basis. Changes to an

institution‘s business plan has the added benefit of being submitted to the Board for approval and

thus may be one of the most powerful ways to internalise SPM.

2. Create a separate Strategic SPM Action Plan: A new, and separate, strategic SPM action plan can

be developed following the results and presentation of the SPM diagnostic. Planning should flow

directly from the discussions that occur during the debriefing presentation. Although outside

consultants may provide facilitation, all action items should come from the organisation‘s

leadership itself. This is critical to ensuring ownership of SPM initiatives, and preventing

impractical donor or consultant-led suggestions.

Questions to Ask

1. Revisit (if necessary): What is your mission and what are your social objectives?

2. Revisit (if necessary): What is the target clientele of your organisation and how will you ensure

that your reach them?

3. What factors can improve staff satisfaction, and thus staff retention and productivity?

4. How can you improve your organisation‘s responsibility to clients?

5. How can you improve your client‘s satisfaction levels and improve client retention?

6. What further market research, or changes in products and services are necessary to improve client

retention?

7. compete with other institutions

8. What indicators can use to measure achievement of your mission or social performance?

9. What tools can you adapt/use to improve social and overall performance?

3. The KOGMA Approach to SPM Just as in a Strategic Business Planning exercise, the KOGMA framework provides a way to effectively

organise your SPM strategy.



KOGMA stands for Key Objectives, Goals, Measures/targets and Activities – together these provide a

clear, simple framework for the implementation of your SPM strategy.

Creating Key Social Objectives

To implement your strategy you will need to focus on these critical

issues that drive the Key Social Objectives. It is all too easy to get lost

in a wide variety of activities, but having too many objectives and

activities may result in failure to achieve any of them! The Key Social

Objectives necessary to implement your strategy will help you to:

• Prioritise and focus on the critical issues - What Really

Matters

• Help all staff see how their work contributes to the vision and

the strategy to achieve it

For example, one MFI may wish to focus on Client/Operational Issues and have the objective of

―Improving Client Satisfaction‖ or else on Governance and have an objective of ―Developing an SPM

Governance Committee composed of representatives from key stakeholders‖.

Determining Activities Necessary to Achieve Key Social Objectives

The next step is to set the activities that must be achieved in order to achieve the Key Social Objectives.

Again, one should focus on the issues that really drive the achievement of the Key Social Objectives. For

example, to improve Client Satisfaction, an organisation must first put in place a system or format to

measure client satisfaction regularly. Likewise, it must train its staff in how to deliver effective customer

service. Thus activities for this objective might include: developing a Client Satisfaction Survey, training

staff on how to administer the survey, and create a system of regular assessments and monitoring of

results.

Designing Measurable Targets to Guide Implementation and Follow Up

Initiatives taken by an institution, if not measured, become less effective as the impact of such initiatives

may not always be visible or tangible to staff and/or other stakeholders. Thus, it is important to identify

measurable targets which will help the institution to monitor the changes against the key social objectives

set. The variation in performance between the set targets and achieved target then helps analysis of the

performance of the programme. Selection of targets often requires development of systems and formats

which will enable the institution to use the measures.

For example, to improve client satisfaction, an organisation must first put in place a system or format to

measure client satisfaction regularly (e.g. client satisfaction surveys administered every quarter, MIS or

Excel chart for processing results). It must then determine what an acceptable score is (e.g. maintain 90%

client satisfaction scores) so that it may take action or do further assessments if these targets are not met.

Identifying Who is Responsible for What, and

By When

Finally, critical to implementation of any

plan is to identify who is responsible and by

when the various tasks and activities will be

accomplished. This ensures accountability

and division of labour so that plans are

realistic and achievable.



4. Sample Strategic SPM Action Plan

In reality, for any well governed institution, this exercise may take as long as a month if the MFI seeks

inputs and buy-in from key stakeholders (Board Members, Investors, Community, Staff). Therefore,

while an outline of an SPM strategy may begin on Day 5 of a visit, in reality a follow up visit may be

necessary to finalise a Strategic SPM Action Plan.

Strategic Social Objectives: 1) To ensure policies are in place to protect clients; 2) To improve client

and staff satisfaction levels;3) To communicate policies and changes more effectively with staff

ACTIVITY INDICATOR PERSON

RESPONSIBLE

BY

WHEN?

