Social Performance
Moving Forward
Mak Remissa
AMK social and financial objectives are formulated in our mission, vision and guiding principles. Our specific
approach to managing social performance is two-pronged:
• At the management level, the Research department is in charge of social and market research while other
departments -notably the Inspections, HR and Operations- collaborate in assessing issues around AMK’s social
responsibility towards clients or staff.
• At the governance level, the Social Performance Committee (SPC) advises the Board of Directors broadly mirroring
the role played by the Audit and Finance Committee but with respect to AMK’s social performance.
This dual-committee structure attempts to give the Board a balanced view of AMK’s overall institutional
performance, so that governance decisions are appropriately aligned to the institution’s dual objectives.
The main design of AMK’s social performance systems at the management and Board levels are outlined in the
figure below, summarizing the five main social performance dimensions within AMK:
i. Outreach of financial services in line with stated mission;
ii. Demand-driven products and services for clients;
iii. Client protection and transparency;
iv. Other social responsibilities – corporate culture, policies for staff, etc;
v. Change studies or transformation effect on clients.
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APPROACH TO INFORMATION
AND ANALYSIS
Decision
Making
Systems
Board of Directors level ³ Advisory Function: Social Performance Committee
Management level
³ Social and market research function
Research Department
Internal audit and CSR
Inspections, Operations and HR Departments
Assessment
Framework
(On-going)
³
Verifiable
indicators for
monitoring
<1> Poverty outreach
<2> Demand- driven products and services
<3> Client protection and transparency
<4> Other Social Responsibility (community, staff)
Tools
³ Sample cash-flow household survey, exit survey, other ad hoc research
(e.g. insurance, domestic remittances, etc)
Sources
³ Research (Client Profiles, Wellbeing/Poverty Score, Satisfaction, Exit, Competition,
Loan use, Multiple loans, etc.) and Other Internal Reports (Internal audit reviews, HR surveys)
Change
(periodic
research)
³ ‘Understanding the dynamics that happen inside the household to assess whether
our clients are better off (or less poor) than other groups with no access to
microfinance.’
Within the framework, the first four dimensions of Social Performance (outreach, demand-driven products, client
protection and social responsibility) are assessed on ongoing basis – that is, regularly through simple and verifiable
indicators. However, assessment of change in households (transformation effects) is undertaken only periodically
because it is methodologically demanding, time/cost intensive and more challenging to fully operationalize for
decision-making. The change studies serve as a proxy impact analysis, assessing changes in households’ wellbeing,
but without attempting to attribute these changes uniquely and exclusively to access to AMK’s microfinance
services.
Since 2003, AMK’s Market and Social Research Department has provided the management with hard data as an
input for decision-making. The research team conducts annual surveys which provide information about clients:
household profiles, cash-flow analysis, satisfaction and exit feedback and other market research. An important part
of the team’s work has been developing a score that measures the wellbeing of client households on entry as well as
tracking changes in wellbeing over time. This information is used to assess the poverty levels of client households.
Once information is available, virtually all departments are involved in decision-making through regular management
meetings, for instance in the creation of new products.
“SPC members are nominated by the Board for a two year term and include both internal and external
members with extensive research backgrounds. SPC members’ bios are available on pages 12-13 of this
report).”
In addition, AMK has invested in systems and structures to incorporate social performance at the governance level.
The Social Performance Committee (SPC) was created in 2005 and become operational in 2006. Its main function is
to advise the Board on whether management is incorporating social performance findings into decision-making to
achieve AMK’s goals. In terms of AMK’s dimensions of Social Performance, the SPC monitors the four first dimensions on a yearly basis and provides guidance in setting the change study framework every 3 to 5 years.
The following pages summarize the main highlights of AMK’s social and market research intelligence reports, and
introduce the most recent developments for managing social performance in AMK during 2008 – including the
drafting of internal and external reporting standards for social performance and the innovative Social Performance
Reporting Framework, which has evolved in response to critical challenges in incorporating social performance into
decision-making.
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“AMK is one of the seven pioneering MFIs participating in the Imp-Act Global Learning Programme on
Social Performance Management (SPM). The SPM in Practice series was published in 2007 and new
updates showing evidence of effective SPM and understanding its organizational value are expected for
2009 (check www.ids.ac.uk/impact for further details).”
AMK’s systems for managing social performance pioneered the implementation of emerging good practice:
systems are consistent with the current industry definition of social performance and concentrate on monitoring
each of the main areas of the social performance causal chain: starting with the objectives, the effectiveness of the
systems and services in meeting these objectives, and the outputs at the portfolio and client levels.
