Add new indicators
1. Do I need new indicators to track social performance?
If you need to build on your current MIS, you should only consider which indicators to choose when you have answered the nine questions on your information needs. Jumping too quickly to selecting and implementing social performance indicators, without thinking through your specific information needs, will cost more time and money in the long run. When starting out, we recommend that you identify just a few critical information gaps to focus on: those that are essential to understanding your social performance. The SPM team should consult the executive management when choosing indicators. One option is to follow the approach used in a recent SPTF survey, which asked MFIs to prioritise the indicators based on:
- organisational relevance
- ease of collection (including financial costs)
- likelihood to yield quality results.
2. What kinds of indicators should I consider?
MFC’s Strategic Management Handbook states that indicators are considered to be either ‘process’ oriented (covering intent, design and internal systems) or ‘results’ oriented (covering outputs, outcomes and impact). For results-oriented indicators, you will want to track social performance according to three areas:
- outreach to target clients
- clients’ use of services
- benefits created for clients.
Think through the technical and resource implications when choosing certain indicators. For example, the way in which exit rates or poverty levels are defined can have significant resource implications for data collection and reporting. In some cases, you may be able to identify proxies for measuring impact, which can simplify the data collection process and reduce related expenses. Furthermore, some indicators, even the ones being developed by the SPTF, may not be relevant for every MFI. The key is to measure what you value – because you can only manage what you measure.
3. Prizma’s poverty scorecard and social indicators
Prizma (Bosnia and Herzegovina) has developed a poverty scorecard to measure clients’ initial and subsequent poverty status. It chose seven indicators to track: three reflecting poverty risk categories (education level, residence and household size) and four tracking indicators of livelihood (household assets, transport assets, meat consumption and sweets consumption). Prizma validated these indicators with the 2002 Bosnian Living Standards Measurement and found that they were some of the most robust measures in the country.
Five of the seven indicators have possible scores from 0–1, and two of them 0–2, with a total of nine possible points. Clients are then assigned to one of three poverty categories:
- 0–2 (poor and very poor)
- 3–4 (vulnerable non-poor)
- 5+ (non-poor)
These indicators have several advantages, including accuracy, credibility, adaptability, and cost-effectiveness (as four of the seven indicators already existed in the MIS).