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We are a global management consultancy that delivers exceptional outcomes and sustainable change

Case Study

Oper­a­tional Excellence

The Pow­er of Micro­fi­nance: Catalysing Eco­nom­ic Growth with a 57% Jump in Loan Value

2023/05/22

INTRODUCTION

Micro­fi­nance serves as a bea­con of finan­cial hope for indi­vid­u­als and small busi­ness­es in devel­op­ing regions. It serves as a means of eco­nom­ic empow­er­ment, offer­ing loans, sav­ings, insur­ance, and oth­er finan­cial ser­vices to peo­ple who are tra­di­tion­al­ly under­served by con­ven­tion­al banks. With access to microloans, small entre­pre­neurs can start or expand their busi­ness­es, lead­ing to job cre­ation and income generation.

Our client is a foun­da­tion that has been pro­vid­ing micro-finance for almost half a cen­tu­ry. It has worked towards ele­vat­ing lives through a com­pre­hen­sive best-practice approach in com­mu­ni­ty development.

RESULTS

103% 

Num­ber of Loans Released 

57% 

Val­ue of Loans Released 

25 Days to 4 Days 

Loan pro­cess­ing time shortened 

30% 

Part­ners enter­ing the program 

48% 

Decrease in Project lead time 

THE CHALLENGE

To oper­a­tional­ize the com­pa­ny’s desire to grow the organ­i­sa­tion and its ser­vices. To do so, it first need­ed to imple­ment bet­ter sys­tems and process­es for their peo­ple. As such, the Client asked Renoir to con­duct an analy­sis look­ing into the main oper­a­tional dri­vers sup­port­ing both micro finance and project management.

ANALYSIS

The Analy­sis per­formed includ­ed the following:

For Micro Finance:

  1. Insuf­fi­cient plan­ning and con­trol of Prospects
  2. Lim­it­ed time was spent devel­op­ing ‘new sales’ and plan­ning was informal
  3. Low com­pli­ance to poli­cies and process­es with lim­it­ed, active supervision
  4. Branch­es were man­aged by individual’s styles rather than in a stan­dard way
  5. Lack of sys­tem­at­ic supervisory/management controls
  6. Data incon­sis­ten­cies and delays pre­vent­ed time­ly con­sol­i­da­tion and imped­ed per­for­mance reviews

For Project Management:

  1. Despite being a “project man­age­ment” organ­i­sa­tion, there was lit­tle evi­dence of a robust project man­age­ment approach
  2. Detailed plan­ning and scop­ing of ini­tia­tives were lacking
  3. Sys­tems to roll down activ­i­ties into oper­a­tional KPIs, with con­trols in exe­cu­tion and follow-up, were not in place
  4. Lessons learned were not cap­tured to con­tribute to a knowl­edge man­age­ment culture

PROJECT APPROACH

Project Gov­er­nance was estab­lished with two Man­age­ment Action Teams, a Micro Finance team and a Project Man­age­ment team. A week­ly Steer­ing Com­mit­tee, com­prised of the CEO, COO, and mem­bers of Board of Trustees, reviewed and eval­u­at­ed key activ­i­ties, ensur­ing that the Project remained on course and on time.

The Project began with Renoir’s Focus Process™, look­ing into process­es and the as-is Man­age­ment Con­trol Sys­tem (MCS), with stud­ies and work­shops dur­ing this oppor­tu­ni­ty iden­ti­fi­ca­tion stage. This ensured max­i­mum impact, own­er­ship, and pre­pares the orga­ni­za­tion for strong post Project sustainability.

“ I was very impressed with the devel­op­ment of the Project and feel the sense of own­er­ship and com­mit­ment of the task force, Man­age­ment Actions Teams and the oth­er team mem­bers who are involved. The team’s achieve­ment so far is remarkable.”

COO

IMPLEMENTATION

First­ly, the Micro Finance team focused on reduc­ing pro­cess­ing time, expand­ing out­reach whilst grow­ing sat­is­fac­tion lev­els and con­trol­ling risk, through reli­able report­ing and a short inter­val con­trol mon­i­tor­ing system.

