Managing Social Performance in Microfinance: Building Successful Clients and Successful Institutions (Practice Note No. 9)

Publication Date: 2005
Published by: ImpAct - Improving the impact of microfinance on poverty: an action research programme
Document Type: Paper

View this Document   Email this Document

The importance of social performance management in microfinance

This article defines Social Performance and Social Performance Management (SPM), and discusses the importance of having a SPM system in microfinance to improve the effectiveness of microfinance institutions (MFIs).

The article enumerates three steps of creating and maintaining a successful SPM system, citing case studies to illustrate each point:

• Setting social performance objectives.
• Monitoring and assessing social performance.
• Using SPM and making it part of daily work.

The paper sets clear guidelines as the first step in establishing the social performance objectives:

• Laying down clear and realistic performance objectives;
• Clarifying how specific activities achieve the desired social objectives;
• Identifying indicators to assess whether the goals have been achieved.

It presents a detailed methodology in Step 2 to assess the performance of the system through monitoring and analysis. There are two components to this:

• Routine monitoring;
• Research.

Step 3 illustrates various ways of integrating the SPM system into the daily functioning of an MFI, and stresses the need for incorporating the SPM into the MFI’s organization structure and daily work.

The article puts forward a strong case for the implementation of the SPM system in the workings of MFIs to improve their effectiveness in achieving their objectives.