1. Review/Revise Client

Targeting

1. Updated Poverty Assessment

Form w/ new or adjusted

indicators)

2. Communication / training with

staff on new Client Targeting

CEO

May 2009

June 2009

2. Explore Product

Diversification

1. Market Research Studies

2. Product Design w/Costing

3. Product Piloting

4. Launch of new product (s)

CMT led by CEO

September

2009

TBD

TBD

TBD

3. Client Satisfaction Surveys 1. Survey Tool chosen/ developed

2. Survey carried out every 6 month

3. # of FGDs/surveys conducted

4. Dissemination of survey findings

to staff

1. CMT led by

CEO

2-4. Ops Mgr

May 2009

From June

2009

July

2009

4. Client Protection

1. Development of Policy and

Inclusion in Operations Manual

2. Dissemination / Communication

to Staff

3. Creation of Public Relations cell

(PRC) at head office w/dedicated

staff, telephone line, and MIS

4. PRC begins operation

1-2. CEO

3. CMT (led by

CEO)

4.Dedicated PRC

staff member.

May 2009

June

2009

June

2009

July

2009

5. Activities Prohibited for

Lending policy

1. Development of Policy and

Inclusion in Operations Manual

2. Dissemination / Communication

to Staff

CEO May

2009

June

2009

6. Workshops on Organisational

Policies

1. # of workshops held

1st round

(HR/Incentives/Operations)

HR Manager (with

support of CMT)

End July

2009

7. Designing Staff Appraisal

Formats

1. New Formats in Developed

HR Manager (with

support of CMT)

September

2009



What Other Tools Can We Use to Focus Our Research and

Analysis?

MicroSave Toolkits: Human Resource Management,

Market Research for Microfinance, Customer

Satisfaction, Strategic Business Planning & Process

Mapping

SEEP / AIMS Tools

2. # of Staff Receiving Assessment

October

2009

5. Implementation: Developing a Social Performance Management Culture MFIs should not rush to try to change everything and immediately adapt too many social performance

management ‗best practices‘. These may end up becoming overwhelming, or else a burden to MFI staff

and senior management. It is critical to understand the MFI‘s own social perspective, values and context.

Many times, an MFI may already have SPM elements in place – such as a drop box for client suggestions

or a basic staff satisfaction poll during quarterly staff meetings. Sometimes, these things may simply

need to be strengthened or improved. This may even begin with taking an organisation‘s mission and

communicating it more effectively to staff – at meetings, through posters or displays, on stationary, or

during orientation training. It is often better, therefore, to start off with small, simple steps that an

organisation can take, and which build on existing systems wherever possible –such as adding a question

about whether clients are clear on terms and conditions in an internal audit field visit guide.

Monitoring and Communication

Likewise, beyond setting achievable goals, part of building a Social Performance Management culture is

integrating this into regular monitoring and communication. The KOGMA exercise, or building a

Strategic SPM Action Plan, is designed to set targets and assign responsibility so that monitoring

becomes possible. Ideally, the action plan becomes absorbed in the Strategic Business Planning

document and process, and is thus woven into the DNA and everyday functioning of the MFI. Again,

SPM should not be an activity apart, but integrated into the day-to-day operations and communication

systems (flyers, notices, etc.) of an institution in order to truly see results – both social and financial.



References

MicroSave Toolkits:

Mutesasira, Leonard, and Wright, Graham. ―Market Research for Microfinance Toolkit‖. MicroSave.

2004

Wright, Graham et al. ―Participatory Rapid Appraisal for Microfinance – A Toolkit‖. MicroSave.

MEDA/MicroSave. ―Human Resource Management Toolkit‖. MEDA / MicroSave 2007.

Cracknell, David, Parrott, Lisa and Wright, Graham. ―Customer Service Toolkit‖. MicroSave. 2005

Wright, Graham et al. ―Strategic Business Planning for Market-led Financial Institutions‖. MicroSave.

2007

Prakash, L.B. and Babu, K Somanadha. ―Management Information Systems – A Practical

Toolkit‖.MicroSave 2009

Jacobs, Ruth et al. “Board Governance Training for MFIs Toolkit‖. MEDA/MicroSave.August 2007

Other References:

Campion, Anita and Linder, Chris. ―Putting the ‗social‘ into performance management: A practice based

guide for microfinance‖. Institute of Development Studies. 2008

CERISE. SPI and Financial Performance Brief No.7: Studies of links between social (SPI) and financial

performance (Mix) for 42 Latin American MFIs‖. CERISE. 2008

Christen, Robert P and Al. Financial institutions with a double-bottom line: implications for the future of

microfinance. CGAP Occasional Paper, July 2004

Imp-Act. ―Social Performance Management in Microfinance: Guidelines‖. Institute of Development

Studies. 2005

Lascelles, David. ―Microfinance Banana Skins 2008 - Risk in a booming industry”, Centre for the Study

of Financial Innovation (CSFI ), sponsored by CitiGroup & CGAP. 2008

Microfinance Information Exchange (MIX). ―Social Performance Standards Report‖. MIX. 2009.

