Volume I aims to achieve four overarching objectives:

1. Broaden understanding of the various functions that contribute to successful FSP performance
2. Supply a portfolio of tools that can assist managers to strengthen the performance of their unit, branch or institution
3. Stimulate the sharing of experiences and strategies for meeting current challenges
4. Expose managers to microfinance experience from other parts of the world and inspire more innovative thinking about what might be possible in the local environment

In addition, each of the 24 modules in the course has specific learning objectives that guide discussions and activities in that area and help to ensure the consistent transfer of knowledge and skills across decentralized delivery channels.

This section covers four topics that address different aspects of the course title: microfinance, management, the definition of performance, and the institutional context for improving performance.

• Module 1: The Manager's Mandate addresses the topic of management. What are the roles and responsibilities of a manager? And what makes individuals effective in carrying out those responsibilities? This module explores the four functions of management, different management styles and characteristics of effective managers.
• Module 2: Financial Services for the Poor addresses the topic of microfinance. It explores the diverse financial service needs of the low-income market and the products that can meet those needs. It analyses the various aspects of outreach and the challenge of sustainable outreach expansion.
• Module 3: Institutional Options considers the formal, semi-formal and informal identities through which managers may have to work. It compares the advantages and constraints of different institutional types and discusses how transforming to or partnering with another type of institution can help managers achieve goals and overcome environmental challenges.
• Module 4: Strategic Direction explores how an institution's vision, mission, values and objectives define the performance managers are expected to achieve. It also examines how managers can use these four components to guide and motivate better performance from their team.

This section focuses on clients and how managers can build long-term relationships with the markets they want to serve.

• Module 5: Market Research explains the importance of understanding the needs, behaviors and preferences of clients. It explores the market research process as well as primary and secondary data-gathering techniques.
• Module 6: Product Development examines how to create financial products that are valuable to clients and the institutions that deliver them. It analyses the product development process and the preconditions for successful product development.
• Module 7: Communicating Value looks at how to market products in a way that distinguishes them from the competition and clearly communicates their benefits to clients. It addresses market segmentation, messaging and sales techniques.
• Module 8: Customer Service explores the definition and delivery of excellent customer service. It discusses tools and strategies for improving customer service and for creating a customer service culture.
• Module 9: Customer Loyalty examines why long-term client relationships are so important. It then considers multiple approaches to creating and monitoring loyalty.

This section focuses on risk management.

• Module 10: Introduction to Risk Management provides a framework for understanding the variety of risks to which microfinance institutions are vulnerable as well as a process for controlling those risks.
• Module 11: Credit Risk addresses the most fundamental vulnerability of a financial institution - the possibility that clients will not repay their loans. It examines a multitude of steps that can be taken before and after loan disbursement to reduce the likelihood and scale of loss.
• Module 12: Staff Fraud and Security Risk considers how to prevent, detect and respond to fraud. It also discusses strategies for managing institutional exposure to theft, fire, and other types of damage.
• Module 13: External Risks explores the degree to which regulatory, macroeconomic, political, demographic, environmental and competition risks can and should be managed. For priority risks, monitoring and mitigation techniques are discussed.

This section focuses on strengthening the people, structures, systems and culture through which microfinance institutions deliver their products and services.

• Module 14: Human Resource Management explores how to recruit, develop and motivate people to achieve an institution's mission and objectives. It examines specific techniques for evaluating performance as well as for improving employees' ability and willingness to improve their performance.
• Module 15: Institutional Culture considers why and how shared values, attitudes and behaviors can be among an organization's greatest assets. It analyses techniques for proactively shaping a culture that fuels stronger performance.
• Module 16: Organizational Structure examines how microfinance institutions divide responsibility for the work that needs to be done and how they organize people, functions and partnerships to facilitate implementation of that work. It compares the impact of different structures on information flow, accountability, institutional efficiency and client value.
• Module 17: Using Organizational Architecture to Manage Growth explores how human resource management, institutional culture and organizational structure define an institution's capacity to grow. After analyzing a variety of growth strategies and patterns, it considers how an organization's architecture needs to evolve over time to support healthy growth.

This last section focuses on strategies for enhancing efficiency and productivity.

