It has just been confirmed that two key staff have resigned from UIG and are

joining a competitor company. The two staff (James Owino and Simon Kivumbi)

were managing projects that together accounted for approximately 35% of UIG's

they were all senior managers and concluded by wondering what

the development might imply from a competitor perspective.

(ii) A member inquired whether the firm could not reconsider the

departing employees' salary as a last minute initiative to retain

them. The Head of Human Resource and Administration advised

that the exit interviews revealed that the departing employees

turned down the option to negotiate for salary increments.

(iii) The Head of Audit noted that the exit of the two best performing

underwriters should be an eye opener for management to reflect

upon what needs to be done to improve staff retention, citing the

need to examine the workflow processes at UIG. He stressed that

this did not mean there was something wrong, but the question

ought to be asked since losing the best is a symptom of something

bigger. He urged management to immediately conduct a candid

assessment of the internal operating environment, with a view to

identify issues affecting staff and implementing appropriate

solutions.

(iv) The CFO noted that specialist teams should be considered as a way

of motivating staff and improving efficiency. She added that there

was too much variability in the stream of work, particularly

underwriting. She said, ............ "Sometimes it seems like the whole

company is in a particular industry, then all of a sudden it is

something else. This cannot be stimulating for staff". She

concluded by noting that her findings were that very little profit is

made on some projects, yet the company continued to spend a lot

of money on them. She also requested management for support in

recruiting at least three more staff to join her team and proposed an

overhaul of the financial management and reporting system.

(v) In direct response to the above submission, the Head of

Underwriting asserted that he believed variety makes work

interesting. He added that his team would rather have variability

than routine. The former keeps work interesting as opposed to the

latter which breeds boredom.

(vi) Seeing that there was unlikely to be any agreement in sight, the MD

noted that most of what members were raising had been discussed

before, but no concrete solutions were arrived at. He asked

whether an outsider's view might allow for a candid assessment of

the firm. "What about the CFO who recently joined the senior

management team?" asked the Chief Business Development Officer.

commission income. Extracts from their exit interviews are highlighted in

Appendix 5.

The Managing Director is concerned that their departure could have significant

effects on the company but the real impact is yet to be assessed. He, therefore,

called a management meeting to discuss the development. The following is an

extract of the deliberations at the impromptu management meeting:

Min. 1: Agenda

The following agenda was adopted:

1. Opening prayer

2. Communication from the Chair

3. Resignation by James Owino and Simon Kivumbi

4. A. O. B.

Min. 2: Opening prayer

The opening prayer was led by the Head of Human Resource and

Administration

Min. 3: Communication from the Chair

The Managing Director (MD) thanked the members for turning up at

short notice. He stressed the fact that UIG was facing lots of

challenges, some of which were arising from an increasingly hostile

macro environment, while others were occasioned by internal

inefficiencies. He cited the finance department as one of the areas

that needed to be more effective in supporting management

decision making. He tasked the Chief Finance Officer (CFO) to

clean-up the finance department, adding that now that she was a

qualified accountant, and having spent one year on the job, there

was need to show some results.

Min. 4: Resignation by James Owino and Simon Kivumbi

(i) The MD expressed his regret that UIG had lost two of the most

highly treasured employees. He was particularly concerned that the

two staff might end up taking away some clients since insurance

business is largely relationship driven. He thereafter opened the

floor for discussions from members on what the appropriate

response should be. He urged the team to think strategically since 'Great idea', responded the MD. Besides, he added, "she has just

qualified as an accountant, so she still has the best accounting and

governance practices at her finger tips. By the way, accountants are

not just number crunchers these days, but they are all round trusted

business advisors."

(vii) It was resolved that the CFO takes the lead in conducting a

diagnostic study of UIG's business operations.

Min. 5: AOB

The MD noted that since the CFO was to conduct the diagnostic study on the

business operations of UIG, she should also assess the company's corporate

governance structures. He added that he had previously held a personal

discussion with Janat about the required governance reforms at UIG, but the

discussion was not concluded.

