Innovations in Managing Social Performance

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  • Notes R enewed interest in the social purpose of microfinance stems from a recognition that Microfinance is more than just the delivery of financial services poor people, but was intended to create social values: Improving the lives of poor and excluded clients and their families Widening the range of opportunities for communities 2. Social performance is defined as the effective translation of an institution's social mission into practice (actions, corrective measures, outcomes). Social performance is therefore both the results achieved (in terms of reaching target clients, meeting client needs and change), and the process by which these are created (the actions and corrective measures that are taken to bring about those outcomes). The SP pathway describes the MFI intentions, design and results: Intent Strategy: mission, goals, objectives Design Architecture for change Systems: organization’s policies, procedures, processes aligned with the MFI mission. This includes its information system, appraisal, reward (financial and non-financial incentives), and communication. Delivery of services: that appropriate service design and delivery is what links our social mission, goals and objectives with desired social outcomes. An important aspect of both organizational strategy and outcomes is the range and quality of the services it sets out to provide, and how this fits with the needs and priorities of actual and potential clients. If an MFI is to be effective, appropriate and quality services are essential. By segmenting their clientele, MFIs are better able to understand and meet the specific needs and priorities of different client groups by designing appropriate services Results Reaching target clients: Outreach to the target population. Serving increasing number of poor and excluded people sustainably: expanding and deepening outreach to poorer people Meeting client needs: Improving the quality and appropriateness of financial services available to the target clients through the systematic assessment of their specific needs Change: MFIs have social objectives in terms of changes they wish to see in the status of clients, families and communities. Creating benefits for the clients of microfinance, their families and communities relating to social capital and social links, assets, reduction in vulnerability, income, access to services, and fulfilment of basic needs. Social responsibility: In addition social performance is concerned with the way in which an organisation does business in relation to norms and expectations of its staff and the community. It is therefore concerns with improving the social responsibility of the MFI in relation to its employees, clients, the community in which it operates and the broader industry to which it belongs. 3. There is a distinction between those pathway elements within and without the control of the MFI. For example, we can control our mission, objectives and goals, as well as our systems, service design and delivery. Additionally, we have control over whether we reach target clients and meet their needs, and MFIs can have influence over the change in its clients lives. Therefore it is important to align our systems and services to our mission such that we are more likely to fulfil that mission.
  • Notes 1. Strengthening social performance does not happen haphazardly: like financial performance, it requires a deliberate and systematic approach. Given many competing institutional priorities and the fact that most MFIs’ performance management is biased towards financial objectives and performance, day-to-day decision-making usually favours financial rather than social performance. 2. "Managing" social performance refers to the process of measuring, analyzing, reporting and using social performance information to achieve social outcomes and impacts. To be useful, this information needs to be integrated into MFIs’ operations—systems, processes, programmatic design and value systems. In other words, it must be institutionalized.
  • Cécile – 15 - 11h55-12h
  • Notes Draft definitions - Social audit : verifies an institution's (a) achievement against its self-defined social performance; and adherence to industry-standard (b) principles and practices of SPM and (c) treatment of (i) the environment (ii) employees and (iii) clients. Social rating: analyzes and assesses the status of an institution for public and private (social) investors and policy makers, based on an audit of an institution's adherence to (a) industry-standard principles and practices of Social Performance Management; (b) industry-standard treatment of (i) the environment, (ii) employees and (iii) clients; (c) institution-defined social performance; and (d) industry-defined social performance outcomes (e.g., MDGs). Social performance assessment is the process by which the microfinance institutions and external assessors judge an MFI’s demonstrated intent, institutional design, management processes to achieve results in terms of reaching target clients, meeting their needs and effecting positive change in their lives. Such assessment is used by internal stakeholders to improve practices and by external stakeholders to monitor and benchmark performance A number of tools have been developed or are currently being developed to allow for the monitoring and assessment of different aspects of social performance, including a variety of poverty assessment tools, outcome measurement tools, and social auditing and rating tools. Process Intent and design - a number of tools assess whether an organisation has thought through and designed its program in terms of the social objectives. These tools define a number of questions in relation to each dimension of social performance, but mostly do not look at the actual results achieved E ffectiveness in managing social performance - to effectively translate mission into practice. Methods are available to assess both the systems for managing social performance, and the effectiveness of these systems in the leading to appropriate decision making that balances both social and financial performance Results: Reaching target clients – An MFI might target a wide range of clients, but the assessment of social performance is primarily concerned with outreach to poor people. A number of tools are available to assess poverty levels of clients, and to look at other characteristics of MFI clients. Meeting target clients’ needs – This links to the increasing recognition that Microfinance needs to be more market orientated, and this implies understanding that different clients have different needs. A lot of tools have been developed to help understand and assess clients e.g. AIMS, MicroSave . Effecting desired change - change generally relates to the broad development goals of microfinance.
