The Universal Standards, One Year Later

> Posted by Meghan Greene, Manager, Microfinance CEO Working Group

Last June, at the annual Social Performance Task Force meeting in Jordan, the members of the Microfinance CEO Working Group and their lead social performance directors announced their plan to conduct the first large-scale analysis of the Universal Standards for Social Performance Management (USSPM) in practice, a process we called “beta testing.” You may recall our blog post about the plan last summer.

After a year of work, we’re ready to share our results, as detailed in the new working paper, “Insights from ‘Beta Testing’ the Universal Standards for Social Performance Management.”

As many of you know, the Universal Standards for Social Performance Management are a set of 99 “Essential Practices,” organized into six sections:

  • Section 1: Define and Monitor Social Goals
  • Section 2: Ensure Board, Management, and Employee Commitment to Social Goals
  • Section 3: Treat Clients Responsibly (Essentially tracking the Smart Campaign)
  • Section 4: Design Products, Services, Delivery Models, and Channels that Meet Clients’ Needs and Preferences
  • Section 5: Treat Employees Responsibly
  • Section 6: Balance Financial and Social Performance

The Universal Standards are considered applicable to all double bottom line microfinance institutions, and meeting the Standards signifies that an institution has strong social performance management practices. Clearly, implementing all 99 Essential Practices requires careful thought, planning, and execution, but we wanted to learn more about the process of translating the Standards into action. We partnered with more than 20 MFIs to work to answer a number of questions, including:

  • Process of Assessment: What does it take to conduct an assessment against all 99 of the Essential Practices? How do we use the information that an assessment reveals to improve practices?
  • State of Social Performance Management: How do MFIs view their current practices vis-à-vis the Standards?
  • Feedback on the USSPM: Do MFIs find the Universal Standards to be relevant, achievable, measurable, and understandable?

We found that a full assessment of an institution’s social performance management practices is an in-depth undertaking that requires significant planning and multiple parties, often lasting several days to a week. Because it is an extensive process, interested parties should take some time to think about what approach might work best for them. Working Group members utilized a variety of approaches, ranging from self-assessments to quasi-audits with focus groups and client and staff interviews. Each approach varied in depth, specificity, and resources, but ultimately the correct type of assessment depends on the MFI’s intent – e.g., increase awareness around social performance management versus preparation for a social rating.

No matter the approach, MFIs found the assessment process to be valuable, often reporting that the assessment helped them improve overall staff understanding of social performance management best practices. Many institutions created action plans for improving their practices over time.

We found that the participating MFIs believe they already meet 78 percent of the 99 Essential Practices – a very high view of current practice. MFIs also indicated that most of the outstanding Essential Practices were achievable in some timeframe, usually one to two years.

MFIs performed best on Section 4 (Design Products, Services, Delivery Models and Channels that Meet Clients’ Needs and Preferences) and Section 5 (Treat Employees Responsibly). The institutions varied widely in the challenges they encountered, but on average they struggled most with Section 1 (Define and Monitor Social Goals), and had the most questions and concerns about the Essential Practices in Section 6 (Balance Financial and Social Performance).

Our results found that the USSPM are, on the whole, relevant, practical, and achievable for MFIs. However, even though most of the participating MFIs had a strong grounding in social performance management, many still struggled with understanding or measuring some Essential Practices, or felt overwhelmed by the process. As the industry evolves and develops, we’d like to work together with the SPTF and other interested parties to help ensure the Standards can be made clear, simple, and approachable to MFIs of all sizes and levels.

We believe that the USSPM are an important step forward for the industry, and we hope others will take on the challenge of assessing themselves against and implementing the Standards. We hope our findings contribute to the exciting ongoing conversation about what it means to institute responsible microfinance practices.

To read the full report, click here. To learn more about the USSPM, please see the SPTF web site.

*This post was modified from its original version on May 23, 2013. The original version included a different Average USSPM Compliance chart.

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