M-CRIL.―Technical Note #1: Estimating Client Exit Rate‖. M-CRIL. 2007

Nelson, Candace and Garber, Carter. ―Learning from Clients : Assessment Tools for

Microfinance Practitioners‖. The SEEP Network. DC.

Orlitzky, Schmidt and Rynes. ―Corporate Social and Financial Performance: A Meta-analysis‖. Sage

Publications. 2003

Simanowitz, Anton. ―Quality Audit Tool for Managing Social Performance Handbook‖. MicroFinance

Center. 2007.



Simanowitz et al, ―Social Performance Management in Microfinance Guidelines‖. Imp-Act Consortium /

IDS, 2005.

Sinha, Frances. ―Social Rating and Social Performance in Microfinance: Towards a Common

Framework‖. EDA/M-Cril, Argidius, and the SEEP Network. 2006

Woller, Gary. ―Social Audit Tool Handbook‖. USAID/Chemonics Intl. 2008



ANNEXURES



1. SPM Visit Programme Guide

Offices in: Kenya, Uganda and India

Associates in: Benin and Guatemala

www.MicroSave.net

[email protected]

SPM Visit Programme Guide Preparation:

1. CEO phone interview

a. Icebreaking

b. Overview of the MicroSave approach to SPM

c. What would you expect as a result of MicroSave‘s SPM visit?

d. Who will be the Champion and people we could work with and what are their contacts?

e. Request to ask staff to fill Staff Satisfaction questionnaire

f. Request for documents:

i. Operations Manual

ii. Strategic business plan

iii. HR Manual

iv. Internal Audit Manual (if possible)

2. Call to relevant people or SP Champion

a. Icebreaking and explanation of mission

b. Explanation of their roles, especially in co-moderating and/or translating

3. Follow-up Email

a. Restating objective of the assignment

b. Thanking for or Re-requesting documents

c. Sending Staff Satisfaction questionnaire (local language or English version to be translated

and filled by the staff)

d. Sending Overview of MicroSave SPM presentation

4. Review of Documents and identification of additional areas of inquiry

Ideally: One day preliminary work should be scheduled for the review of documents and the preparation

of additional questions

Day 1:

1. Overview presentation:

a. MicroSave‘s approach to SPM (15 minutes + 15 minutes discussion)

b. The areas/indicators we look at and the tools we use (10 minutes, a very rapid overview)

c. Mission analysis and phrasing of social objectives (30 minutes)

o This builds on the preliminary discussion with the CEO – e.g. ask the rest of the sr. mgmt

team to answer the question ―What social objectives do you feel Your MFI is fulfilling?‖





o The objective of the exercise is to link each objective with the relevant tool

o Staff satisfaction and ServQual (customer satisfaction) would be included by default

2. Staff interviews

Using the MicroSave questionnaire (or the Mix Reporting Framework), and on the basis of

preliminary review of documents. (If Mix Reporting is used then it can be filled up with the staff).

3. Preparation of Field Work

a. Detailed overview of the tools with accompanying staff

b. Explanation of basic rules of FGD moderation, and translation

c. Request of HR manager and staff involved with the group to remain neutral or not be

present during the FGD to avoid bias

4. Analysis of Staff Satisfaction Survey (SFS) -if filled earlier

In the ideal situation, the SFS would be handed over to MicroSave by the HR manager on Day 1.

MicroSave team would do a rapid analysis to identify questions on which to focus during the FGDs.

Day 2 and Day 3:

Field work using the relevant client appraisal, satisfaction, market research tools

Staff Satisfaction surveys are completed if it had not been done earlier. MicroSave staff would

take some time (max 20 minutes) to go over the surveys and identify areas to probe on.

End of Day review (or early morning next day)

Ideally, time would be dedicated to discuss FGD results and identify areas of comparison/focus

for the upcoming fieldwork day.

