MicroSave – Market-led solutions for financial services
Offices across Africa, Asia
and Latin America
www.MicroSave.net
SOCIAL PERFORMANCE MANAGEMENT (SPM)
TOOLKIT MANUAL
Prepared By:
Matt Leonard
With: Chris Linder, Meryem E. Faris, Neeraj Lal and Alice-Mary Meggs
November 2009
Social Performance Management Toolkit Manual 2
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 1
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
Social Performance Management Toolkit Manual 2
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 3
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 4
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 5
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 6
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 7
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 8
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 9
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 10
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 11
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 12
MicroSave – Market-led solutions for financial services
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/
Social Performance Management Toolkit Manual 13
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 14
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 15
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 16
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 17
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 18
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 19
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 20
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 21
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 22
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 23
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 24
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 25
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 26
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 27
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 28
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 29
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 30
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 31
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 32
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 33
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 34
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 35
MicroSave – Market-led solutions for financial services
• 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
Social Performance Management Toolkit Manual 36
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 37
MicroSave – Market-led solutions for financial services
• 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
Social Performance Management Toolkit Manual 38
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 39
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 40
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 41
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 42
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 43
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 44
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 45
MicroSave – Market-led solutions for financial services
ANNEXURES
Social Performance Management Toolkit Manual 46
MicroSave – Market-led solutions for financial services
1. SPM Visit Programme Guide
Offices in: Kenya, Uganda and India
Associates in: Benin and Guatemala
www.MicroSave.net
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?‖
Social Performance Management Toolkit Manual 47
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 48
MicroSave – Market-led solutions for financial services
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
Social Performance Management Toolkit Manual 49
MicroSave – Market-led solutions for financial services
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?
Social Performance Management Toolkit Manual 50
MicroSave – Market-led solutions for financial services
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?
Social Performance Management Toolkit Manual 51
MicroSave – Market-led solutions for financial services
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)
Offices in: Kenya, Uganda and India
Associates in: Benin and Guatemala
www.MicroSave.net
Social Performance Management Toolkit Manual 52
MicroSave – Market-led solutions for financial services
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
to improve the quality of life
6 Average marriage age of Clients'
Daughters
Measures the performance of MFI on mission if it aims
to improve the quality of life
(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
Social Performance Management Toolkit Manual 53
MicroSave – Market-led solutions for financial services
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
Of your clients who have been with your institution for 5 years, what percentage is estimated to
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
Of your clients who have been with your institution for 3 years, what percentage is estimated to
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
Of your clients who have been with your institution for 5 years, what percentage is estimated to
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
Social Performance Management Toolkit Manual 54
MicroSave – Market-led solutions for financial services
Offices in: Kenya, Uganda and India
Associates in: Benin and Guatemala
www.MicroSave.net
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
Social Performance Management Toolkit Manual 55
MicroSave – Market-led solutions for financial services
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.
Social Performance Management Toolkit Manual 56
MicroSave – Market-led solutions for financial services
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 Performance Management Toolkit Manual 57
MicroSave – Market-led solutions for financial services
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 Performance Management Toolkit Manual 58
MicroSave – Market-led solutions for financial services
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.‖