  • Notes There is a tension between the need for simple standardised reporting of social performance, and the very different contexts and objectives of MFIs. We can rate or audit social performance, looking at the effectiveness of the organisation in reaching their target clients, meeting client needs, and achieving the changes they desire. This looks at both the intent and design of the organisation and the results achieved, but in relation to their own stated objectives. The assessment therefore is whether an organisation is effective in realizing its mission or not. We can assess the intent and design of an organisation in relation to agreed norms or standards of a “ good” MFI - this is the approach taken by CERISE and AMAP We can assess the actual results are achieved by an MFI against agreed standardised indicators such as level of poverty outreach in relation to the US dollar per day poverty line. There are two approaches to this: setting specific standardised indicators e.g. percentage of children attending primary school setting broad standardised indicators, and allowing for local definition of relevant specific indicators e.g. quality of education
  • Makes microfinance more deliberate and effective Allows performance and trade-offs to be managed Allows for better investment decisions by donors
  • Cécile – 15 - 11h55-12h
  • --Social Performance Resource Center --Training Programs in Social Performance Management List upcoming dates and locations…..this can be updated before each presentation. Will this be listed on the Imp-Act website and the Resource center? Notes: 1. The SP Resource Center provides links to all of the above mentioned initiatives (in Bobbi’s chart). You can talk about the training of the Imp-Act Consortium and next available dates/locations.
  • --Social Performance Resource Center --Training Programs in Social Performance Management List upcoming dates and locations…..this can be updated before each presentation. Will this be listed on the Imp-Act website and the Resource center? Notes: 1. The SP Resource Center provides links to all of the above mentioned initiatives (in Bobbi’s chart). You can talk about the training of the Imp-Act Consortium and next available dates/locations.
  • Innovations in Managing Social Performance

    1. 1. Innovations in Managing Social Performance based on communication prepared by Social Performance Task Force Gaamaa Hishigsuren Director of Research, IDEAS Member of ImpAct consortium and SP Task force [email_address]
    2. 2. Overview <ul><li>What is social performance? </li></ul><ul><li>Why is social performance important? </li></ul><ul><li>What does it mean to manage performance? </li></ul><ul><li>How can MFIs manage social performance? </li></ul><ul><li>What role does assessment play? </li></ul><ul><li>How can we assess social performance? </li></ul><ul><li>How do management, assessment, reporting relate? </li></ul><ul><li>Is social performance a costly diversion? </li></ul><ul><li>What are some efforts to Assess and Manage? </li></ul><ul><li>Where to go for further information? </li></ul>Introduction Managing Social Performance Assessment and Reporting Resources and Next Steps
    3. 3. <ul><li>The effective translation of an institution’s mission into practice in line with their values </li></ul><ul><ul><li>Process : actions and corrective measures </li></ul></ul><ul><ul><li>Results : reaching target clients, meeting client needs, change </li></ul></ul><ul><ul><li>Values : Relations w/employees, clients, community and the environment </li></ul></ul><ul><ul><li>Neither incidental nor implicit </li></ul></ul>What is Social Performance? . Intent Operations Results
    4. 4. Why Is Social Performance Important? <ul><li>SP is an end to financial services which is means </li></ul><ul><li>It demonstrates intention of investors and MFIs </li></ul><ul><li>It delivers on potential of microfinance to contribute to the MDGs * </li></ul><ul><ul><li>Reduce extreme poverty and </li></ul></ul><ul><ul><li>hunger </li></ul></ul><ul><ul><li>Improve primary education </li></ul></ul><ul><ul><li>Promote gender equality </li></ul></ul><ul><ul><li>and empower women </li></ul></ul><ul><ul><li>Improve health </li></ul></ul>. *Millennium Development Goals Social Performance Financial Performance Mission