Day 4:

Reporting writing day:

Deliverables:

Debriefing PPT for Senior Management and other invitees (Board, Staff)

Executive summary : One page document summarising the findings and which can be left behind

(This constitutes the Report‘s skeleton and will be built upon to make the report)

MicroSave SPM Excel Sheet filled (if the latter then it is only for internal use to make the report)

SPM Report Draft

Day 5:

De-briefing presentation with development of action-plan using SPM KOGMA

o SPM KOGMA: the key SP objectives were defined on day one and MicroSave‘s visit

result guide the MFI towards improvement actions which would be recorded in an easy to

follow-up format including Actions/ Person in Charge/ Deadlines

o This will also allow to plan MicroSave‘s support assignments

Program at least 1, but preferably 2, follow-up visits to assess progress and to help with

implementation. Maybe at Month 3 and Month 6. These could be shorter visits of 2-3 days only.



2. Social Performance Management Indicators28

SOCIAL PERFORMANCE QUESTIONNAIRE

S# CATEGORY Answer Score Comments / Description / Examples

1.0 Mission Clarity

1.1 What is your MFI's mission?

1.2 Define what key terms mean

1.3 Specific social goals and objectives Describe:

1.4 Has there been any change in vision/mission? If yes, describe:

1.5 What is the poverty level of those clients that your

institution wishes to reach? Other:

1.6 Is the mission communicated to all levels? Describe:

1.7 What is target market of your institution? Other:

1.8 What development goals do you pursue through

the provision of financial & non-financial services? Other:

1.9 Are you meeting your social goals presently?

2.0 Governance

2.1 Is there a diversity of backgrounds and expertise

(social, financial and legal) on your board? Describe:

2.2 How many times a year do they meet?

2.3 Does your board monitor achievement of mission? Describe:

2.4 Do your social objectives influence the setting of

policy and strategic objectives at the board level? Examples:

3.0 Alignment of Systems

3.1 SBP:Do you set targets based on social

objectives? Describe:

3.2 SBP: Is performance against these objectives

monitored?

3.3 MIS: Does your MIS contain social indicators

linked to your mission? Describe If yes, describe:

3.4 MIS: Is social data analysed and used in decision-

making? If yes, give examples:

3.5 HR: Does your induction / training include an

emphasis on mission and social performance?

3.6 HR: On which areas of social performance does

training focus: preventing indebteness, clear communication of prices, proper client treatment..

Describe:

3.7 HR: Do your institution's staff performance

appraisals of staff relate to social objectives? If yes: which?

3.8 HR: Does your institution have in place a staff

incentives scheme related to its social objectives? If yes, describe:

3.9 Internal Audit and Control: Are social objectives and criteria integrated into the institution’s internal audit and control system?

If yes, describe how:

4.0 Social Goal - Client Services

4.1 Lending methodology

4.2 Number of products List:

4.3 Offers some form of insurance? Describe:

28

Adapted from MIX Market Social Performance Standards Report



4.4 Offers some form of savings? Describe:

4.5 Flexible services (terms, size, grace, top up) Describe:

5.0 Market Research on Clients

5.1 Has ways to understand Client Needs /

Preferences (market surveys, client feedback) Describe:

5.2 How often does your institution use such means

5.3 Tailors products to reflect those needs/preferences Examples:

6.0 Client Retention

6.1 Calculates and Reports Exit/Dropout Rate?

7.0 Responsibility to Clients: Client Protection

7.1 Do you have policies or practices designed to

protect clients? (privacy of client data, proper treatment, non-discrimination, etc.)

If so, describe how:

7.2 Measures to ensure Client Protection (training

staff, supervision, clear instruction in ops manual, staff performance review, financial literacy etc)

7.3 Does your institution ensure transparent

communication with clients about prices, terms and conditions of financial products?

How:

7.4 Do staff provide clients with receipts for payment Describe:

7.5 Does your institution have a practice/policy to

avoid client over-indebteness? Describe:

7.6 Does your institution ensure that appropriate

collections and delinquency management practices are followed?

Describe:

7.7 Does your institution have client feedback and

complaint mechanisms in place?

8.0 Cost of Services

8.1 How are interest rates on loans stated? How does this compare with competition?

8.2 Do you know the percentage of clients borrowing

from other institutions? ____%

8.3 Do you know the percentage of clients borrowing

from moneylenders? ____%

9.0 Non-financial Services

9.1 Does your institution offer any non-financial

services to meet clients other needs? List:

9.2 Links with partner organisations to provide NFS? Describe:

10.0 Responsibility to Staff

10.1 Do you have a clear HR policy to ensure fair and

equal treatment of staff?

