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THE INTERVIEW: Jeff Prestridge speaks to David Nish about transforming Standard Life.
By Jeff Prestridge.
Updated: 21:54, 12 September 2010.
They’re knocking down the offices on the executive floor of Standard Life’s headquarters on Lothian Road, Edinburgh.
The demolition is all part of chief executive David Nish’s plan to turn the 185-year-old financial giant – six million customers and £179 billion of assets – into a more open organisation. He is fond of the word ‘transformation’.
It is his first interview since taking over less than a year ago from Sandy Crombie, the man who steered the business through a difficult demutualisation in 2006.
New broom: David Nish is the force behind a catalogue of dramatic changes at Standard Life’s Edinburgh HQ.
It was a bold appointment by a board that in the past had always opted for actuaries who were company ‘lifers’ such as Crombie, Iain Lumsden and the late Scott Bell.
Nish, 51, is not an actuary (and is pleased to let people know) but an accountant who had worked at Standard Life for only three years before formidable chairman Gerry Grimstone gave him the top job and told him to bring the company into the Brussels threat to merchant navy defiant: The Red Duster flag of the merchant navy age.
Nish comes from Glasgow – and still lives there with wife Caroline – which makes him an even bigger ‘outsider’. ‘I’m from the wrong side of Scotland,’ he says. He’s been married 27 years and has two children, both at university.
Judging by the physical changes at HQ, Nish’s wish for corporate glasnost is being put into action. Out are large executive offices with oak doors. In comes open plan. ‘I will have an eighth of the space Sandy had,’ he says with pride. ‘When I joined I had to walk 50 yards before I could find another colleague.’
Out also is the absurd policy requiring staff to enter the building through the basement, leaving the front reception for clients and the company executives.
Nish, a former PricewaterhouseCoopers partner and finance director of ScottishPower, has also got rid of the rule which reserves the top floor for board meetings and hospitality.
‘Someone deemed that staff could never be located above the executives, but that’s ending,’ he says. ‘We’re turning the floor over to staff training.’
However, 600 staff – 480 at headquarters – have been axed as part of a £100 million cost-cutting programme. The revolving door has also caught a dozen top executives, though Nish has made an equal number of senior appointments from within and externally.
Nish says this is necessary to make the company leaner and more nimble. ‘Standard Life is like a dam’, he explains. ‘There is pent-up energy behind it. We need to remove the bricks to allow the energy to flow. There is a lot of skill in this organisation but it’s underdeveloped.
‘We don’t need new ideas. We need to speed up our metabolic rate, improve the lead time it takes to get products to market, generate a stronger performance culture within the organisation and work out how we can best create shareholder value driven off doing best for our customers.’
The executive team has been shaken up to let individuals take decisions. ‘I can’t make them all. We’ve got good people here but they’ve never been allowed to do things,’ he says.
‘Only last week, Ronnie Collard, head of customer service, said to me, “At last I can get on with the issues I’ve wanted to tackle for the past 20 years but have never been allowed to do.” I need to mobilise all 10,000 staff to make decisions.’
Then, rather surprisingly, he says: ‘I’m not running an insurance company. We’re a long- term savings and investments business. I want to distance ourselves from being viewed as an insurer – of being slow, not consumer-oriented and not understanding the long-term savings market.’
Nish says regulatory change, Government policy and the impact of the financial crisis means that the focus of the next decade will be savings, not insurance.
‘We must construct appropriate savings and investment vehicles to help people accumulate for retirement,’ he says. ‘If we do this, Britain can be a genuinely exciting place for Standard Life to do business.’
Nish says the company’s thriving asset management arm will help it. The business has been boosted by the recent acquisition of hedge fund specialist Aida Capital and a tie-up with Japanese bank Chuo Mitsui.
Nish is also keen to break the company’s long-standing dependency on financial advisers. Although he intends to give advisers all the support they need to make the jump from being paid by commission to being fee-charging – a regulatory requirement – he wants to explore other sales avenues, such as direct to the customer and through employers.
‘I want to bring the outside world into Standard Life,’ he says. ‘We’re doing something we’ve never done before, which is talk to customers.
‘We don’t serve 70 per cent of the market, those people who don’t use advisers. That’s daft.’
Nish’s enthusiasm for the savings market may not be shared by some of Standard Life’s big rivals such as Prudential, which are increasingly looking East, though Standard Life has successful business operations in China and India, to which Nish is committed.
But more than ever, Nish wants to be at the heart of a British savings boom.