• Module 18: Understanding Efficiency and Productivity addresses the definition and measurement of efficiency and productivity. It explores the root causes of inefficiency and introduces multiple strategies for doing more with less.
• Module 19: Performance Incentives examines the role of financial and non-financial incentives in motivating staff performance. It introduces various incentive scheme options and identifies key characteristics of effective incentive scheme design.
• Module 20: New Technologies looks at a range of technology options that are enabling microfinance institutions to increase output, lower costs and deepen low-income households' access to financial services. It discusses the opportunities and challenges presented by different technologies and provides guidelines for introducing a new technology effectively.
• Module 21: Managing Change tackles the tricky business of introducing new things in an effort to improve performance. It examines why there is often resistance to change and suggests strategies for facilitating changes that generate productive results.
• Module 22: Costing and Pricing explains the relationship between costs and pricing and explores how costing and pricing can be tools for increasing efficiency and productivity. It compares two principal approaches to costing and cautions against common pricing errors.
• Module 23: Plans, Budgets and Reports analyses tools for defining measurable performance goals and then tracking performance to ensure those goals are met. After considering different types of plans, budgets and reports, it provides guidance on what and how to monitor.
• Module 24: Managing Performance brings the previous 23 modules together in the context of the four functions of management. It explores how the tips, tools and techniques introduced during the course can assist managers in fulfilling each function more effectively.

Volume 1 is available in generic version and special social performance management (SPM) edition with SPI4 at its focus.

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Generic version

SPM edition

 The course is based on the ILO publication “Making microfinance work. Managing for improved performance” (420 pages, preview here).

Managing Product Diversification aims to achieve four main objectives:

1. Raise awareness of the opportunities and risks that product diversification presents
2. Explore options for improving the outreach of microfinance institutions through product diversification
3. Provide tools and strategies for managing the product diversification process successfully
4. Encourage more proactive management of FSP product portfolios over time

In addition, each of the 24 modules in the course has specific learning objectives that guide discussions and activities in that area and help to ensure the consistent transfer of knowledge and skills across decentralized delivery channels.

This introductory section helps microfinance institutions (FSPs) plan and organize themselves for successful product diversification. It encourages FSPs and the entities that support them to reflect upon their diversification efforts to date and how they might do things differently in the future to expand their outreach through ongoing product and market development.

• Module 1: Understanding Product Diversification defines product diversification and the concept of a strategic product mix. It explores the many reasons why microfinance institutions might want to develop new products and markets while raising awareness of the damage diversification can cause.
• Module 2: Managing Product Development focuses on the process through which FSPs can effectively manage their product development activities, both those that result in the creation of new products and those that improve the performance of existing products. It examines techniques for generating a consistent flow of product development ideas, screening those ideas, and managing the risks inherent in diversification to limit the damage that could be caused.
• Module 3: New Market Development compares the process of new market development to that of new product development. It introduces the concept of an outreach strategy and explores how market segmentation can be used to better understand and serve new types of customers.

This section explores the variety of products that microfinance institutions (FSPs) might want to include in their product portfolio. Each module examines the characteristics, utility and challenges of one type of product, using examples from FSPs around the world to illustrate variations in the way that type of product can be delivered.

• Module 4: Savings discusses mandatory and voluntary savings products, including demand deposits, fixed deposits and contractual savings. It examines the prerequisites for intermediating savings and suggests strategies for addressing major challenges associated with savings mobilization, such as fraud prevention, cost control, liquidity management and marketing.
• Module 5: Long-term Savings and Micropensions explores the supply of, and demand for, savings products with a duration of five years or more. It reviews product design features that can meet the needs of the low-income market, giving special attention to products that bundle savings with insurance, and highlights issues that must be addressed for this type of product to be viable.
• Module 6: Microenterprise Loans compares multiple methodologies for delivering microenterprise credit and explores the conditions under which certain methodologies might be more appropriate for serving a particular market segment than others. It discusses the main elements of microenterprise loan product design and the trade-offs that must be managed to create client value while managing credit risk.
• Module 7: Housing Loans focuses on the design and delivery of credit products that enable individuals to finance their habitat needs. This may include repairs, expansion, new home construction, property legalization or access to water, electricity or other services. It examines how housing loan design and delivery differs from other credit products and suggests strategies for managing risks and challenges that are unique to this product category.
• Module 8: Emergency and Consumption Loans describes the rationale for this type of lending as well as the controversy which surrounds it. It offers guidelines for designing a product of this type that can assist low-income households in managing risk and irregular cash flows while avoiding over-indebtedness.
• Module 9: Microinsurance examines the concept of insurance and the conditions under which this type of risk-managing financial service is preferable to savings or credit. It explores the different types of microinsurance products that are being used by low-income households and the structures through which FSPs are able to deliver those products effectively.
• Module 10: Leasing describes financial products that facilitate clients' use of equipment that they do not own (or own only in part). It clarifies the major differences between leasing and asset-backed lending and explores the conditions under which FSPs might consider adding leasing to their product mix.
• Module 11: Money Transfers addresses the range of financial services that enables the movement of money from one party to another. This includes bill payment, remittances, government transfers and person-to-person transfers. It compares the building blocks of different money transfer systems and explains how the money transfer value chain works before examining the business models through which FSPs can offer money transfer services.
• Module 12: Non-financial Services considers two important themes: 1) why some FSPs offer education, health, business development or other non-financial services; and 2) how such services can be efficiently and effectively delivered so as to complement an institution's financial service offering.
• Module 13: Grants explores how the provision of small sums of money or in-kind benefits to clients without an expectation of repayment can enable FSPs to build productive relationships with disadvantaged market segments. It also discusses how to design micro-grants so they do not create dependency, discourage savings, or distort the market for sustainable microfinance.