10.2 Do you have a clear salary scale that reflects

competitive or market rates? Explain:

10.3 Does your institution provide staff with a full range

of benefits (health insurance, pension, etc.) Describe:

10.4 Do you monitor employee satisfaction? How? (If not, why not?)

10.5 Are there clear policies for staff development

(training plan, performance reviews, promotions)

10.6 How often do staff receive feedback and

performance reviews?

10.7 Does your institution monitor staff turnover rates?



10.8 Do you perform exit interviews with departing

staff? Why not?

11.0 Group Systems

11.1 Do all members participate in governance and

normal operations of the self-help group? Describe:

11.2 Are members, or member representatives,

involved or consulted in some way in the decision-making and management of your institution?

Describe:

11.3 Ensures accountability to its JLG/SHG groups? How?

11.4 Ensures accountability of group leaders to

members? How?

11.5 Regular rotation of group/centre leadership? Describe:

11.6 Any activities to build capacity of groups? Describe:

12.0 Gender Approach

12.1

Do you have any policies/strategies to address

gender inequality in society? (eg. through client

targeting, products or methodology)?

12.2

Do you have any gender policies/strategies to

address gender inequality in your institution (eg.

hiring, advancement; anti-sexual harassment)?

13.0 Responsibility to Community and Environment

13.1 Has a policy for responsibility to the community

(eg. job creation, no child labour)? Describe:

13.2 Undertakes other activities or initiatives for the

benefit of the community? Examples:

13.3 Has a formal/informal policy for responsibility to

the environment for the type of client enterprises/activities for which you give loans?

Describe:

13.4 Do you have an environmental policy for the

internal functioning of your MFI (eg. water/electricity conservation)

Describe:

14.0 Social Goal - Outreach

14.1 There is a clear selection process for villages? Describe:

14.2 Your institution has a clear client targeting strategy

(eg. eligibility criteria)?

14.3 If yes or partiallly, are you reaching who you think

you are? How do you know?

14.4 Does your institution measure the poverty level of

entering / recently joined clients?

14.5 If yes or partially, how does it measure poverty?

15.0 Social Goal - Impact

15.1 Does your institution track the changes in poverty

over time in its clients? 0 How?

15.2 Does your institution track any other changes in

socio-economic outcomes of clients? 0

15.3 Which of the following does it track?



3. Social Performance Management (SPM) Indicator List

MicroSave SPM Indicators

S.No. MicroSave SPM Indicators (1) Remarks

Customer Satisfaction

1 Client Retention Rate Higher client retention rate not only indicates high

customer satisfaction levels, but is one predictor of

strong financial performance (active clients at the end

of the period/

active clients at the beginning of the period+ new

clients)

2 Client Dropout Rate Gives an indication of what percentage of clients are

dropping out. Requires MFI to define "dropout" (1-

client retention rate)

3 Client Satisfaction Level (score) Measures the level of client satisfaction directly based

on survey

4 Effective Annual Interest Rate (EIR) Shows the real cost of borrowing from an institution

Staff Satisfaction

1 Staff Retention Rate May indicate level staff satisfaction levels, but is one

predictor of sustainability and higher financial

performance (active staff at end of period/active staff at

beg. of period+new staff)

2 Staff Turnover Gives an indication of what percentage of staff are

leaving the organisation (1-staff retention rate)

3 Staff Satisfaction Level (score) Measures the level of staff satisfaction directly based on

survey

4 Average Salary per Field Staff Reflects the compensation structure of the MFI and may

be compared with Cost of Living to assess its fairness

5 Average Salary per Managerial Staff Reflects the compensation structure of the MFI and may

be compared with Cost of Living to assess its fairness

6 Lowest to Highest Salary Ratio Reflects the compensation structure of the MFI and

shows the care SMT and Board takes of the lower level

staff

Client Outreach

1 Outreach Ratio Proxy for depth of outreach relative to GDP per capita

2 Average Starting Loan Size Proxy for depth of outreach (takes out bias effect of

long-term clients graduating to higher cycles)

3 Average Loan Size Proxy for of depth of outreach (effected by long-term

clients)



www.MicroSave.net

[email protected]





4 Percentage of Rural Clients/Total Clients Measures the efficacy of client targeting, especially if

the mandate is to target rural clients

5 Percentage of Slum-dwelling Clients/Total

Clients

Measures the efficacy of client targeting, especially if

the mandate is to target urban poor

6 Average Poverty Level Measures the average economic profile of clients using

$1/day, PPI, national poverty level standards

7 Remote Customers Ratio Some parameters like distance from the nearest block/

nearest bank branch etc. may be used

8 Percentage of SC/ST/OBC Clients Measures the efficacy of client targeting and

inclusiveness if the mandate is to target vulnerable

populations (Scheduled Castes / Scheduled Tribes/Other

Backward Castes)