    5. 5. What Does It Mean to Manage Performance? <ul><li>Microfinance institutions have a mission that sets double bottom line: social and financial goals. Therefore, performance management </li></ul><ul><li>concerns both social and financial </li></ul><ul><li>performance </li></ul><ul><li>Performance must be defined and </li></ul><ul><li>measured </li></ul><ul><ul><li>What is explicitly defined and </li></ul></ul><ul><ul><li>measured gets managed </li></ul></ul><ul><ul><li>Need to define desired </li></ul></ul><ul><ul><li>performance </li></ul></ul><ul><ul><li>Need to measure against </li></ul></ul><ul><ul><li>desired performance </li></ul></ul>. Performance Management Social Performance Financial Performance Mission
    6. 6. How Can MFIs Manage Social Performance? <ul><li>SPM is a management approach not one ‘tool’ or list of indicators. </li></ul><ul><li>Apply social lens to performance management </li></ul><ul><ul><li>Translate mission into guiding goals and objectives </li></ul></ul><ul><ul><li>Monitor and assess performance towards goals and objectives </li></ul></ul><ul><ul><li>Use information to improve practice </li></ul></ul><ul><li>Build on existing systems and processes </li></ul><ul><ul><li>Appraisal, reward, communication </li></ul></ul><ul><ul><li>Information system to monitor & assess performance </li></ul></ul><ul><ul><li>Decision-making processes </li></ul></ul>Social Performance Pathway Monitoring Use Intent Design Results Social Performance Pathway Assessment Intent Operations Results
    7. 7. Managing Social Performance: ImpAct consortium <ul><li>Three main components : </li></ul><ul><li>Defining clearly social performance goals and objectives based on organization’s mission and strategy </li></ul><ul><li>Assessing and monitoring social performance outcomes through integrated information system </li></ul><ul><li>Using the info in management decision making to improve social performance </li></ul>
    8. 8. What Role Does Assessment Play? <ul><li>Used by Internal and external stakeholders </li></ul><ul><ul><li>Improve practice </li></ul></ul><ul><ul><ul><li>Outreach, </li></ul></ul></ul><ul><ul><ul><li>Products and services </li></ul></ul></ul><ul><ul><ul><li>Change in people’s lives </li></ul></ul></ul><ul><ul><li>Monitor and benchmark performance </li></ul></ul><ul><ul><li>Define good practice…and re-define microfinance </li></ul></ul><ul><ul><li>Inform investment to realize potential of microfinance </li></ul></ul><ul><ul><ul><li>Is microfinance good development investment? </li></ul></ul></ul><ul><ul><ul><li>Where is investment needed? Where? </li></ul></ul></ul>
    9. 9. How Can We Assess Social Performance? <ul><li>Internal periodic and ongoing assessment (MIS or informal info system): </li></ul><ul><ul><li>Who are the clients reached and excluded? </li></ul></ul><ul><ul><li>Whether clients’ needs are met? </li></ul></ul><ul><ul><li>What changes are brought about in clients’ well being? </li></ul></ul><ul><li>Internal audit and social performance review: </li></ul><ul><ul><li>Quality of social performance management system </li></ul></ul><ul><li>External social audit and rating </li></ul><ul><ul><li>Verify and assess degree and nature of social performance </li></ul></ul><ul><ul><ul><li>Process : actions and corrective measures </li></ul></ul></ul><ul><ul><ul><li>Results : reaching target clients, meeting client needs, change </li></ul></ul></ul><ul><ul><ul><li>Values : Relations w/employees, clients, community and the environment </li></ul></ul></ul><ul><ul><li>Support an external enabling environment Information for practitioners, public and private investors and policy makers </li></ul></ul><ul><ul><ul><li>Trustworthy </li></ul></ul></ul><ul><ul><ul><li>Consistent </li></ul></ul></ul><ul><ul><ul><li>Comparable </li></ul></ul></ul>
