Guide / Toolkit

Choosing and Using Indicators for Effective Social Performance Management (Practice Note No. 5)

Steps to develop indicators for effective social performance management system
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This note argues that microfinance institutions (MFIs) need to use a variety of social and financial indicators to track their performance and the impact that they have on the intended beneficiaries. It discusses:

  • The steps a microfinance institution (MFI) needs to take to develop indicators suitable for its program;
  • Issues that may influence the choice of indicators;
  • Difficulties the MFI encounters;
  • Examples of how different MFIs have developed their own indicators that respond to their information needs and the kinds of impact they expect.

The paper lists the following steps in choosing and using indicators. It states that the MFI should:

  • Be clear about what it wants to measure and why;
  • Identify sources of information;
  • Draw up a list of possible indicators;
  • Narrow down the list based on whether the indicators are reliable, relevant, sensitive, easy to use, ethical, practically and technically feasible, sustainable, etc;
  • Assess how and when it will answer the questions;
  • Pilot test the indicators;
  • Validate the selected indicators;
  • Make the most of the indicators for social performance management.

The paper also discusses case studies of MFIs that have used indicators to assess their social performance.

About this Publication

By Imp-Act
Published