9 Previously Unbanked Ratio Measures percentage of clients who were previously

unbanked

Gender

1 Gender Ratio Determine the percentage of female clients accessing

services

2 Female Staff to Female

Management/Board ratio

Determine how accessible higher positions in MFI are

to female employees

Outputs

1 Percentage of clients accessing products

which may improve the quality of life

E.g. Education Loan, Health Loan, Emergency Loan,

NFS etc. Measures the performance of MFI on mission

if it aims to improve the quality of life

2 Insurance payout to actual expense ratio Measures the efficacy of insurance if mission/MFI is

interested to reduce vulnerability

3 Percentage of clients accessing non-

financial services

Measures the number of clients benefitting from NFS

such as health, business skills, education, other training,

etc.

Outcomes and Impact*

1 Average Savings per Client (and per year) May show the client's capacity to save (even if in bank,

etc.)

2 Average Education Level of Client's

Wards

Measures the performance of MFI on mission if it aims

to improve the quality of life

3 Average Education Level of Client's

Daughters

Measures the performance relative to MFI's mission if it

aims to improve the quality of life

4 Child Enrollment Ratio Measures the performance relative to MFI's mission if it

aims to improve the quality of life

5 Mortality rate among Clients Measures the performance of MFI on mission if it aims


6 Average marriage age of Clients'

Daughters

Measures the performance of MFI on mission if it aims


(1) Adapted from MIX Market "Social Performance Standards Report", Axel de Ville (ADA), Kurt Moors

(BRS), EMP 2008,MicroRate‘s ―Performance Indicators for Microfinance Institutions‖, M-CRIL and CGAP

* Impact can only be assumed if indicators are measured over time, and compared against a control group



Additional MIX Market Social Indicators

S.No. Additional MIX Market Social Indicators (2)

Client Outreach

1

What percentage of all entering/recently joined clients is estimated to be below the poverty line,

at the end of the reporting year?

2

What percentage of all entering/recently joined clients are estimated to be in the bottom 50% of

the poverty line), at the end of the reporting year?

3

Of your clients who have been with your institution for 3 years, what percentage is estimated to

be below the poverty line?

4


be below the poverty line?

Client Protection

1 Percentage of your clients that are borrowing from other institutions

2 Percentage of your clients that are borrowing from money lenders

Client Outputs

1 Number/Percentage of Clients who received enterprise services

2 Number/Percentage of Clients who received education services

3 Number/Percentage of Clients who received health services

4 Number/Percentage of Clients who received women's empowerment services

Client Outcomes / Impact*

1 Percentage of clients who have graduated from group loans, during the reporting year:

2 Enterprises financed and employment generation

3 Enterprises financed

4 Number/Percentage of Start-up enterprises

5 People self-employed (including household) in financed enterprises

6 Hired workers (non-household) in financed enterprises

7 Number/Percentage of full-time self-employed workers

8 Number/Percentage of full-time hired workers

9 Number/Percentage of part-time self-employed workers

10 Number/Percentage of part-time hired workers

11 Percentage of clients' daughters of primary school age who are attending primary school

regularly (all vs. old clients - more than 3 years)

12

Percentage of clients' daughters of secondary school age who are attending secondary school

regularly (all vs. old clients - more than 3 years)

13


be above the poverty line now?

14

What percentage of these clients (now above the poverty line) were below the poverty line when

they joined the institution?

15


have moved above the poverty line

16

What percentage of these clients (now above the poverty line) were below the poverty line when

they joined the institution?

(2) MIX Market "Social Performance Standards Report"

* Impact can only be assumed if indicators are measured over time, and compared against a control group





www.MicroSave.net

[email protected]

4. Inventory of Staff and Client Interaction Tools

Staff Interaction Tools

1. Senior Management Focus Group and Interview guides

i. Interview Guide for CEO, Operations Manager

ii. Interview Guide for HR Manager

iii. Interview Guide for MIS Manager

iv. Interview Guide for Branch Manager

v. Interview Guide for Board Members

Objectives:

Identify whether Social Objectives are defined

Identify if Governance and Management policies are aligned with mission and social objectives

2. Staff Satisfaction Survey (with Analysis Worksheet)

Objectives:

Assess staff satisfaction level and the areas where the MFI needs to improve its HR policies.

