What are the hidden challenges in microfinance performance that could undermine institutional success? This research uncovers critical insights from Gulu District, revealing how the Balanced Scorecard framework can illuminate both strengths and weaknesses in service delivery, reshaping our understanding of microfinance effectiveness.
5.10 – Constraints and Limitations of the Study
The present study had some constraints and limitations, which were unavoidable; these have been discussed as follows: First, it is an empirical fact that a larger sample would increase the confidence level in a research results.
However, there was a problem in obtaining data during this study. In the first instance, several of the MFIs recorded by the private sector development centre in Gulu, were not operational and a good number of them, which could be eligible for this study, were neither viable nor responsive.
This resulted into getting only eight MFIs for the study, instead of the proposed sample size of twelve (12). Secondly, although the questionnaires were carefully developed, and tested, some respondents could not complete their questionnaires due to various reasons, some of them involved management influence.
Thirdly, most of the MFIs had just been established, so both the customers and employees had not been with the MFIs for long.
This in one way or another affected their responses to the questionnaires. Fourthly, during the data analysis, the Pearson’s coefficient obtained was 0.521 at the significance level of 0.05.
This value is at a lower side, and this came because some responses were negative particularly in the areas related to staff motivation, and tools or equipments required for staff use, which were actually lacking.
Finally, poor infrastructures in the MFIs made it difficult for some people to access the appropriate financial services from the MFIs.
5.11 – Recommendations
Implication of the present research seems meaningful for both researchers and practitioners. It can be a valuable piece of work for academicians, microfinance institutions, policy makers and others who are directly or indirectly involved in organizational activities. Some of the specific recommendations are presented as follows:
That customers must be taken care of when providing services, management of the MFIs should take the initiatives to understand the customer needs, and a strong customer relation management should be in place to monitor and evaluate the customer needs as they come for the services in their institutions.
Generally, today’s customers have greater access to information, and greater expectations, they demand more from the institutions they have a business relationship with, often making it difficult to properly serve their needs.
Customers want their problems resolved as quickly as possible. Customers want to be treated with respect and do not want to be taken for granted. Customers want to talk to kind and understanding human beings. Customers want the management resolutions to be fair, not arbitrary, or one-sided.
Introduction of BSC requires sufficient training or sensitisation to all the stakeholders, which include customers, employees, and the directors of the MFI.
The design of the BSC should involve all the stakeholders, most especially, the employees, to avoid neglect during the implementation. They know better what performance metrics should be formulated.
The design of the BSC should be in line with the vision and strategy of the organisation in question, and it should be dynamic depending on the strategy of the organisation, and there must be a strong leadership support.
An organization’s success depends increasingly on the diverse backgrounds, knowledge, skills, creativity, and motivation of its workforce. Valuing the workforce means, committing to their satisfaction, development, and well-being.
The major challenges in valuing people include leaders’ commitments to the employees’ success, recognition that goes beyond the regular compensation system, offering development and progression within the organization and sharing the organization’s knowledge so that the workforce can better serve the customers.
In addition, contribute to achieving strategic objectives, create an environment that encourages risk taking and innovation, and create a supportive environment for a diverse workforce.
An organization with effective human resource strategy focuses on creating and maintaining a capable and motivated workforce. Essentially, it strives to ensure that the organization has the right people in the right place at the right time with the right skills and motivation to achieve the organization’s goals and objectives.
5.12 – Areas of further research
A number of areas were not covered by this study because of the specific objectives, which mainly revolved around the use of the balanced scorecard, performance evaluation, and service delivery evaluation in the microfinance institutions operating in Gulu district. The following areas therefore could be explored further by other researchers:
Undertake a detailed investigation on a similar topic but on a wider scope, covering more areas or districts. The robustness of the BSC as an evaluation tool for the MFIs should be extended by using a more elaborate performance metrics.
These metrics may even include social and environmental issues, which have come into play due to the ever-changing business climate, which may have effects on performance management and delivery of services in any organisation, but are not properly addressed by the BSC.
Investigate the reasons why microfinance institutions with high performance measurement orientation are more effective in delivery of services than those MFIs with low performance measurement orientation.
Make an in-depth study on the linkage between performance measurement and service delivery in the microfinance institutions.
Explore the area to find out the factors affecting performance measurement orientation and its impact on service delivery effectiveness.
Frequently Asked Questions
What are the key challenges in microfinance performance?
The study identified weaknesses in learning, growth, and innovation perspectives, affecting overall service delivery and performance levels.
How can microfinance institutions improve customer service?
Management of the MFIs should take initiatives to understand customer needs and implement strong customer relation management to monitor and evaluate these needs.
What recommendations were made for implementing the Balanced Scorecard in MFIs?
The introduction of BSC requires sufficient training for all stakeholders, and its design should involve employees to ensure relevant performance metrics are formulated.