Required:

Assuming the role of the CFO at UIG, you have been requested to take lead in

developing a plan of action that will improve operational efficiency at the

company. Specifically, you are required to cover the following aspects:

Section A: Governance and Risk Management:

A1: Operational risks faced by UIG.

A2: Preventive measures against money laundering.

A3: Key pillars of corporate governance for a company like UIG.

A4: Ethical challenges faced by UIG and recommended interventions.

Section B: Finance and Accounting:

B1: Financial evaluation of the project to set up a subsidiary.

B2: Assessment of the qualitative factors to be considered before establishing

the subsidiary.

B3: Prerequisites for raising capital through the securities exchange.

B4: Likely impact of IFRS 9 implementation at UIG.

Section C: General Matters:

C1: Considerations prior to entry into new markets.

C2: Staff retention strategies to be considered by UIG.

C3: Your views on the proposed pension sector reform.

Appendix 5

Exit interview1 with James Owino (JO) and Simon Kivumbi (SK)

1. Please explain why you have decided to leave UIG.

JO: I just felt that it was time to move on to something different. I have

been with UIG for 8 years and learnt a lot. But as an underwriter, I

have done pretty much everything and I just needed a challenge.

SK: We just developed a great idea and it just seemed right to pursue it.

It is a huge challenge ahead for us, but we are giving it our all.

2. What do you see as the good things about working with UIG?

JO: The variety of business is the biggest plus. This keeps underwriters

on their toes all the time, allowing you to learn new things all the

time. You are never sure how the next day will turn out. From a

marine project, to a construction project, then into oil and gas, quite

interesting stuff. However, it can also be stressful at times.

I also loved the people. We have a very friendly team of staff that

make you feel at home. There is always somebody to ask when in

doubt.

SK: Oh, the people! No doubt it is a wonderful team. I will miss you all.

3. What do you like to change about UIG?

JO: Nothing really. I generally loved it all. However, it might be better

to specialise, because I think the company could give clients a better

service and become more efficient. On the flip side though, this

would unfortunately take away variety. It would also be nice to

allow staff some time to think about business process improvement.

Most of the time staff are busy chasing around clients for business

with limited time to talk about issues with one another. In addition,

meetings should be regular, to allow staff have their say.

SK: Apart from creating specialist units for the underwriters, nothing

really. The diversity is too much for the guys. Maybe there should

also be more support from the finance team and the IT team,

particularly when it comes to addressing client inquiries. It is really

embarrassing to issue erroneous statements to clients. The company

also needs to revisit its current setup in terms of the organogram.

Some types of products, particularly the pensions are a little bit specialised. Whereas staff can be expected to sell these products,

those without a financial background generally struggle. Oh, I

almost forgot the professional subscription. It is unfair for UIG not to

pay professional membership fees for staff, yet the company

benefits from the skills. Other than these, there is nothing to

change.

4. Are there any actions that UIG could take to persuade you to stay?

JO: No, not now. I have made up my mind to go and I have told all my

friends here. So, I do not think there is anything that can make me

change my mind. Besides, am looking forward to the new challenge.

SK: Hahahahaha; I do not think so.

5. What are you going to do?

JO: Simon and I have founded an insurance brokerage firm, which will

specialise in a niche where UIG has no existence. I am happy that

we are not going to compete with UIG.

SK: We are launching a unique model with focus on some neglected

market segments.

6. How do you feel about setting up a unit within UIG to serve this niche that

you have found?

JO: It would not work because I would not really be in charge.

SK: I do not think UIG would pay me for this. It would be too expensive

for the company.

7. Would you consider coming back if it does not work?

JO: I do not know, but it is very kind of you to ask. It is always difficult

to go back to an old job. But who knows, maybe it can happen.

SK: Yes, I would, at the right time.

8. Finally, do you think UIG is an ethical company?

JO: I think we have no ethical challenges, much as UIG is not so unique

from a typical Ugandan business.

SK: Certainly, yes. There are cases of conflict of interest, sharing of

commissions with brokers, 'clever' language in policies to hoodwink

clients, price optimisation, dual pricing and so on.

9. Thank you for having worked for UIG. We wish you every success in your

new endeavours.