3. Staff Focus Group Discussion Guide

Objectives:

Assess the level of awareness about social objectives

Assess the level of customer protection in practice

Probe on the areas of staff satisfaction/dissatisfaction

Client Interaction Tools

Client Outreach, Dropout and Customer Service FGDs

Service Quality Questionnaire (ServQual)

Relative Preference Ranking / Product Attribute Ranking

Customer Service Attribute Ranking

Simple Wealth Ranking

Empowerment FGD

Household Generation, Receipt and Spending of Cash Analysis





5. SPM Glossary

This Social Performance Management (SPM) Glossary includes terms and definitions necessary to understand

and discuss the social performance of microfinance institutions. It is based on a selection of key terms taken

from a similar, more in-depth guide developed by SEEP.

Audit An examination of the records, statements, systems, and procedures of an organization

together with its stated claims for performance. This is typically undertaken with a view

to verifying the quality, meaningfulness (e.g., accuracy, validity, compliance, inclusiveness,

completeness), and other aspects of the claimed performance of the organization.

Client Assessment The process of gathering and assessing information about clients. Ideally, information

includes clients‘ perspectives and experiences. It includes quantitative and qualitative

methodologies.

Client Dropout The share of an organization‘s clients that ceases to purchase its products or services.

Client Monitoring The routine process of tracking changes in clients‘ status or of providing important

descriptive information about clients. It may be quantitative or qualitative in nature.

Client Retention The share of an organization‘s clients that continue to purchase its products or services.

Client Satisfaction An organizational measure of the extent to which the needs, wants, and expectations of

clients are met.

Code of Conduct A set of principles indicating how an organization expects its members to act. It is

frequently general, and enforcement is left to the discretion of the organization.

Depth of Outreach The degree to which an organization reaches poor people with financial services.

Double Bottom-Line A framework for measuring and reporting an organization‘s performance against financial

and social standards.

Financial Performance Organizational performance as measured by financial metrics, such as profit, net

operating margin, return on investment, return on assets, or operational efficiency.

Financial Return A return that enhances the stock of financial capital.

Impact Those organizational outcomes that can be attributed to the activity of the organization

above and beyond what would have happened anyway.

Impact Assessment A research activity undertaken with the objective of attributing observed outcomes to

organizational activity. Impact is determined by the counterfactual. Determining the counterfactual in turn

requires comparing a treatment group to a valid control group.

Impact Monitoring The periodic or routine tracking of selected client outcomes. In contrast to impact

assessment, impact monitoring does not attempt to attribute observed impacts to organizational activity.

Internal Processes Operational processes that transform inputs into outputs, outcomes, and impacts. Internal

processes include, for example, mission identification, communication, and reinforcement;

management information systems; incentive systems; staff hiring and training; customer

service; and strategic planning.



Market Research The systematic collection, analysis, and reporting of data about the market (customers,

competitors, and other market actors) and its preferences, opinions, and trends.

Mission The core purpose of an organization that defines why it exists, and what it does for whom.

Mission Alignment The alignment of an organization‘s internal processes, policies, culture, incentives, and

products and services with its mission.

Non-financial Services Services offered by an organization, either alone or in collaboration with other

organizations, with the main objective of improving clients‘ business performance, socioeconomic

well-being, access to services, or social standing. Examples include business development services, health care,

literacy or other life skills training, community participation, or political voice or other type of empowerment.

Such services may be linked to, bundled with or provided separately from financial services.

Objective A measurable statement about the end result that an organization is expected to accomplish

in a given period of time. Objectives flow from goals, the purpose of an organization, or the organization‘s

overall mission.

Outcome The change to the client population and its environment the organization is trying to

make, which could include attitudes, behaviors, knowledge, skills, status, or socio-economic

well-being. (If outcomes can be statistically attributed to the organization‘s activities, they

become impacts.)

Participatory Rapid Appraisal (PRA) A label given to a family of participatory assessment approaches and

methods that emphasize local knowledge and enable local people to make their own appraisals, analyses, and

plans. PRA uses group animation and exercises to facilitate information sharing,

analysis, and action among stakeholders. Although originally developed for use in rural areas, PRA has been

employed successfully in a variety of settings.

Poverty The state of one who lacks a usual or socially acceptable amount of money, material

possessions, standard of living, or access to basic needs and/or services. It may also be

defined or characterized by persons who suffer from social, economic, or political exclusion,

marginalization, or powerlessness. Two common measures of poverty include (1) persons

living below the poverty line established by the national government, or (2) persons living

on less than US $2.00 per day in daily per-capita expenditures—equal to $2.15 per day per

capita in purchasing power parities at 1993 prices.

