Top 10 Lessons on Social Performance Management for Microfinance

08 July 2013

Contributed by: Frank DeGiovanni

The Social Performance Task Force (SPTF) launched the Universal Standards for Social Performance Management (“Universal Standards”) one year ago at its annual meeting in Jordan. SPTF is an international task force with more than 1,500 members from every microfinance stakeholder group, and seeks to build knowledge of and promote social performance. The Universal Standards are a comprehensive manual of good practices in social performance management (SPM), created collaboratively by SPTF members during a two-year long participatory process as a resource to help financial institutions achieve their social goals. The Universal Standards incorporate all of the Smart Campaign’s Client Protection Principles while also addressing all other areas of social performance management. The 21 standards are organized into six broad categories of activity: defining and monitoring social goals, governance, treatment of clients, development of products and services, treatment of employees, and balancing financial and social performance. Each standard is specified by a set of corresponding “essential practices” that must be implemented to meet the standard.

In the past year, financial institutions have engaged with the Standards in several ways:

  • self-assessment of their SPM practices against the “essential practices” listed in the Universal Standards,
  • development of action plans to change practice in areas where the self-assessment showed gaps, and
  • implementation of essential practices that were not yet in place in their institution.

At the June, 2013 annual meeting of the SPTF in Panama, Task Force members shared their top ten lessons learned about implementation of the standards:

  1. Secure Board and management buy-in. Board and senior management buy-in is the foundation for an institution’s ability to change practice. For this reason, before starting self-assessment or action planning, an institution must make sure that board members and senior managers understand the standards and agree that they are important. (Contributed by Genesis, Guatemala).
  2. Take adequate time to review the Standards. Staff were surprised by how long it took to read the full Standards document, understand each of the essential practices, and determine the extent to which the institution was implementing each practice. Reviewing the Universal Standards is a process that ideally should involve every department and employees at every level in the institution. This review takes several days. (Contributed by Opportunity International, Australia)
  3. Be honest when assessing current practice. To evaluate an organization’s practices, it is important to review each essential practice in the document and ask, “Is our organization implementing this practice?” The process of self-evaluation reveals strengths and weaknesses, and it is better to be honest and realistic to obtain accurate baseline results to inform your plans for change. (Contributed by Horizonti, Macedonia)
  4. Gather feedback from employees and clients. Institutions find that senior managers often have very different perspectives and types of information from other employees and clients. By gathering feedback from employees at all levels, as well as clients, the institution gains the most accurate view of how closely, or not, the practices in the field match the policies of the institution. (Contributed by ASKI, Philippines)
  5. Create an action plan very soon after completing the self-assessment. The self-assessment process builds buy-in and excitement for change, but the momentum will fade without next steps. It is therefore very important to create an action plan soon after the self-assessment process concludes. That way, the ideas for change will be translated into actual change. For the plan to be effective, it must include a timeline, budget, and clear designation of who is responsible for achieving each outcome. (Contributed by Pakistan Microfinance Network, Pakistan)
  6. Communicate about SPM vertically and horizontally within the institution. All employees have a role to play in the institution’s social performance management. Thus, information about SPM – from who is doing it, for what reason, to the outcomes achieved - should be communicated throughout the institution vertically and horizontally. When employees in all positions, and all departments, are informed, the institution is much better positioned for success. (Contributed by ALIDé, Benin)
  7. Put specific people in charge of implementation. Though many people may participate in the process of reviewing the Standards, evaluating the institution, and creating plans for follow-up, the project needs a smaller group of people or a single person who are/is ultimately responsible to make sure the standards are implemented. It is important that this team/person should have not only the responsibility, but also the authority, to ensure that SPM is an institutional priority. (Contributed by CrediMUJER, Peru)
  8. Create short-term and long-term implementation goals. Achieving good performance in every aspect of SPM is a very involved process that will take substantial time, but it can be discouraging to work on improvement without seeing results. To maintain momentum and support, it is thus important to set short-term as well as long-term goals. When an institution achieves the quick wins, it motivates everyone to continue working on the bigger goals. (Contributed by Juhudi Kilimo, Kenya)
  9. Build on existing systems for cost effectiveness. Cost is a major factor in an institution’s willingness to change its operating systems. By building on their existing systems, even institutions with very limited resources have found that they can make meaningful improvements in their SPM. (Contributed by AFMIN, Africa)
  10. Remember who you are working for! Any change process has setbacks and moments of discouragement. At those times, it’s helpful to pause, consider again the bigger picture, and remember that SPM is important because it helps institutions create positive changes in the lives of the poor and vulnerable. Focusing on clients’ needs and the potential to meet those needs provides motivation to continue improving systems. (Contributed by Sevis Finansye Fonkoze, Haiti)

This is a critical and exciting moment in the microfinance sector’s development. Now, more than ever before, we have broad agreement that social performance is important to helping microfinance institutions achieve their social mission. With the Universal Standards, we have a document that outlines exactly what management practices are essential to achieving exemplary social performance. In other words, we have the buy-in and the tools, and we are positioned to improve practice. As we do so, I have every hope that we will see an increase in how well microfinance benefits the lives of its clients.


------ The author is the Director of the Financial Assets Unit at the Ford Foundation and Board Chair of the SPTF.