Further detailed information on AMK’s Social Performance systems is available at:
www.amkcambodia.com/Docs/AMK%20Case%20Study%20SPM%20Mgmnt.pdf
Highlights of AMK of Social and Market Intelligence Reports (classified by main dimension)
DEPTH OF OUTREACH (measuring poverty on entry):
Yes – see below:
Is AMK reaching at least a similar share
of poor households of what is found in
Group
Individual
Total clients
the general rural population?
clients
clients
New clients (< 1year) below the Food
Poverty Line in Rural Areas
Wellbeing groups for new clients
Estimation: actual number of poor new
clients being served
ADEQUATE PRODUCTS
(range, quality of services)
n/a [Proxy:
0%]
• There is general satisfaction among
See graph Wellbeing Score in page 8
– Quartile Analysis Wellbeing Score
for satisfaction consistent with previous
63%[*]
n/a
76%
56,605
n/a
AMK group clients (with main reasons
ﬁndings and similar among new and old
clients).
• Feedback from exiting clients is similar
*Based on representative sample data of group clients. Because data on individual clients is not yet
available, the aggregate figure is calculated proportionally to new group clients and individual clients,
assuming that individual clients are unlikely to be below the poverty line.
to the feedback from active group
clients and consistent with previous
ﬁndings.“Not needing money now” is the
OTHER CORPORATE SOCIAL RESPONSIBILITY (CSR)
•
Signatory of the MicroFinance Transparency initiative (further information
available at: www.mftransparency.org)
•
Launch of “AMK customer satisfaction hotline”
main reason for leaving AMK – but, the
proﬁle of reasons for exit varies widely by
client’s poverty group.
CHANGES IN POVERTY (measuring changes in poverty over time)
Does AMK measure changes in poverty and wellbeing
over time?
Yes – see below:
Total clients
Group clients
Individual clients
Senior clients (in AMK >= 3 years) below Food Poverty
Line in Rural Areas
48% [1]
50%
n/a [Proxy: 0%]
Current clients who have improved their wellbeing score
in last 2 years
42% [2]
46%
n/a [Proxy: 0%]
Current clients clasified as poor on entry who improved
their wellbeing score in the last 2 years
-
60%
n/a
[1]
Based on representative sample data of group clients. Because data on individual clients is not available yet, the aggregate figure is calculated proportionally
to all current group and individual clients who joined AMK three years ago, assuming that individual clients are unlikely to be below the Food Poverty
Line in rural areas.
[2]
Based on representative sample data of group clients. Because data on individual clients is not available yet, the aggregate figure is calculated
proportionally to all current group clients and individual clients who joined AMK two years ago, assuming that individual clients are unlikely to see wellbeing score
improvements.
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Social Performance Indicator- Towards Internal Reporting Standards
“Social Performance Standard Reporting under development by the MIX Market”
During 2007 and 2008, AMK participated in the development of a list of core social performance indicators to be
used to track the social performance of MFIs, providing feedback to the Social Performance Task Force (SPTF)
and the Microfinance Information Exchange (MIX) on whether potential indicators were relevant, easy to obtain
and verify and likely to yield quality results. The resulting 22 indicators are currently being integrated into the MIX
Market public information platform and will be integrated into the MicroBanking Bulletin benchmarks in the future.
An example of the type of information that will be regularly reported is detailed below.
Achievement of Social Goals – Excerpt AMK’s Report to the MIX Social Performance Standard Reporting
Does AMK track whether clients’ children are attending school?
Yes
Does AMK collect this information separately for new clients (< 1 year) and for older
clients (> 3 years)?
Yes – see below:
New Clients
Older Clients[*]
Clients’ daughters in school / Clients’ daughters of primary school age
87%
91%
Clients’ sons in school / Clients’ sons of primary school age
85%
91%
Clients’ daughters in school / Clients’ daughters of secondary school age
57%
52%
Clients’ sons in school / Clients’ sons of secondary school age
63%
69%
[*]
The sample of older clients is much smaller and thus, conclusions are only preliminary.
“Internal Reporting”
Internally, AMK has also been working towards balancing social and financial objectives by creating more
inclusive portfolio analysis templates from the MIS at the branch and head office level. Below are some initial working
templates for monitoring performance and facilitating decision-making at different management levels:
As of 31/Dec/2008
Group
Individual
Total
End-ofTerm
Instalment
Credit line
instalment
85%
86%
86%
89%
77%
30.7-37.1%
37.1%
34.7%
36.7%
30.7-36.8%
• Share Active Loan Accounts
188,696
40%
24%
21%
15%
• Share Loan Portfolio (US$, million)
$23.42m
25%
16%
22%
34%
• New clients to AMK and to products
47%
57%
68%
-
53%
• Senior clients changing from another AMK
loan products
26%
5%
10%
79%
28%
• Continuing clients in same products
26%
37%
22%
21%
19%
• New Clients (< 1year with AMK)**
51%
60%
72%
• Clients 1 to 2 years with AMK
24%
34%
26%
2%
25%
• Clients 2 to 3 years with AMK
12%
4%
2%
42%
9%
• Clients 3 years or more with AMK
13%
1%
0%
55%
4%
$124
$75
$82
$129
$286
$149
$76
$151
$194
$357
(Active Borrowers only)
WOMEN ACTIVE BORROWERS
EFFECTIVE INTEREST RATE (EIR) [OR APR]
PORTFOLIO DISTRIBUTION BY PRODUCT
ACCOUNT DISTRIBUTION WITHIN PRODUCTS
PRODUCT DISTRIBUTION BY SENIORITY
62%
LOAN AVERAGES
• Average Loan Outstanding
• Average Loan Disbursed
* When new MIS becomes operational, the porfolio analysis templates will also include drop-out rates and rural households by product.
