Social Performance Management

Dr. Reem Ramadan

Putting the “Social” into Performance

• As social businesses, microfinance institutions (MFIs) apply commercial means to achieve social ends.

• Social goals include larger numbers of poor and excluded people; improving the quality and appropriateness of financial services; creating benefits for clients; and improving social responsibility of an MFI.

Financial Performance of MFIs Loans outstanding, Profit margin, Operating margin,

OSS, FSS and PAR

About Numbers

Social Performance of MFIs Social mission, poverty outreach, impact, client

satisfaction & loyalty, respect for staff and clients and participation

About People

People + Numbers = Success

What is Social Performance?

Social performance is the effective translation of an institution’s social mission into practice in

line with accepted social goals

Social Performance Management (SPM)

The process of translating mission into practice, including setting social objectives, tracking Social Performance, and using information to improve practice

1) demonstrate program impact2) improve program services

Assessment with Action

Managing to Achieve Desired Results

• Performance is not incidental

• What is explicitly defined and measured is what people excel at

– Need to define desired performance– Need to measure results against desired performance

6

Performance Management

Social Performance

Financial Performance

Mission

Components of Social Performance Management

• Developing social performance goals and relevant strategy to achieve those goals.

• Monitoring and assessing organizational performance towards achieving and attaining its social goals.

• Institutionalizing and using social performance information to develop organizational performance.

Dimensions of Social Performance

INTENT AND DESIGNWhat is the mission of the institution?

Does it have clear social objectives?

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

Are systems designed and in place to achieve those objectives?

OUTPUTDoes the institution serve poor and very poor people?

Are the products designed to meet their needs?

OUTCOMEHave clients experienced social and economic improvements?

IMPACTCan these improvements be attributed to institutional activities?

Intent and Design

Internal

Systems/ Activities

Outputs

OutcomesImpacts

Social Performance Management

Design and inputs

Mis

sion

Obj

ectiv

es

Goa

ls

Reaching Target Clients

ChangeService Design & DeliverySystemsMeeting Client Needs

Outputs Outcomes ImpactIntent

“ Effective translation of mission into practice ”

Governance/PoliciesGoals/Objectives

• Management/Strategy• Systems Development & Use• Product & Service range• Human resources

Outreach/ChangesServicesProduct & service

development &delivery

Information system

Benefits of Social Performance

Better management (balance financial/social objectives, base line info., performance tracking, early warning systems)

More client-responsive (appropriate services, more product choices, better customer service)

Improved outreach and services (portfolio segmentation, understand client use, innovations, verify impact of programmatic changes, track impacts on clients)

Improved financial performance (better client retention, growth, lower operational costs)

Final Word…

MFIs that integrate a social lens into performance management processes will benefit not only from more loyal and satisfied clients,

but also an ability to demonstrate social outcomes to external stakeholders, including social investors.