This case study outlines the approach that Prizma has taken to manage its social performance. It highlights a poverty scorecard that is used to generate important information about their clients that helps management make decisions to meet developmental and institutional goals.
Prizma Case Study on Social Performance Management
Prizma is an MFI working in Bosnia and Herzegovina with a mission to improve the well-being of poor and low-income women and their families by giving them long-term access to financial and non-financial services. Through its work with Imp-Act, Prizma is working to better understand the characteristics of poverty in the Bosnian post-war context, the extent to which the organization is reaching poor people, and the reasons high numbers of clients are exiting their programs. It has conducted detailed investigations to find out which products, policies and procedures contribute to the exclusion of poor people. The information was gathered and assessed with various tools and methodologies, including a qualitative poverty assessment, focus group discussions, and studies.
As a result, Prizma has made some fundamental changes to the way it works. For example, a more flexible system of loan repayment has been introduced to deal with the insecurities of poor people’s lives. At the organizational level, staff incentive systems have been revised, including an annual bonus based on poverty outreach targets. Finally, efforts have been made to make sure these changes are implemented across the organization.
In keeping with its mission, Prizma has sought to enhance social performance by institutionalizing organizational learning and deepening poverty outreach, focusing fundamentally on leadership, organizational culture, incentives, and systems. To these ends, Prizma has worked with the MFC under Imp-Act to develop a poverty assessment system intended to meet the organization’s developmental and institutional imperatives. Developed as a scorecard, this system specifically seeks to meet two overarching needs:
Measure Poverty Status First, it enables the organization to assess their clients’ poverty status relative to other clients and across different segments of its clientele, to understand who is being served—who joins, stays, and leaves—and refine targeting strategies, client and staff incentives, and product attributes.
Second, it enables the organization to report on their clients’ poverty status in absolute terms, in relation to the national poverty line and the widely referenced international poverty benchmark of $1 and $2 a day.
Third, it enables the organization to measure discrete change in their clients’ poverty status and well-being over time.
Monitor Change in Status Over Time While this system does not, on its own, capture the complex, dynamic, multidimensional, and context specific nature of poverty in Bosnia-Herzegovina, it does enable Prizma to understand and demonstrate more clearly and on a regular basis the extent to which it is (a) reaching who it seeks (and claims) to be reaching and (b) fulfilling its social mission. Additionally, it is stimulating organizational learning and, in turn, stronger strategic positioning and development of sound operating policies and pro-poor products and services.
The Prizma Poverty Scorecard
Prizma's aim to combine social performance with financial sustainability is regularly reviewed and monitored for effectiveness. It invests in strategies, such as the Prizma Poverty Scorecard, to increase awareness of who it is reaching, and determine how it can better reach and serve poor people. This investment is vital for meeting mission goals. It is also essential if Prizma is to survive in an increasingly competitive market.
Poor and Very Poor 0-2 • Vulnerable Non-Poor 3-4 • Non-Poor 5+
Indicator
0
1
2
Education
What is the education level of female household head/spouse/partner?
=Primary
>Primary
Residence
Where is residence?
Rural/Peri=10,000
Urban >10,000
Houshold Size
What is household size?
=5
<5
Household Assets
Does household possess a stereo CD player?
No
Yes
Transport Assets
Does household possess a transport vehicle?
No
Yes
Meat Consumption
On average, how often does household consume meat each week?
Rarely 0-2 times/week
Sometimes 3-5 times/week
Often 6+ times/week
Sweets Consumption
On average, how often does household consume sweets with main meal each week?
Rarely 0-2 times/week
Sometimes 3-5 times/week
Often 6+ times/week
Poverty Status Score (0-9)
Use of the Scorecard
Enabling staff to generate reports on client household poverty status by branch, product, dropout, gender, portfolio quality, and an array of other variables already captured in the MIS, represents a milestone in Prizma’s efforts to enhance social performance. In addition to enabling the institution to better meet its developmental imperatives, this system is enabling Prizma to meet critical institutional imperatives, including:
Managing Human Resources The scorecard demonstrates that depth of outreach is not only fundamental to the Organization’s mission, but also critical to operational performance and strengthens staff commitment to the system. Depth of outreach and change in client status are incorporated into the Institution’s incentive system intended to motivate staff and affirm the primacy of social performance.
Segmenting the Market Poverty variables strengthen Prizma’s efforts to segment its clientele and improve service.
Monitoring Client Dropout The System enables Prizma to track dropout by poverty status enabling the institution to better understand the (in)appropriateness of its products and services, and in turn, determine what can be done to retain and help these clients.
Developing Products and Services Understanding its clients better allows Prizma to understand how clients use and benefit from existing services. The Institution can then adapt these services to the developmental needs of poorer clients, as well as to segments critical to institutional imperatives.
Positioning the Organization Strategically Understanding its clients better has helped to position Prizma strategically in the increasingly competitive environment of Bosnia-Herzegovina. Segmenting its clientele by poverty status allows Prizma to develop more effective promotion strategies and delivery channels to attract, serve, and retain clients it is mandated to serve given its mission and needs to remain competitive.
Improving Efficiency A powerful use of the Scorecard includes integrating poverty scoring data into Prizma’s existing activity-based costing (ABC) system. This enables the Institution to better understand its cost structure generally and the specific cost of products targeted to poorer segments of its clientele and locus of cost associated with outreach to poorer clients. Such information then enables the Institution to identify means to provide more efficient service to poorer clients and focus greater attention on those drivers most important to improving efficiency.
Managing Credit Risk In addition to finalizing a system to score poverty, Prizma is preparing to employ credit scoring. It is anticipated that measures to assess poverty status will be crucial to assessing credit risk among different segments of its poor clientele. However, rather than seeking to use credit scoring to exclude poorer people, Prizma seeks to enhance its understanding of credit risk to further deepen its outreach.