Rating Refers to the external process of assessing an organization‘s performance. This is distinct

from an internal or external audit, which refers to a process of verification.

Social Accountability The responsibility of an organization to provide evidence to stakeholders that its

operations and performance are in conformance with its social mission and obligations.

Social Accounting The process by which an organization monitors, evaluates, and accounts for its social

performance in relation to its aims and those of its stakeholders.

Social and Ethical Performance The impact of an organization on its stakeholders, particularly in those

dimensions in which they hold the organization accountable. It refers to the systems and individual behavior

within an organization, as well as to the direct and indirect impact of an organization‘s

activities on stakeholders.



Social Audit An examination of the records, statements, internal processes, and procedures of an organization

related to its social performance. It is undertaken with a view to providing assurance as to the quality and

meaningfulness of the organization‘s claimed social performance.

Social Enterprise An organization that uses business solutions to accomplish social goals. Social objectives are

its primary driver, rather than being driven by the need to maximize profit for shareholders and owners.

Social Entrepreneur A person who uses entrepreneurial skills to address social and environmental problems. It

may involve revenue generation, although this is not required.

Social Impact The change in net social welfare due to an organization‘s activities. It includes the wider

local, national, and global communities.

Social-Impact Causal Chain A model that explains how impact is created. It begins with organizational inputs,

which are transformed via internal processes into outputs. Outputs in turn produce outcomes, and outcomes

produce impacts.

Social Investment Investment that aligns an individual‘s or an organization‘s investment policies with its social

values, that is made principally for the purpose of earning a social return.

Social Investor A person or organization that engages in social investing.

Socially Responsible Business A for-profit business that operates in an ethical manner and demonstrates

concern and action for the public good.

Social Mission The core social purpose of an organization.

Social Objectives Objectives related to the social mission and the corresponding social performance of an

organization.

Social Organization An organization with the primary purpose of pursuing and achieving social objectives.

Social Performance The effective translation of an organization‘s social mission into practice. Social

performance is not just about measuring the outcomes, but also about the actions and corrective measures that

are being taken to bring about those outcomes.

Social Performance Assessment (SPA)

The process by which an organization measures its social performance relative to its social mission and

objectives and to those of key stakeholders. Measurement may focus at any of the steps in the social impact

causal chain.

Social Performance Management (SPM)

The process of translating mission into practice, including setting social objectives, tracking social performance

and using this information to improve practice.

Social Rating An independent assessment of an organization‘s social performance using a standardized

rating scale. The social rating process and rating scale may parallel those used for financial rating.

Social Reporting Public disclosure by an organization of its social performance.

Socially Responsible Investment (SRI) Investment that aligns an individual‘s or an organization‘s investment

policies with its social values, that is made principally for the purpose of earning a financial return.



Social Return The net impact on society resulting from an organization‘s operations.

Social Return on Investment (SROI) Monetary summary of an organization‘s social return from a capital

investment. A term originating from return on investment (ROI) used by traditional investors.

Social Venture Capital Equity investment with the goal of social as well as financial return on investments. It

is typically longer term than a loan, with risk being shared more equally between the investor and the

organization invested in. Social-venture-capital financial rates of return are often

not as high as for conventional venture capital

Strategic Objective An elaboration of the mission statement that develops with greater specificity how the

organization will carry out its mission. The objective may be of a programmatic, policy, or

management nature, and is expressed in a manner that allows a future assessment to be

made of whether the objective was or is being achieved. See Strategic Goal.

Strategic Plan A document used by an organization to align its organization and budget structure with

organizational priorities, mission, and strategic objectives.

Strategic Targets The numbers to achieve on each strategic objective by a specified time.

Transparency The openness and willingness to accept public scrutiny. Transparency exists when there is open

public access to information produced by the organization, when the information is

sufficient and reliable, and when there exists sufficient means of communication between

the organization and its stakeholders

Triple Bottom Line A framework for measuring and reporting an organization‘s performance against financial,

social, and environmental standards.

Values Deeply held beliefs within organizations that may be stated or unstated and which are

demonstrated through the day-to-day behaviors of its employees.

Vision Long-term goal of strategy. It answers the question, ―How would society be different if our

mission were realized.‖

SOCIAL PERFORMANCE MANAGEMENT (SPM) …...MicroSave – Market-led solutions for financial services...

Documents

Transcript of SOCIAL PERFORMANCE MANAGEMENT (SPM) …...MicroSave – Market-led solutions for financial services...