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September 20, 2018

Equity plan sees McKinsey give rare hire advice

Equity Group boss James Mwangi's contract with the firm runs up to 2024. Photo/FILE.
Equity Group boss James Mwangi's contract with the firm runs up to 2024. Photo/FILE.

Whenever McKinsey is mentioned in regards to company restructuring, employees brace themselves for the worst.

The US-based firm has a reputation in Kenya for radical human capital changes that mostly result in job cuts going by consultancy jobs they have undertaken for several organisations locally over the years. Among those that were urged to lay off hundreds of staff to remain profitable notwithstanding their expansion plans include: National, Barclays, Kenya Commercial and Co-operative banks.

But there is always a first time for everything. Halfway through its contract with Equity Group, the multinational consultancy firm has recommended a massive 200 per cent increase in number of employees for the financial services firm which is planning a massive expansion in Africa.

The McKinsey advice, contained in its preliminary report to Equity Group, fits perfectly with the kind of management style the company's CEO James Mwangi is known for: trend setting for achievement of a maximum social-economic impact.

Equity Group is targeting to expand its business to at least 15 more countries in Africa eyeing to grow its customer numbers to about 100 million.

"McKinsey will disappoint people in this bank. For the first time in Kenya, they came to hire!" Mwangi reveals.

Mwangi who is credited with driving Equity's success from a loss-making bank to its current position as the most profitable bank in the country currently says the Africa expansion plans are dear to his heart.

"It is my legacy project," Mwangi says.

To oversee the project to completion, Mwangi signed an assurance contract with the group's directors and major shareholders that he will be at the helm of the company during the duration of the project.

"I am fully committed to this project and shareholders gave me a contract for up to 2024," he adds.

Mwangi whose total stake in the regional financial services giant is 4.88 per cent (direct shares of 3.45 per cent and indirect shareholding through Equity Group employee shareholding plan), says the achievement of the 100 million customers is "almost certain" given the company's fast growth pace in the last decade.

"In 2004 we had a customer base of 600,000 which has now grown to reach 10 million and this is in only one country. Now if we target 15 countries going by the same pace it is almost certain we will achieve our target," he explains.

Equity's latest expansion strategy dubbed 'Equity 3.0' started with an internal restructuring in which the organisation created a non-operating holding firm and changed its name to Equity Group Holdings Limited.

Under the holding company are 12 wholly owned subsidiaries namely Equity Insurance Agency Limited which offers insurance brokerage services, Equity Investment Bank Ltd, Equity Investment Services Ltd which is a non-trading institution, Equity Consulting, Equity Nominees and Finserve Africa Ltd which offers telecommunications services under the brand name Equitel.

Other subsidiaries are Equity Group Foundation which conducts philanthropy work and its lending businesses Equity Bank Kenya, Equity Bank South Sudan, Equity Bank Rwanda, Equity Bank Tanzania and Equity Bank Uganda.

As part of its Africa expansion plans, the group has been poaching high-profile executives from major global organisations and financial institutions in the last few years, a move that it intensified in the last few months as it geared up for the Equity 3.0.

For instance, it has appointed a new Group risk officer who is finishing up his contract at International Finance Corporation and set to join Equity in June.

The director of strategic partnerships and initiatives - Jumaane Tafawa- a Harvard University graduate joined Equity in 2012 from the World Bank. He is in charge of Equity Investment Bank, he also leads implementation of Equity Bank's SME strategy, business clubs and Equity Group Foundation entrepreneurship and innovation centre.

Chief financial officer Chinese national Raphael Hukai, joined Equity two years ago. He holds a Bachelor of Science degree in Computer Science from the Institute of International Politics of Beijing, China. Hukai previously worked for IBM. Hellen Gichohi the MD of Equity Group Foundation also has an impressive CV. She joined the company in December 2012 after serving as the president of Africa Wildlife Foundation. She holds a PhD in Ecology from the University of Leicester in the UK. She also holds a Master of Science degree in Biology of Conservation and a Bachelor of Science in Zoology from the University of Nairobi and Kenyatta University respectively.

The experience list in the 15-member group's top management team is as long as it is diverse. All with a global working exposure of some sort.

"Look at the depth of experience in the bank. Those of you who keep asking me about succession plans, any of the people behind me can do," said Mwangi on Wednesday, flanked by the team of directors, as he presented the quarter one 2015 financial results.

He added that the "house is now full" and ready to embark on implementation of the expansion strategy and recoup investments made on hiring the  crème de la crème team. Wage bill for the group during the first quarter of 2015 rose by two per cent to Sh2.48 billion compared to a similar period last year when it totalled Sh2.42 billion.

Besides competitive packages given to these directors to poach them from their plum jobs in top organisations, Equity enlisted the permanent services of Reuben Mbindu, its human resource director to woo these directors into joining the company.  Mbindu previously worked for Standard Chartered in UK and Hong Kong. Prior to working at Stanchart, Mbindu had worked at Unep, Deloitte and Siemens which had stationed him in Germany.

"This (the massive hiring in management) is what has pushed the wage bill up a little bit...anyway we have now finished investing and are getting down to work with the team," says Mwangi.

All the directors have locked contracts spanning seven to 10 years at Equity to ensure that the company recoups its investment in them before they change jobs if they wish to do so.

Back to the McKinsey report, Equity says, most of the new jobs will be outside Kenya while the new posts in the country will mainly be in the insurance and Finserve subsidiaries which are at initial stages of growth.

The insurance brokerage currently has 105 employees, a number that will be raised to 600. Under Finserve which runs the Equitel mobile phone services, the number of employees will be increased from 32 to about 3,000 gradually over the next few years, Mwangi said.

In total, McKinsey has recommended that given the expansion plans the group has to venture into 15 African countries, it will need to increase its staff number from 8,000 to 24,000.

Aside from staff requirements, McKinsey is also evaluating markets that Equity is eyeing and is currently conducting stress tests and evaluating market structures prior to the group launching operations in these countries.

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