Can a new broom deliver at Old Mutual?

Ngwerume had been with the group for nearly 30 years, having joined Old Mutual as a departmental manager before climbing up the ladder, landing the plum post of GCEO in September 2007.
Students of history will recall that this was the most difficult period in the country’s history: It was during this time that hyperinflation, tagged Zimbabwe’s number one enemy then, decimated the country’s battered currency, rendering it defunct early 2008.
Opinion has been divided on whether Luke, as the outgoing GCEO is affectionately known, deserves a place among corporate gurus, retired and serving, making up Zimbabwe’s Hall of Fame. His admirers credit Ngwerume for leading the group through the economic maelstrom. Several companies found the going tough and did not live to see dollarisation in February 2009 which, along with the advent of the inclusive Government that same month, slammed the brakes on the economic meltdown. Against all odds, Ngwerume was still able to steer the ship through turbulence. Over and above that, he saw through a number of projects left by his predecessor, Graham Hollick, including the US$2 million Ngezi Shopping Centre in platinum-rich Mhondoro-Ngezi in Mashonaland West.
Others, however, are not convinced that he did a good job. This group includes ordinary men and women whose policies with Old Mutual became meaningless upon maturity due to the effects of hyperinflation. As far as this group is concerned, his exit is more of good riddance to bad rubbish.
Within this category are reformists or rather optimists who see Ngwerume’s exit as one of the building blocks sine qua non for the restoration of the lost confidence.
The brickbats are not targeting Ngwerume alone: Anyone who short-changed policyholders during the hyperinflationary era has been painted with the same brush — that of causing the evaporation of confidence in insurance products. In the case of Ngwerume, the criticism goes beyond lost opportunities.
There are those who believe that he did not do much to help black Zimbabweans break into the mainstream economy, which still favours an elite few.
Given Old Mutual’s balance sheet size, they argue Ngwerume — the first black person to occupy the top office — should have done a lot more. This group, rightly or wrongly, reasons that it was always going to be difficult for him to leave a lasting impression. At the end of it all, it became a question of putting new wine in old bottles as nothing much changed.
That Old Mutual has been around for more than 165 years raises a lot of expectations, some of them informed by its colonial past. But nothing dilutes the fact that the group is one of the vestiges of colonialism that went through both World Wars, Ian Douglas Smith’s Unilateral Declaration of Independence, the liberation struggle, the land reforms of 2000 and now indigenisation but still managed to wither the storms. And yet inside those 165 years, Old Mutual could have set up thousands of black Zimbabweans in the manner the late Victor Muchatuta was able to transform the face of the health delivery sector, as managing director of the then Southampton Assurance. The company changed its name to Intermarket Life Assurance in 2002. Indigenous people have been livid about it. Last year, the militant Affirmative Action Group took its gloves off, saying Old Mutual’s rentals per square metre were ridiculously high. As a result, occupancy levels for most of its properties have been far from pleasing thereby depriving policyholders of income. To be fair on Ngwerume, the change he may have desired was not going to be achieved overnight since the governance system he inherited in 2007 had been entrenched for more than a century and a half. But that does not stop people from asking: Did he leave a mark and what hope is there that a change of guard would transform Old Mutual into what the ordinary folk desires?
The first part of the question is more for students of history. The latter part cannot be ignored as it influences the future.
Put differently, can a new pair of hands deliver at Old Mutual? A number of names have been thrown into the hat, tipped to replace Ngwerume as part of Old Mutual’s corporate renewal. Among those in the running is Jonas Mushosho, the managing director of Old Mutual Life Assurance; Central African Buildings Society managing director Kevin Terry and Zvomunoda Chizura, managing director Old Mutual Investment Group.
Each one of these executives has an impressive curriculum vitae. They have all seen it all in their fields and, given the opportunity, have what it takes to make a difference.
But still the question remains: Can Old Mutual allow whoever will succeed Ngwerume to ring changes in the manner the group does its business, or like those before him, the successor will find the office to be a straight jacket?
