Putting the ‘Social’ Putting the ‘Social’ into Performance into Performance Management in Management in MicrofinanceMicrofinance

Lalaine M. JoyasLalaine M. Joyas

Microfinance Council of the Philippines, Inc. Microfinance Council of the Philippines, Inc. (MCPI)(MCPI)

PACAP Microfinance Development Forum30 January 2009

Broader context…• Increasingly

commercial approach to microfinance

• Professionalization of the sector

• Focus on social performance: – Has it been lost? – Is it taken for granted? – Is there “mission drift”?

Social PerformanceSocial Performance

The effective translation of one’s social mission into practice, in line with accepted

social values that relate to…– reaching poorer and excluded clients;– improving the lives of clients and their families;– widening the range of opportunities for

communities.

The SP Common The SP Common FrameworkFramework

ContextContext

Country and regional development indicators (from secondary sources)Country and regional development indicators (from secondary sources)

Microfinance institution profile and financial servicesMicrofinance institution profile and financial services

Process: Policies and Strategies Process: Policies and Strategies

Social performance management (SPM)—mission clarity; alignment of Social performance management (SPM)—mission clarity; alignment of systems; decision makingsystems; decision making

Social responsibility—to clients (SR-CL), including, where applicable, gender Social responsibility—to clients (SR-CL), including, where applicable, gender approach (GA), member governance (MG), non-financial services (NFS) approach (GA), member governance (MG), non-financial services (NFS) –to community (SR-Cm);to community (SR-Cm);–to staff (SR-St); and to staff (SR-St); and –to environment (SR-Env), from lenders to small enterprisesto environment (SR-Env), from lenders to small enterprises

Results: Achievement of Social Goals (SG)Results: Achievement of Social Goals (SG)

Outreach (SG-Or): Depth and breadth, may include hired (non-family) Outreach (SG-Or): Depth and breadth, may include hired (non-family) employment) employment)

Financial services (SG-Sv): Variety, appropriateness, and transparency Financial services (SG-Sv): Variety, appropriateness, and transparency

Change (SG-Ch): Outcomes and impactChange (SG-Ch): Outcomes and impact

Social Performance Social Performance FrameworkFramework

• Intent and DesignIntent and Design

• Internal Systems & ActivitiesInternal Systems & Activities

• OutputOutput

• Outcome/ImpactOutcome/Impact

Dimensions of Social Dimensions of Social PerformancePerformance

INTENT AND DESIGNINTENT AND DESIGNWhat is the mission of the institution? Does it have clear social What is the mission of the institution? Does it have clear social objectives?objectives?

INTERNAL SYSTEMS & ACTIVITIESINTERNAL SYSTEMS & ACTIVITIESWhat activities will the institution undertake to achieve its social What activities will the institution undertake to achieve its social mission?mission?

Are systems designed and in place to achieve those objectives?Are systems designed and in place to achieve those objectives?

OUTPUTOUTPUTDoes the institution serve poor and very poor people?Does the institution serve poor and very poor people?Are the products designed to meet their needs? Are the products designed to meet their needs?

OUTCOMEOUTCOMEHave clients experienced social and economic improvements?Have clients experienced social and economic improvements?

IMPACTIMPACTCan these improvements be attributed to institutional activities?Can these improvements be attributed to institutional activities?

Social Performance Social Performance PathwayPathway

Social Performance is defined in terms of both processes and results

Translating mission into practice is a deliberate and intentional process

Desired change in the lives of clients is the goal of this process and it is not automatic

Social Performance Social Performance ManagementManagement

The process of translating mission into practice, including setting

social objectives, tracking Social Performance, and using

information to improve practice.

• Developing social goals and Developing social goals and objectivesobjectives

• Monitoring and assessing performance

• Improving operations

Social Performance Social Performance Management ComponentsManagement Components

SMART ObjectivesSMART Objectives

SSpecific MMeasurable AAchievable RRelevant

TTime-bound

Types of Social Goals Types of Social Goals

• Reaching target clientsWho will the MFI reach?

• Meeting target-client needs How will the MFI meet the needs of its clients?

• Change in target clients’ lives What positive changes will the MFI contribute

to in the lives of its target clients?

People’s Bank Case Study: People’s Bank Case Study: Social Goals and ObjectivesSocial Goals and Objectives

Social Goals Social Objectives

Reaching target clients:Poor women and their families

• In each of the next 3 years, deepen outreach of services to poor households, reaching at least 50% “poor” and 10% “very poor” among new clients

Meeting target- client needs:Providing quality financial services

• Reduce client exit rate by 20% in the next 3 years

• Increase client satisfaction by 15% in the next 3 years

Change in target clients’ lives: Improving their well-being

• In each of the next 3 years, reduce poverty level of clients and their families by moving at least 50% of clients up one level of the poverty scale

• Developing social goals and objectives

• Monitoring and assessing Monitoring and assessing performanceperformance

• Improving operations

Social Performance Social Performance Management ComponentsManagement Components

Information systemInformation systemAppropriate & cost effective information – fit for purpose?

Progress out of Poverty Index (PPI) – integrated into MIS:• Data from all clients/every loan cycle• Segmentation and performance management

• Developing social goals and objectives

• Monitoring and assessing performance

• Improving operations Improving operations

Social Performance Social Performance Management ComponentsManagement Components

Social Performance Social Performance Management Management …in practice…in practice

Getting StartedGetting Started

0

5

10

15

20

25

30

35

40

45

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Clients

Social Performance Social Performance Management Management …in practice…in practice

Aligning StrategyAligning Strategy

Social Performance Social Performance Management Management …in practice…in practice

Aligning Management SystemAligning Management System

Social Performance Social Performance Management Management …in practice…in practice

Aligning Management SystemAligning Management System

Leadership and cultureLeadership and cultureDoes ‘passion for mission’ compensate for lack of systems? • Organisational leadership and culture is key• Commitment and leadership is not enough – needs to be systematised• Many of partners have strong founder- leaders

Social Performance Social Performance Management (SPM):Management (SPM):

…what are the benefits? and …what are the benefits? and

what are the costs? what are the costs?

Benefits…Benefits…

• More appropriate products and services for clients

• Better service for clients• Higher retention of clients• Program growth• Lower operational costs• Demonstrate Social Performance to

external stakeholders

Costs…Costs…

The cost of what?• Management processes• Information systems• Product development: (Health protection: $15,000)• Mini-surveys: Costs part of operations• Monitoring: Costs part of operations• Market research (Health protection: $3,000)• Impact assessments: $4,500; $20,000

Tools for Assessing Social Tools for Assessing Social Performance Performance

Intent and Design

Internal systems/ activities

Outputs

Outcomes

Impacts

CERISE SPIMFC Social Audit

SPA ACCION SOCIALPlanet Rating

Triodos/GRI - TSFFMO E&S Risk

Audit

M-CRILMicrofinanz

a Rating

CGAP/Ford/Grameen PPI

USAID/IRIS PATFINCA FCATOxfam Novib

SEEP/AIMS tools

Common Framework for Social Performance Assessment