UNIVERSAL STANDARDS FOR SOCIAL PERFORMANCE MANAGEMENT AT BOLIVIAN

UNIVERSAL STANDARDS FOR SOCIAL PERFORMANCE MANAGEMENT AT BOLIVIAN MICROFINANCE SECTOR By PROFIN Foundation, for SPTF Networks Meeting, Panama, June 2013

2 FINANCIAL AND PRODUCTIVE SECTOR SUPPORTING FOUNDATION • PROFIN made the 1 rst. implementation of SPI social audit in Bolivian Microfinance Sector, in 2006. • Constantly, PROFIN has worked supporting the Social Performance Assessment and Social Performance Management of MFIs. • In 2013, PROFIN has finished a study about baseline situation of Universal Standards in Bolivian Microfinance Sector. • Founded in Bolivia in 2006, after 10 years of experience as program of SDC and DANIDA. PROFIN´s main activity has been the financial innovation for productive sector. Social performance is part of the institutional strengthening interventions of MFIs, for which PROFIN gives technical support since 2006.

3 PROFIN´S STRATEGY REGARDING UNIVERSAL STANDARDS TO TO TO MAKE TO KNOW MAKE KNOW IMPROVE AWARENESSRAISING AND CONTEXTUALIZATION WORKSHOP SELF ASSESSMENT OF COMPLIANCE WITH UNIVERSAL STANDARDS REPORT THE STATE OF SITUATION OF UNIVERSAL STANDARDS: A PUBLIC SECTORIAL REPORT AND A CONFIDENTIAL INDIVIDUAL REPORT TECHNICAL SUPPORT FOR IMPROVE THE IMPLEMENTATION OF UNIVERSAL STANDARDS

4 TO KNOW SCOPE OF THE WORKSHOP 1. Conceptual Framework of Social Performance 2. International Initiatives • SPM approach of Imp-Act Consortium • Social Audit and Social Rating • Market Research and Poverty Measurement • Responsible Finance • Universal Standards and Social Performance Indicators 3. Local Initiatives • Networks initiatives: ASOFIN y FINRURAL • Sectorial initiatives: PROFIN Foundation • Social Performance in new Financial Services Law. PROFIN invites to IMFs to participate in the process PROFIN conducts a workshop for each IMF, representatives of Board of Directors and employees participate PROFIN gives to each MFI the workshop material for internal use

5 TO MAKE STANDARD 5 C. THE INSTITUTION MONITORS EMPLOYEE SATISFACTION AND TURN-OVER COMPLIANCE ESSENTIAL PRACTICES Null Low Median High Total The organization gathers, 5 C. 1 documents, and analyzes X employee satisfaction data The institution monitors the rate of employee turnover 5 C. 2 and understands the reasons for employee exit x The institution takes action to correct institutional 5 C. 3 problems leading to employee turn-over and dissatisfaction x 5 C. Monitor of the employee satisfaction and turn-over 5 C. 1 know information about the employee satisfaction 5 C. 2 Monitor the employee exit causes and turn-over rate 5 C. 3 Correct the employee dissatisfaction causes and turn-over Maximum value 12 Current value 9 % 75% 4 2 50% 4 3 75% 4 1 25% PROFIN gives to each MFI a self assessment questionnaire of Standards compliance PROFIN fixes a rating scale of the answers 0 = null compliance 1= low compliance 2= median compliance 3=high compliance 4=total compliance PROFIN identifies the current percentage of compliance

6 TO MAKE KNOW PROFIN generates a sectorial report with average results of MFIs (public report) AVERAGE COMPLIANCE WITH THE STANDARDS 1 A. Strategy for reach social goals 1 B. Collection, report and quality of social performance information 2 A. Committed of the Board of Directors with the social mission 2 B. Support of Board of Directors for accountability of social performance 2 C. Involvement of senior management with social strategy 2 D. Social Performance in recruiting, evaluation and recognized of the employees 3 A Prevention of over-indebtedness 3 B. Transparency in the information provided to customers 3 C. Fair and respectful treatment of clients 3 D. Privacy and security of client data 3 E Mechanisms for complaint resolution 4 A. Understand clients’ needs and Preferences 4 B. Appropriate product design and delivery 4 C. Design of products and services targets to generate benefits for clients 5 A. Supportive working environment and Human Resources policy 5 B. Transparency in employment terms and training for employees 5 C. Monitor of employee´s satisfaction and turn-over 6 A. Appropriate and sustainable growth rates 6 B. Appropriate financing structure 6 C. Responsible pricing 6 D. Appropriate compensation to senior managers 80% 71% 87% 80% 76% 70% 88% 85% 73% 84% 70% 73% 88% 79% 81% 85% 78% 86% 82% 84% 90%

7 TO MAKE KNOW (2) Sections of Social Sectorial MFI Gap of Prioritization Performance average Compliance 100% of Management Compliance compliance improvements 1. Define and Monitor Social 75% 19% -81% 1 Goals 2. Ensure Board, Management, and Employee 76% 49% -51% 2 Commitment to Social Goals 3. Treat Clients Responsibly 81% 70% -30% 4 4. Design Products, Services, Delivery Models and 83% 75% Channels That Meet -25% 5 Clients’ Needs and Preferences 5. Treat Employees Responsibly 81% -19% 6 6. Balance Financial and Social -36% 3 Performance 84% 64% PROFIN generates a report for each MFI (a confidential report) PROFIN identifies gaps of 100% compliance and the prioritization of improvements In the example, the MFI should prioritize the social strategy definition and the social goals monitoring (gaps= -81% and -51%)

8 TO IMPROVE PROFIN´S THECNICAL SUPPORT FOR SOCIAL PERFORMANCE MANAGEMENT ESTRATEGY PLANNING WITH SOCIAL DIMENTION INFORMATION SYSTEM FOR SOCIAL PERFOMANCE MANAGEMENT STRENGTHENING GOVERNANCE SECTION 1: DEFINE AND MONITOR SOCIAL GOALS SECTION 2: ENSURE BOARD, MANAGEMENT, AND EMPLOYEE COMMITMENT TO SOCIAL GOALS FINANCIAL INNOVATION PROCCESS WITH DEMAND APPROACH SECTION 3: APPROPRIATE DESIGN OF PRODUCTS, SERVICES, DELIVERY MODELS AND CHANNELS STRENGTHENING SOCIAL RESPONSABILITY SECTIONS 3 AND 5: TREAT CLIENTS AND EMPLOYEES RESPONSIBLY

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