By looking internally for a replacement, Ngwerume’s successor will have one major advantage of knowing all the ropes having been within the system for years. Conversely, this strength might also become a weakness in that familiarity breeds contempt. In other words, the incoming GCEO might have become accustomed to the culture and the group’s values to the point of becoming ineffective. It would have made a difference if the new GCEO was to come from outside but again those who call the shots at Old Mutual could be avoiding causing a culture shock.
Another difficult part for the incoming GCEO is that Old Mutual is controlled from South Africa, making it impossible for any new broom to enjoy a free reign. Trying to ring changes from Zimbabwe will obviously run into the rigmarole of bureaucratic sloth, consultations and fears associated with any perceived change. Changing an established corporate culture is quite a Herculean task. It neither can be done by decree, nor through persuasion, however earnest. It certainly can’t be done by manipulation. It can happen over time, the equivalent in business of generations — but one can never be sure of that, either.
Corporate culture arises from the purpose for gathering individuals together into a collaborative group to pursue that purpose. That is the single most important factor behind the development of the group’s mores. Others include issues as diverse as the surrounding societal culture, the professions involved in the group, the industry, and the competitive environment. As group cohesion develops and matures, corporate culture arises from the interaction of all members of the group. During this initial period, managers — especially entrepreneurial owners — can indeed be quite influential in this process, though hardly its only, or even decisive, source.
However, once the culture matures, its centre of gravity settles down and becomes more stable, less subject to outside influence by external  — or even internal — factors.
That is why leaders who imagine that they are imparting change on corporate culture are typically only provoking alterations to its mood. These may be defensive reactions to what are perceived as arbitrary and even wrong-headed moves by the boss.
Or they may be powerful surges of energy and drive, if the boss has the wisdom — or the good fortune — to strike a chord that resonates with a productive fibre central to the corporate culture. Corporations can thus have changes of mood, and it is most certainly true that these often arise from the actions or decisions of top management. They can even have unsettling mood swings, every bit as dysfunctional to the organisation as such a phenomenon is in an individual.
The disaster that ensued at the National Aeronautics and Space Administration in the United States in January 1986 when the space shuttle Challenger blew up shortly after launch, killing all the crew, is often used to demonstrate the difficulty of changing an organisational structure. A special commission appointed by the then US president Ronald Reagan to investigate the accident found that NASA’s organisational culture and decision-making processes had been a key contributing factor to the accident. That beside the point, despite its dominance on local soil Old Mutual Zimbabwe constitute less than one percent of the group’s business. Even in its financial reports, Old Mutual Zimbabwe is only mentioned in passing with reference to it hardly sufficient to fill the back of a postage stamp.
In the half year to June 30, 2012 Old Mutual plc struggled to improve earnings from wealth management with its net margin declining from 32 British pounds (bps) to 30bps in the first half of this year. This was partly because of challenges in emerging markets, which includes Zimbabwe, Kenya, Malawi and Swaziland. What that does is to relegate Old Mutual Zimbabwe’s business on the Group’s agenda to the level of “any other business”, which hardly inspires confidence for those who want to see the group becoming actively involved in transforming the country’s economy.
There is therefore a very clear and present danger that Old Mutual Zimbabwe, with the passage of time, could be overthrown from the top spot in the insurance industry by the emerging players that might quickly respond and adapt to the changing environment.
Any change, tend to favour new players than monoliths that usually find it difficult to adapt.
It would be an indictment on Old Mutual Zimbabwe management if this were to happen given that Old Mutual’s interests, like an octopus, run in all directions. It is the largest investor on the Zimbabwe Stock Exchange through investments made in listed companies across all sectors on behalf of their Zimbabwean customers. It also manages the savings of more than a million Zimbabweans.
But the truth of the matter is that we can learn from experience if we are ready to adapt that experience to changed conditions.
This is precisely the challenge confronting Old Mutual Zimbabwe and their new GCEO whoever it is that eventually lands this demanding post.

Professor Sithole is an investment analyst working in the United Kingdom. He writes here in his personal capacity. He can be contacted at [email protected].