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Social Performance Reporting Framework
During 2008, AMK’s innovative Social Performance Reporting Framework became operational as a monitoring
tool for improving management processes. The framework is a clear and effective tool to inform the Board on
both the collection of strategically relevant information as well as whether the data is adequately informing decisionmaking processes.
The box below shows the main structure of this AMK Social Performance Reporting Framework, which is divided
into two main sections. The first section is produced by AMK management while the second section is filled in by
the SPC and passed along to the Board as an integral part of the SPC meeting minutes.
From AMK Management
to SPC and Board
AMK - Social Performance Reporting Framework
Regular Monitoring
Year Evaluated ___
Date: ___________
Depth of
Outreach
Adequate
Products
Transparency
& Client Protection
Periodic Research
Other Corporate Social
Change
Responsibility
Sources of Information
Indicators / Trends
SUMMARY
Depth of
Outreach
Adequate
Products
Transparency
and Client
Protection
Other Corporate Social
Responsibility
When
applicable….
Change
Tick as appropriate
Tick as appropriate
From SPC to Board of Directors
Accurate methodology and process?
Findings: currently
in line with mission?
Findings: foreseeable
issues in the future?
Is there info/data
missing?
Tick as appropriate
Tick as appropriate
Tick as appropriate
Issues to Report
Any Other
This Social Performance Reporting Framework is an integral part of SPC meeting minutes
Signature:
SPC members
In the ﬁrst section of the Reporting Framework, the first four dimensions of Social Performance are assessed every
year. AMK’s Research Department summarizes the indicators selected to assess each dimension, referencing the
source of information and identifying the main highlights and trends from the findings.
The data to assess the first two dimensions (depth of outreach, demand-driven products) is produced by the
Research department and compiled into reports such as depth of outreach, client satisfaction, exit surveys or
pricing analysis. For instance, to assess the depth of outreach, AMK uses the indicators of Wellbeing Score and
Daily Food Expenditure per capita compared with the National Food Poverty Line in Rural Areas.
To assess the last two dimensions (transparency, client protection and social responsibility towards the community
and staff), indicators are compiled based on data from HR, Operations or Inspections departments. For example, to
assess AMK’s responsibility towards its staff, the Reporting Framework summarizes the results of the staff satisfaction survey, as well as the number of staff who resigned and the reasons for their resignation.
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The second section is the SPC mechanism to report to the Board of Directors. It mirrors the structure of the reports
from the Audit Committee, applying a “Red-Yellow-Green Light” assessment system (i.e. red signals a problem and
green signals good performance). Firstly, the SPC assesses whether all the necessary information is available and
accurate, and whether the results are indeed in line with AMK’s mission. Secondly and more importantly, the issues
falling into the ”Yellow” or “Red” category are described by the SPC in the line Issues to Report, so that the Board
can incorporate them into its strategic guidance for AMK.
The Reporting Framework’s traffic lights system is reported to the entire Board by the SPC Chairman and all
additional information is recorded in the minutes.
AMK’s creation of the SPC and the Social Performance Reporting Framework for the Board of Directors is a first
for the microfinance industry. AMK was recognized for this innovation by being awarded the runner-up prize of the
European Microfinance Award on Socially Responsible Microfinance. While the SPC and the Reporting Framework
were designed to meet AMK’s specific characteristics and mission, the model can be easily replicated elsewhere in
order to move social responsibility from a “do no harm” approach towards an incremental “do good” effort. Other
organizations with interests or investments in MFIs based in developing countries could follow a similar initiative in
order to stress the importance they give to Social Performance at the governance level of the institutions they fund
or with which they collaborate.
“ AMK’s ﬁrst Social Rating was released in early 2008 and provided a score of Alpha ( ) reﬂecting “very
good systems and adherence to social mission and values” The rating was produced as part of the Imp-Act
Consortium Global Learning Programme on Social Performance and is available at http://www.mixmarket.
org/en/demand/demand.show.proﬁle.asp?token=&ett=1331# ”
Mak Remissa
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