Social Performance: FAQs

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.

Financial service providers (FSPs) with strong SPM design products that help clients cope with emergencies, invest in economic opportunities, build assets, and manage their daily and life cycle financial needs. Such FSPs also treat employees responsibly and carefully balance the institution’s financial and social goals.

SPM is important because it puts clients at the center of strategic and operational decisions, making it more likely that financial services will be safe and beneficial for clients. For many years, the industry has emphasized financial sustainability, but we have learned that strong financial performance alone does not necessarily translate into benefits for clients. 

A social strategy is just as important as a financial strategy. Without both, financial service providers (FSPs) and funders will make decisions based on financial goals. In such cases, clients may benefit from access to financial services but it is not a given. In fact, financial services can cause harm to clients.

The inclusive finance industry seeks to provide access to responsible financial services in order to achieve social benefits. This purpose can only be achieved by industry stakeholders committed to formalizing the social objectives of financial services through strong SPM practices. 

The concepts of "social performance" and "impact assessment" are often confused and used interchangeably. But there is an important distinction: impact refers to outcomes or changes that can be directly attributed to programs. Impact assessment is just one element of SPM.

Rather than focusing on “proving” impact, SPM focuses on the management practices that lead an institution toward positive social results for their clients. Impact assessment is a much more complicated and costly analysis than the observation of outcomes, and is almost always undertaken by an external party, whereas the financial institution itself typically designs and manages all other elements of its social performance.

Client protection is a body of norms, standards, rules, and laws that guide and govern the market conduct of firms with respect to their customers. Client protection encompasses measures to prevent illegal activities, such as laws against bribes or fraud, as well as fair treatment policies, such as fair pricing, and proactive initiatives, such as financial education.

Strong client protection practices do not, however, ensure that an FSP will achieve its social goals. An FSP can be honest and transparent with its customers without having or achieving a social mission. However, FSPs that have a social mission must pursue strong client protection, as “doing no harm” to clients is an essential part of creating positive outcomes for clients.

Social performance measurement and management can be cost-effective and does not have to come at a price of reduced long-term sustainability. The most cost-effective way to make changes is to design them so that they can be implemented using only existing staff and resources. Changes that involve raising awareness and buy-in, such as discussing SPM with board members, management, and staff, can have no associated costs. Other changes, such as adjusting staff or client training procedures to incorporate SPM, can be relatively inexpensive. Buying and implementing an entirely new management information system tends to be one of the more expensive changes, but is not always necessary.

When considering how to prioritize and pay for SPM activities, first consider existing SPM efforts and look for opportunities to build on these practices for “quick wins” that will energize staff to take on the higher-effort activities.

For higher cost/effort activities, ensure that the benefit to clients and the institution is also high. One example is the creation of a client complaints phone line to replace your branch suggestion boxes. Though the start-up effort and costs may be high, this activity will likely increase client satisfaction, create greater field officer accountability, and provide management with valuable information for operational or product improvements.

There is no single formula for successful SPM. However, the industry has recognized a set of core management practices that constitute “strong” SPM. These practices form the SPTF Universal Standards for Social Performance Management (“the Universal Standards”).

The Universal Standards bring together strong practices implemented successfully throughout the industry in one comprehensive manual. Developed through broad consultation, the Universal Standards both reflect current practice and push practitioners toward better performance.

FSPs can use the Universal Standards to understand all aspects of SPM, evaluate their own practices against global practices, and improve their management systems over time. Similarly, other stakeholders—investors, donors, networks, technical assistance (TA) providers, consultants, and regulators—can use the Universal Standards to understand SPM, assess the performance of FSPs, and support them to improve practice.

Six Dimensions of the Universal Standards:

1. Define and Monitor Social Goals

2. Ensure Board, Management, and Employee Commitment to Social Goals

3. Design Products, Services, Delivery Models and Channels That Meet Clients’ Needs and Preferences

4. Treat Clients Responsibly

5. Treat Employees Responsibly

6. Balance Financial and Social Performance

Social performance management initiatives sit in the broader spectrum of responsible inclusive finance, which encompasses SPM and client protection. Client protection ensures that FSPs are protecting clients from harm through practices such as transparent pricing. Client protection is important for FSPs whether or not they have a social mission.

Social performance management, which includes client protection, makes an organization’s social mission a reality. SPM plays an important and vital role at FSPs with a double-bottom line. There are two standard-setting initiatives for social performance: SPTF and Truelift.

In addition, the SPTF Responsible Inclusive Finance (RIF) Working Group convenes leaders from its 7 founding initiatives (CERISE, MFTransparency, MIX, Principals for Investors in Inclusive Finance, The Smart Campaign, SPTF, and Truelift) to coordinate standards, tools, and messaging. Since launching in 2013, the group has also integrated other industry actors into the group, including the specialized microfinance raters, the SP Implementation Fund for Networks, the Progress out of Poverty Index, and the Microfinance CEO Working Group.

To help clear up industry confusion, the group has developed a framework for MFIs to improve practice in responsible inclusive finance. The group frames the path to responsible inclusive finance in five stages – Learn, Assess, Plan, Implement and Demonstrate – and outlines the resources and tools available from each initiative at each stage.

Contact the Social Performance Task Force (SPTF) if you are interested in joining. The SPTF is a global non-profit organization consisting of over 3,000 members from every region and microfinance stakeholder group.

The SPTF website is a “one-stop shop” for information on SPM, including the SPM Resource Center.