This section explores the characteristics of eight market segments, the nature of the product mix that can meet the needs of each segment, and the strategies that microfinance institutions are using to overcome key challenges associated with serving each segment.

• Module 14: Targeting Marginalized Markets focuses on finding, recruiting and serving market segments that are difficult to reach because of their small size, isolation or particular vulnerabilities. This includes disabled persons, bonded laborers, people living with HIV/AIDS, gypsies, and others.
• Module 15: Pre-microfinance for the Poorest focuses on a market segment that is highly marginalized but substantial in size. It examines the barriers to financial service access for the poorest of the poor, from both a supply and demand perspective, before exploring the product mix and adaptations that are enabling FSPs to reach this segment effectively.
• Module 16: Microfinance for Youth focuses on potential microfinance clients who are underserved because of their young age. It explores the product design and delivery mechanisms that can help youth become economically active, start their own enterprises, finance education and manage risks.
• Module 17: Microfinance for Women focuses on the female market segment and considers how FSPs can adjust their product design, delivery mechanisms and communication strategies to develop longer-term, more empowering relationships with low-income women.
• Module 18: Post-crisis Microfinance focuses on communities that have been affected by armed conflict, coups, earthquakes, floods or other natural and man-made disasters. It discusses when and how microfinance can be an appropriate intervention in such communities as well as the steps FSPs can take to prepare themselves and their clients for crisis.
• Module 19: Islamic Microfinance focuses on low-income clients who want access to financial products that respect Islamic law. It describes how key Islamic principles influence product design and pose unique challenges for those that want to serve this segment of the population effectively.
• Module 20: Rural Microfinance focuses on a market segment that government and non-government actors have been trying to reach for decades, yet remains vastly underserved. It summarizes the factors that make rural areas so challenging and presents features of an outreach strategy that are enabling some FSPs to serve these areas more effectively.
• Module 21: SME Finance focuses on small and medium enterprises whose financial service needs are usually too small to attract the interest of mainstream financial institutions and too large to be met by a typical FSP. It explores the changes that some FSPs have made to meet the needs of their most successful microenterprise clients, changes that are now enabling them to reach the underserved SME segment.

This last section returns to the management agenda. How can microfinance institutions plan, organize, lead and control the product diversification process to maximize the benefits for themselves and their clients?

• Module 22: Building and Managing Partnerships looks at the important role of partnerships in enabling institutions of various types to diversify efficiently and effectively. It surveys the continuum of partnerships found in microfinance and the factors that contribute to their success. It also identifies strategies for mitigating major risks at each stage of the partnering process.
• Module 23: Delivering a Diverse Portfolio addresses the challenges inherent in delivering a more complex product mix. It raises awareness of the issues that need to be dealt with as a product portfolio expands and provides specific suggestions for adapting institutional culture, redistributing functions and responsibilities, empowering staff, communicating with clients, reengineering systems and managing change.
• Module 24: Product Portfolio Management moves beyond the creation of a diverse product mix to focus on the maintenance of a strategic product portfolio over time. It introduces the product portfolio management function and suggests tools for implementing the activities associated with it, including the definition of product strategy, product elimination and portfolio review.

Volume 2 is available in generic version and special segment focused editions.

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Generic version

Refugees and host communities

MSMEs 

Rural Areas

Youth

The course is based on the ILO publication “Making microfinance work. Managing product diversification” (612 pages, downloadable).