© Copyright 2003 RBAP. All Rights Reserved. Microfinance Staff Performance Evaluation

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 2 Performance Indicators Use of both quantitative and qualitative performance indicators Eighty percent (80%) of the AO’s final rating will come from his/her quantifiable outputs and 20% will be coming from his/her non- quantifiable contributions.

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 3 Quantitative Indicators Number of Active Borrowers Amount of Loans Disbursed Portfolio At Risk (PAR) Ratio

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 4 Number of Active Borrowers - refers to the number of borrowers with outstanding loans who are under the Account Officer’s supervision Amount of Loans Disbursed - refers to the amount of loans disbursed by the AO. This indicator is used as a proxy indicator for the AO’s loan portfolio. Setting a monthly loan disbursement target is easier than determining a monthly loan portfolio target. Portfolio at Risk Ratio - refers to the ratio of the total balances of accounts with past due installments (1 day or more) under the supervision of the AO to his/her total loan portfolio.

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 5 In terms of their relative importance, the amount of loans disbursed and PAR are given high and equal importance (40% each), while the number of active borrowers is given lesser importance (20%). The bias, in so far as individual lending is concerned, is for the AOs to focus on relatively bigger loan accounts and to maintain zero PAR.

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 6 End of Period Accomplishments and Consistency of Performance The evaluation will also look at two aspects of the AO’s outputs: the end-of-period accomplishments, and the consistency of his/her performance during the period. The end-of-period accomplishments refers to the comparison of the AO’s accomplishments with his/her targets as of the cut-off date of the review. Consistency of performance refers to the extent by which the staff has met his/her monthly performance targets. (When measuring the consistency of performance of the AOs on a monthly basis, the number of new borrowers brought in by the particular AO will be used in lieu of the number of active borrowers.)

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 7 The principle behind looking at the consistency of performance is that a staff who was able to attain his/her targets consistently on a monthly basis should be given a higher rating than a staff who had, for the most part of the review period, fell below his/her monthly targets but, nevertheless, was able to meet his/her targets during the “last two minutes” of the review period, so to speak. The consistency aspect, however, could be disregarded when a monthly staff incentive scheme shall have been introduced. In terms of their relative importance, 75% of the AO’s final rating in so far as his/her quantifiable outputs are concerned will come from his/her end of period accomplishments, and 25% from the consistency of his/her performance.

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 8 Qualitative Performance Indicators Knowledge of work Quality of work Attitude Customer service Other Factors

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 9 Scoring System – OVERALL RATING Total Weighted ScoreRating 4.0Outstanding 3.1 – 3.9Exceeds requirements 2.1 – 3.0Meets requirements 1.1 – 1.9Below requirements in some areas 1.0 and belowUnsatisfactory

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 10 Qualitative Indicators – End of Period Accomplishments Number of Active Borrowers % of Target AccomplishedScore Over 100%4 85 – 100%3 70 – 85%2 Below 70%1

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 11 Qualitative Indicators – End of Period Accomplishments Portfolio At Risk (PAR) Ratio PARScore 0%4 0.01% %3 2.56% %2 Over 5.00%1

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 12 Qualitative Indicators – Consistency of Performance Consistency will be measured by the average monthly accomplishments of the AO and his/her average scores for the period.

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 13 Qualitative Indicators The scoring system will be the same as that for the quantitative indicators where the highest level being given the highest score of 4, and the lowest level, 1. The maximum scores, together with the corresponding weight of each performance area, are shown in the table below.

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 14 Performance Area Maximum Score Average Score WeightWeighted Ave. Score A. Knowledge of Work B. Quality of Work Thoroughness4 Organization4 Accuracy4 Timeliness in submitting reports4 Monitoring of Accounts4 Written communication skills4 Sub-total C. Attitude Initiative4 Concern for the company4 Team work4 Convictions4 Integrity4 Sub-total D. Customer Service Appearance4 Customer Relations4 Sub-total Other Factors Punctuality and attendance TOTAL SCORE 4.0

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 15 Estimation Procedure Quantitative Indicators Step 1:Evaluate the AO’s End of Period Accomplishments The target is assumed to be 15 new borrowers per month, or a total of 45 active borrowers during the three-month review period. The target for loans disbursements is assumed to be P100,000 per AO per month, or a total of P300,000 for the review period. The target PAR is assumed to be 0%.

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 16 IndicatorTargetActual Accomp. % Accomp. ScoreWeightWeighted Score # Active Borrower % Amt. Of Loans Disbursed 300,000280, % PARR0%1.0%N/A Total 2.6

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 17 Step 2:Evaluate the AO’s Consistency The number of new borrowers brought in by the AO is assumed to be as follows: 5 in Month 1, 16 in Month 2, and 9 in Month 3. The target is 15 new borrowers per month. The amount of loans disbursed by the AO is assumed to be: P65,00 in Month 1, P125,000 in Month 2, and P90,000 in Month 3. The PARR on a monthly basis is assumed to be: 0% in Month 1, 0% in Month 2, and 1.0% in Month 3.

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 18 IndicatorMonth 1Month 2Month 3Monthly Average WeightWeighte d Score No. of New Borrowers - Actual Target15 - % Accomplishment33.3%106.7%60.0% - Score Amount of Loans Disbursed - Actual65,000125,00090,000 - Target100,000 - % Accomplishment65.0%125.0%90.0% - Score PARR - Actual0% 1.0% - Target 0% - Score %0.40%1.47% TOTAL 2.94

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 19 Step 3:Determine the AO’s Total Score for the Quantitative Indicators IndicatorScoreWeightWeighted Score End of Period Consistency of Performance Total 2.67

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 20 Qualitative Indicators Step 4: Evaluate other qualities of the AO’s performance Assume that the AO performance in other aspects of his work is evaluated by his/her supervisor in the following manner:

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 21 Performance AreaMaximum Score Average Score WeightWeighted Ave. Score A. Knowledge of Work B. Quality of Work Thoroughness2 Organization3 Accuracy2 Timeliness in submitting reports3 Monitoring of Accounts3 Written communication skills3 Sub-total C. Attitude Initiative3 Concern for the company3 Team work4 Convictions3 Integrity4 Sub-total D. Customer Service Appearance4 Customer Relations4 Sub-total Other Factors Punctuality and attendance TOTAL SCORE 3.00

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 22 Overall Performance Rating IndicatorScoreWeightWeighted Score Quantitative Indicators Qualitative Indicators Final Score 2.74 Overall Performance Rating Meets Requirement

© Copyright 2003 RBAP. All Rights Reserved. Staff Evaluation 23 Basic Policies in Performance Evaluation Targets should be set at the start of the rating period. Objective setting should be a participative process. Targets should be documented and signed. The staff’s targets are also the supervisor’s targets. Observe confidentiality of Ratings. Performance ratings should be linked to incentives. Incentives should be separate and not discussed as part of salary.

© Copyright 2003 RBAP. All Rights Reserved. 24 The MABS program is implemented by the Rural Bankers Association of the Philippines. It receives funding support from the U.S. Agency for International Development with oversight provided by the Office of the President and the Mindanao Economic Development Council. Rural Bankers Association of the Philippines Mindanao Economic Development Council Office of the President of the Philippines U.S. Agency for International Development The general contractor is Chemonics International, Inc. These materials were made possible through the support provided by the U.S. Agency for International Development/Philippines under the terms of contract no. 492-C The opinions expressed herein are those of the author(s) and do not necessarily reflect the views of the U.S. Agency for International Development.