    10. 10. Do Management, Assessment, Reporting Relate? <ul><li>Three main Assessment Approaches Emerging </li></ul><ul><ul><li>Assess MFIs’ intent, design, results to own standards </li></ul></ul><ul><ul><ul><li>Reaching target clients </li></ul></ul></ul><ul><ul><ul><li>Meeting client needs </li></ul></ul></ul><ul><ul><ul><li>Achieving changes desired </li></ul></ul></ul><ul><ul><li>Compare relative MFI standards to industry standards </li></ul></ul><ul><ul><li>Assess absolute results against industry standards </li></ul></ul><ul><ul><ul><li>Specific standardised indicator: e.g. % of children in school </li></ul></ul></ul><ul><ul><ul><li>Broad standardised indicators, allowing for local definition </li></ul></ul></ul><ul><li>Need To Achieve Balance </li></ul><ul><ul><li>Simple, standard reporting </li></ul></ul><ul><ul><li>Varied contexts, missions, development norms </li></ul></ul>
    11. 11. Is Social Performance A Costly Diversion? <ul><li>SP is Fundamental Intention of Microfinance, hence it is necessary cost of doing business </li></ul><ul><li>Initial Evidence Demonstrates Cost-effectiveness of Systems </li></ul><ul><ul><li>Build on existing systems </li></ul></ul><ul><ul><li>More research on the way… </li></ul></ul><ul><li>Manage institutional and developmental Imperatives and trade-offs </li></ul><ul><li>Realize Potential of Microfinance—Contribution to MDGs </li></ul><ul><li>Better investment decisions </li></ul><ul><ul><li>Private investors </li></ul></ul><ul><ul><ul><li>Pick winners: invest is what works, </li></ul></ul></ul><ul><ul><ul><li>Affirm good practice </li></ul></ul></ul><ul><ul><ul><li>March investment with rhetoric </li></ul></ul></ul><ul><ul><li>Public investors </li></ul></ul><ul><ul><ul><li>Defining and pushing frontier…taking risks—what investment? Where? How? </li></ul></ul></ul>
    12. 12. What are some efforts? Illustrative examples
    13. 13. Assessing Social Performance: Cerise <ul><li>Examines 4 dimensions : </li></ul><ul><li>Targeting the poor and the excluded </li></ul><ul><li>Adaptation of the services </li></ul><ul><li>Improvement of the clients’ social capital </li></ul><ul><li>Social responsibility of the MFI </li></ul>
    14. 14. Targeting Outreach to the poor and the excluded <ul><li>3 main strategies for targeting: </li></ul><ul><li>Geographic : Selection of the zones of intervention </li></ul><ul><li>Individual : Use of targeting tools </li></ul><ul><li>Pro-poor  methodology : </li></ul><ul><ul><li>Social collateral, </li></ul></ul><ul><ul><li>Specific approach for remote areas or excluded population, </li></ul></ul><ul><ul><li>Size of transaction </li></ul></ul>
    15. 15. Meeting clients’ needs in relation to their capacity <ul><li>MicroSave tools: www.microsave.org </li></ul><ul><li>Qualitative assessment tools : Market research, product attribute ranking, relative preference ranking, financial landscape, etc </li></ul><ul><li>SEEP-AIMS tools: www.seepnetwork.org </li></ul><ul><li>Qualitative and Quantitative tools : </li></ul><ul><ul><li>Client satisfaction tool </li></ul></ul><ul><ul><li>Exit survey </li></ul></ul><ul><ul><li>Loan and savings use tool </li></ul></ul>
    16. 16. Measuring changes in the clients <ul><li>AIMS-SEEP tools 5 client assessment tools (2 quantitative and 3 qualitative tools) www.ideasnet.org </li></ul><ul><li>Management information system indicators for monitoring changes </li></ul>
    17. 17. Developing Social Indicators <ul><li>CGAP and Ford Foundation </li></ul><ul><li>Monitoring progress on 5 to 10 indicators that correspond to 5 dimensions of Millennium Dev. Goals </li></ul><ul><li>Common reporting format allows comparison across different contexts </li></ul><ul><li>Primarily proxy indicators with 35 participating MFIs </li></ul><ul><li>Discussion with MIX on how to report </li></ul>
    18. 18. Where To Go For Further Information? <ul><li>Social Performance Resource Center </li></ul><ul><ul><li>http://microfinancegateway.com/resource_centers/socialperformance </li></ul></ul><ul><ul><li>Management training </li></ul></ul><ul><ul><li>Technical Assistance </li></ul></ul><ul><ul><li>Tools </li></ul></ul><ul><ul><li>Rating, audit and other forms of assessment </li></ul></ul><ul><li>Imp-Act consortium : www.imp-act.org </li></ul><ul><ul><li>Consortium of seven organizations: FFH, IDEAS, MFC, EDA, CARD, MCPI, and IDS </li></ul></ul><ul><ul><li>Capacity building (training and mentoring) modules to assist MFIs in managing social performance </li></ul></ul><ul><ul><li>Action research </li></ul></ul><ul><ul><li>Network for practitioners </li></ul></ul>
    19. 19. <ul><li>Thank You! </li></ul>
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