Decision making
How do you balance social and financial objectives in day-to-day decision-making?
Most decisions must balance financial and social considerations. In some cases, this will prove difficult, which is why you should attempt to tie in your social and financial performance objectives. Remember, social and financial performance goals can be mutually supportive. Reaching more satisfied clients, for example, tends to serve both growth and profit objectives.
| Decision Examples | Financial goal | Social consideration |
|---|---|---|
| Strategic decision: MFI decides to move into new market, offering individual loans to men as well as women | To increase market share and improve sustainability | How will this impact ability to attract, retain and empower existing women clients? |
| Operational decision: MFI decides to reduce group visits to once per month | To improve efficiency | How will this affect group cohesion and mutual support among group members? |
| Decision Examples | Social goal | Financial consideration |
| Strategic decision: MFI decides to expand into rural areas | To serve more underserved, poor clients | How can MFI reduce transactions costs? |
| Operational decision: MFI decides to change repayment schedule | To enhance client satisfaction | How will this decision impact MFI cash flow? |
In the coming months, we will be developing this section to discuss the key tensions that MFIs need to manage effectively in order to achieve both their social and financial goals. These include:
- Balancing growth with quality
- Balancing service flexibiltiy with creating financial discipline
- Balancing MFIs needs for services with an MFI's capacity to provide services
- Balancing MFI's need for sustainability with client vulnerability