Setting objectives
Once your mission is confirmed, define your social objectives. Choosing ‘SMART’ objectives and targets is important because your objectives define what you do, and how you measure it. You should define concrete short- and long-term objectives.
MFC’s Strategic Management Handbook suggests you set ‘process’ and ‘results’ objectives, to compare actual performance to desired outcomes. The table below provides examples of both types of objectives and gives some related performance targets.
- Types of ‘process’ objectives: infrastructure, human resources, systems, policies and procedures. Usually a ‘yes/no’ objective with a deadline, such as ‘Create a new loan product to fit the needs of rural women by the end of 2008.’
- Types of ‘results’ objectives: outputs (usually outreach) and outcomes. Usually have a quantitative target with a deadline, such as ‘25 per cent of our clients will move above the poverty line by the end of 2008.’
| Process objectives | Target (example) | Results objectives (outputs/outcomes) | Target (example) |
|---|---|---|---|
|
Change or add to your: Products or product features Service delivery Human resources policies
Training/capacity
MIS
Policies
Governance systems
|
Create new group loan product for women Open 10 branches in rural areas Field officers achieve > 90% in client satisfaction surveys Integrate SPM module into training for all new employees. Modify MIS to include and monitor 5 new social indicators Create client protection policy Recruit two women Board members |
Output Outreach (gender, poverty, business type, geographic) Loan size Product penetration
Outcomes Decrease poverty Improve children’s access to education Meet majority of clients’ needs |
# of rural clients will increase by 50% in two years Average loan size will not increase above US$50 50% of clients will use health insurance product 10% of clients move above poverty line School enrolment increases to 80% Client retention remains above 75% Clients’ business capital increases by 10% 40% of clients’ children improve health |
The table below gives Pro Mujer Bolivia’s social objectives, which are mostly ‘results’ objectives.
| Strategic goal | SMART objectives |
|---|---|
|
Objective 1: Offer services to women who live in conditions of socioeconomic exclusion |
Individual outreach:95% of clients are women and male participation is no higher than 5% (ongoing). Depth of outreach: At the end of 2007, at least 50% of new clients should be below the poverty line. Geographical coverage: Expand coverage to 15 medium-sized towns by the end of 2008. |
|
Objective 2: Offer integrated services to satisfy the needs of the target clientele |
Access to credit:By the end of 2008, reach an average loan amount of US$241. Client retention rate: Achieve a retention rate of 95% by the end of 2008. New services: To establish, by the end of 2008, three new alliances with institutions to offer additional services for clients. |
|
Objective 3: Support the sustainability of clients, their families and communities |
Income: Increase client income by at least 15% by the end of 2008. Social participation:Increase the participation of clients in social organisations by 15%. Education: Increase by 5% the attendance of clients’ children at school. Savings:Clients’ savings will reach an average of US$85 by the end of 2008. |
Ask yourself:
- are your objectives ‘appropriate’ (as in the ‘A’ in SMART)? For example, can microfinance really help improve the health of its clients’ children (without providing direct health services)? Perhaps the local new, fully staffed and equipped clinic is improving children’s health; fewer long-term child illnesses, however, may bear no relation to whether the children’s parents were MFI clients.
- how do you define ‘poverty’? This can affect operations, including who you reach, what products are needed and how they will be designed and delivered.
- could your MFI’s objectives lead to any unintended, negative results, especially when debt is involved? Try to put in place mechanisms to monitor the risk of negative consequences actually occurring, such as significant defaults and over-indebtedness.
For example, one study of an MFI in North Africa whose mission was ‘to create economic opportunities for clients’ found that it was inadvertently increasing child labour as a result of its lending. This situation is probably not uncommon; a ‘Making Cents’ report describes how another MFI in Egypt found anecdotal evidence that children’s time spent on work (on chores or for the business) increased as a result of its lending. However, the study also found that such ‘informal child labour’ peaked when the loan reached approximately US$2,000, after which it declined. This suggests that the size of loans could have varying impacts on child labour. The MFI in Egypt found that larger loans enabled the adult clients to generate sufficient income to hire other adult labour for business and/or household tasks.
If you have a poverty-focused mission:
If you have a gender- focused mission:
|