Social Performance Management
Social performance management (SPM) refers to the systems that organizations use to achieve their stated social goals and put customers at the center of strategy and operations. A provider's social performance refers to its effectiveness in achieving its stated social goals and creating value for clients. If a provider has strong SPM practices, it is more likely to achieve strong social performance.
Responsible Inclusive Finance
Responsible inclusive finance means delivering financial services in a way that is transparent, fair, safe, and likely to generate benefits for poor clients.
There are two key dimensions for implementing responsible finance: client protection and social performance management. Client protection is the effort to provide fair and safe services for clients. SPM includes client protection but is also explicitly concerned with how to generate benefits for poor clients. Client protection is the responsibility of all providers, while SPM is essential for all double bottom-line institutions—those with both financial and social goals.
Strong social performance does not happen by chance. Social financial service providers (FSPs) need to define and monitor a set of social goals, develop client-centric products and services, treat clients and staff responsibly, and pursue balanced financial performance. This effort constitutes SPM.
Though this effort requires time and attention, a balanced management approach benefits both the provider and the client in the following ways:
- Client-centric products and services. Through direct feedback with clients and the collection of social performance data, the FSP can understand how it is affecting clients and which products and services that clients value. With this information, the FSP can attract and retain clients with appropriate products and services.
- Protection against mission drift. Integration of social goals into business plans and strategies helps ensure that as the FSP grows and changes, its social purpose is retained.
- Reporting to investors/donors. Using client data, the FSP can demonstrate client-level outcomes to external stakeholders (such as investors and regulators), thus helping to attract and retain funding.
- Differentiation in competitive markets. Efforts to protect clients and provide excellent customer service can set the provider apart from other providers.
- Staff satisfaction/retention. Efforts to treat staff responsibly may result in improved staff satisfaction and performance.
- Ability to influence regulation. Positive social data and a strong reputation for social outcomes can help FSPs avoid potential regulatory restrictions, such as interest rate caps. FSPs with strong SPM practices can influence regulation of the social aspects of microfinance.
The management practices that constitute SPM are many. The SPTF has captured the full set of SPM practices in the Universal Standards for SPM.