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Old Mutual Kenya fires 60 employees as stiff competition squeezes revenues

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NAIROBI, Kenya – Old Mutual Kenya has laid off more staff as it seeks a leaner team to survive fierce competition in the insurance and asset management market. The restructuring, which was concluded on January 17 this year, has claimed nearly 60 workers, touching off tension among company staff.

The move is expected to enhance efficiencies and streamline process, according to the management. “Towards the end of last year, I conveyed to you the new operations business structure that would take effect on 1st January 2012,” managing director Tavaziva Madzinga (pictured, left) says in an internal circular to employees.

“The structure, which has seen the consolidation of certain functions, will enhance our efficiencies and aims to streamline our processes which will ultimately see us improve our turnaround times to our sales channels and customers using our new retail system.”

Old Mutual Kenya pioneered unit trusts and offshore investments in Kenya but the company has lately been on the receiving end, with statistics showing both its insurance arm and asset management unit shedding market share. It has also been riddled with internal fraud allegations, which is said to have cost investors hundreds of millions of shillings and led to a major re-organisation of unit heads last year and firing of some.

This also precipitated a flight of investors in the OMAM (Old Mutual Asset Managers) division, which at one time was the market leader. The Kenyan unit hopes cutting staffing costs would give it the nimble size needed to compete against rivals like African Alliance (asset management), British American and ICEA, which are both in insurance and asset management.

People familiar with the matter say the lay-off, implemented between December 2011 and January 2012, has affected 56 people, who have been give Sh400,000 as compensation. “Though the implementation of the changes has not been an easy task for the Old Mutual Kenya family,” says the MD in the letter, “ we completed the restructuring process on 17th January 2012 after having one on one talks with those directly affected by the process. It cannot be underrated the toll this may have had on us, directly and indirectly but it is from this point on that we grow.”

He said the company expects to have fine-tuned a fully operational environment by the end of January. For the business to achieve this kind of seamless transition and stability, the respective Business Unit heads will be having discussions with their teams to outline how each individual is aligned to the new structure, he says.

Top on the agenda will be how the roles and responsibilities will be distributed. Mr Madzinga said this year will be challenging, but he had put strategies in place for growth. “Our focus for the year is built around driving sales and improving customer experience across the group,” he says in the circular. “I know that our Retail Sales Advisors and Corporate Sales team have jump-started this and our operations need to rally behind them to give them full support.”

He concludes his letter by saying: “I urge each of us, in their characteristic strength and resilience, to transition with speed and agility to ensure minimal disruption to both our clients and channels. I look forward to working with you in this new chapter in the OMK story that is full of opportunity.”

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LUKE MULUNDAhttp://Businesstoday.co.ke
Managing Editor, BUSINESS TODAY. Email: [email protected]. ke
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