Manulife Financial Corp. is retooling its Canadian business, reducing staff and collapsing office space in an effort to cut costs and improve customer service.
The Toronto-based insurance and investment company plans to eliminate 700 positions in its Canadian work force over 18 months through a voluntary severance plan and some attrition. Manulife Canada will also give up some office space and seek to hire new staff with technology expertise.
The move comes as Manulife is repositioning its business to compete more aggressively in the Canadian insurance and wealth-management marketplace as customers demand faster and more convenient digital service.
“There’s a big gap in terms of customers’ expectations and how they’ve changed, and the way that we deliver our services to them,” said Michael Doughty, president of Manulife Canada. “They’re looking to us – like every other company – to be able to provide slick, digital, intuitive customer experience, and our industry hasn’t caught up.”
The staff decreases are concentrated in Manulife’s customer experience and administrative teams and reductions will come from people electing to leave the company. Right now, Manulife has more than 13,000 employees in Canada and has added 2,000 people to its head count in the last five years.
Mr. Doughty said that 80 per cent of Manulife’s interactions with clients in Canada should be inexpensive, fast digital processes. This includes answering client questions, updating forms and even some underwriting processes. The other 20 per cent of client connections will be more involved and may require human connection, such as transitioning into retirement or a death in the family.
Manulife also plans to eliminate its office in Kitchener, Ont., to create one Canadian division headquarters in Waterloo, Ont., where employees can work together more easily. The company will also look to hire and retrain some employees in skills that it needs, such as software development and user interface design.
Manulife already serves more than one in three Canadian households, but Mr. Doughty wants to grow profits, premiums and the customer count. Part of that effort hinges on improving digital services, while the other seeks to be more competitive in the market through reducing costs. Some products, such as individual insurance, have proven tough sells to customers because of their onerous application processes. Manulife wants to improve its sales in part by introducing new artificial intelligence programs and automating customer transactions.
Manulife’s changes echo a similar announcement in April, 2017, from Winnipeg-based insurer Great-West Lifeco Inc. to reduce staff and invest in new technology. Great-West said it would reduce its Canadian head count by as much as 13 per cent, or 1,500 positions, within two years. It also pledged to slim down its real-estate footprint and invest in some new technology systems. The insurer took a charge of $215-million before tax in its second quarter of 2017.
Mr. Doughty said that he’s unsurprised others in the industry are trying to improve their offering. “I think this is a challenge that we don’t face alone,” he said. “Our industry hasn’t kept pace with the digital revolution that’s happening and the change in customer expectations that has gone along with that,” he said.
Mr. Doughty declined to comment on the costs associated with Manulife’s voluntary exit plan for staff – or potential future cost savings – saying investors will get more information on the company’s plans at its June 27 investor day.
Manulife Canada’s move follows global CEO Roy Gori’s plans to bring “transformational change” to the staid insurer. Already, that effort has included moves to cut costs and hive off underperforming legacy businesses, as well as renewing investments in markets where demographic trends are spurring demand for insurance and wealth-management products. Mr. Gori also shook up Manulife’s senior management team, appointing new heads to the company’s major regional divisions.