Integrating Social Performance Management into Governance of MFIs

Abstract:

MicroSave has worked with Imp-Act to integrate a social lens into its Governance training. MicroSave SPM diagnostics have increasingly been focussing on the role of governance structures in managing the growing financial and social risks since in view of the global financial crises and the oft repeated criticism of MFIs being primarily commerce-driven ventures. Structural/functional features which skew the balance in favour of commerce have emerged from such studies: - Board composition of an MFI, particularly of an MFI transforming from a non-profit to a for-profit endeavour may be focused on having experience and expertise in financial rather in social aspects - MIS not incorporating social performance assessment indicators - Lack of periodic reviews of 'achievement of mission' which clearly states organisational purposes - Lack of involvement and motivation of staff, including appropriate performance reviews and incentives towards social performance MicroSave's SPM recommends stakeholder involvement - especially clients' or representatives of clients' in strategic decisions, through periodic client consultative group meetings; informal feedback from field staff or other forums and regular client and employee feedback (grievance systems, market research, client committees and customer satisfaction surveys, etc.). It also recommends effective designing of motivation packages for staff as well as putting in place client protection measures for preventing over-indebtedness, fraud, abusive collections, client privacy along with other aspects.

Tags: SPM diagnostics, Microfinance institution, Loan collection practices, Customer satisfaction surveys, MicroSave, BN90, BN 90, Social objectives, Mission drift, UNDP, Social performance indicators, Client protection, Overindebtedness