Actions includ­ed:

  1. Design­ing short inter­val con­trol mech­a­nisms and a joint field­work struc­ture to ensure that per­for­mance is reg­u­lar­ly reviewed, vari­ances addressed, and behav­iour pos­i­tive­ly changed.
  2. Imple­ment­ing Sales plan­ning, prospect and pipeline man­age­ment process­es to ensure that poten­tial clients are effec­tive­ly targeted.
  3. Improv­ing loan pro­cess­ing to short­en the pro­cess­ing days while main­tain­ing the vis­i­bil­i­ty of poten­tial risk.
  4. Devel­op a train­ing pro­gram for sales rep­re­sen­ta­tives and Branch Man­agers to sup­port installed man­age­ment sys­tems and to improve their capa­bil­i­ties and effectiveness.
  5. Re-clustering the meet­ing venues to reduce the trav­el­ling time of the trust staff.
  6. Improv­ing the KPIs and incen­tive pro­gram to ensure that only per­form­ing sales rep­re­sen­ta­tives are rewarded.
  7. Install area and branch lev­el score­cards to increase oper­a­tional vis­i­bil­i­ty and improve tar­get­ed performance.
  8. Design audits for installed sys­tems to ensure behav­iour­al change and sustainability.

Sec­ond­ly, the main objec­tive for the Project Man­age­ment team was to stan­dard­ise project man­age­ment process­es and sys­tems and to cre­ate a project man­age­ment frame­work to serve as a mod­el for oth­er units. The team iden­ti­fied areas of improve­ment that yield­ed clear­ly defined cri­te­ria and resources plan­ning, a com­mu­ni­ca­tion plan to increase part­ner­ship, and opti­mize bud­get uti­liza­tion. Activ­i­ties included:

  1. Iden­ti­fied and defined the Mile­stones that would trig­ger a ‘Go’ or a ‘No Go’, as the guide in ensur­ing effec­tive exe­cu­tion of a project.
  2. Defined cas­cad­ing KPIs for clear account­abil­i­ties and mea­sur­able results.
  3. Installed project offi­cer to focus on com­mu­ni­ca­tion, and lever­age par­tic­i­pa­tion from part­ners in project.
  4. Installed a capac­i­ty plan­ning tool to ensure that resources were well pre­pared for project exe­cu­tion and success.
  5. Devel­oped a fore­cast­ing and bud­get­ing tool to improve tar­get setting.
  6. A project plan­ner and track­er were installed, togeth­er with a week­ly mon­i­tor­ing sched­ule to ensure that projects and activ­i­ties were on sched­ule and met qual­i­ty controls.
  7. Installed a Meet­ing Effec­tive­ness Tool and Action Logs that records and tracks agreed actions.
  8. Improved Dai­ly and Week­ly progress reports for site mon­i­tor­ing and mate­ri­als inven­to­ry to track progress and quick­ly address issues.

KEY RESULTS

The change in process­es and sys­tems yield­ed the following:

While sales trend­ed upward with more than 50% improve­ment in loan val­ue, the new daily/weekly short inter­val con­trol review sched­ule result­ed in a 32% reduc­tion of the Port­fo­lio At Risk.

Project Man­age­ment devel­oped a stan­dard project frame­work for SRP and oth­er pro­grams. Part­ner involve­ment through a new project offi­cer com­po­nent & com­mu­ni­ca­tion plan, new process with defined gate con­trol, and bet­ter resources plan­ning, helped reduce project lead time by 48%.

103% 

Num­ber of Loans Released 

57% 

Val­ue of Loans Released 

25 Days to 4 Days 

Loan pro­cess­ing time shortened 

30% 

Part­ners enter­ing the program 

48% 

Decrease in Project lead time 

CONCLUSION

The com­pre­hen­sive over­haul of our clien­t’s micro­fi­nance and project man­age­ment process­es has yield­ed remark­able results. Improve­ments in oper­a­tional sys­tems and pro­ce­dures have led to sig­nif­i­cant increas­es in loans released and sub­stan­tial reduc­tions in pro­cess­ing time. With more part­ners enter­ing the pro­gram and project lead times halved, the foun­da­tion is now poised for sus­tain­able growth and expand­ed outreach.

Cru­cial­ly, the imple­men­ta­tion of behav­iour­al audit mech­a­nisms served as a fun­da­men­tal dri­ver of cul­tur­al change, sig­nif­i­cant­ly con­tribut­ing to the pos­i­tive out­comes observed. These audits includ­ed con­tin­u­ous learn­ing, guid­ing and coach­ing. They result­ed in a proac­tive and pos­i­tive atti­tude among front­line staff and man­agers, lay­ing a sol­id foun­da­tion for orga­ni­za­tion­al growth. This cul­tur­al shift, cou­pled with the sus­tain­abil­i­ty of new­ly imple­ment­ed process­es and sys­tems, has enabled enhanced per­for­mance and a cul­ture of con­tin­u­ous improvement.

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