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March 22nd, 2012

Strengthening for sustainability was the feature story in Newsday Business Day Magazine


Newsday Business Day Magazine, Thursday 22nd March, 2012 Written By Business Reporter Darcel Choy

THE Unit Trust Corporation will celebrate its 30th anniversary this year and in that time, changes have been made. Last year, the corporation began restructuring at the corporate level which Executive Director Eutrice Carrington explained was part of a strategic plan themed “Strengthening for Competitive Sustainability”.

In an interview at her office on Independence Square, Port-of-Spain last week, Carrington said in November 2010, a strategic planning exercise was commissioned by the board of the Unit Trust Corporation with about 90 persons in the organisation involved in the exercise. Those involved included senior managers, some professionals and para-professionals and non-professionals

They conducted an extensive research in several areas so the corporation could gain an understanding as to where they were so they would know how to proceed going forward. That exercise was concluded in May 2011 and got the approval of the board. The strategic planning period was identified as 2011 to 2015 to be divided in to two periods.

The first period entitled “Action Horizon” is for the period 2011 to 2013 where the corporation would begin executing its initiatives and the second period entitled “Impact Horizon” for the period 2014 to 2015 where they expect to realise the benefits of several of the initiatives that they identified.

“Given our strategic theme, we identified three strategic objectives which are financial restructuring, improved efficiency and governance, reputation enhancement where we sought to enhance our brand and image and refocus on our customers. We determined these three strategic objectives would be central to us realising the theme of competitive sustainability,” she said.

Carrington said they recognised that to improve efficiency and governance a number of things would have to be done including transforming the organisation by restructuring and repositioning it at the corporate level.

“We recognised we would have to reform key processes and procedures that we would need to refine our corporate governance, improve our risk management and cost management framework. in terms of executing the organisational restructuring at the corporate level. As executive director I came up with the organisational structure at the level of the executive and having determined that structure there was organisational realignment and a number of departments were realigned based on the new structure,” she explained.

Carrington went to the board with the organisational structure and got it approved. The information was then disseminated to senior managers and in October 2011 it was disseminated to the rest of the staff at a staff meeting.

She said they recognised there would be redundancy so a redundancy policy was developed. “Armed with the policy we were able to advise the staff that we expected 28 persons to become redundant and we expected that 80 percent of those persons would be senior managers,” she said.

The first level restructuring occurred at the level of the vice-president. The position of marketing and communication international business, the position of vice-president customer services, the position of vice president electronic services, the position of chief risk officer, the position of vice-president corporate support services all became redundant.

These positions became redundant as the restructuring created new positions including corporate affairs vice-president, corporate support admin services and vice-president marketing, communication, and distribution channels. To fill the new positions, those who became redundant were asked to interview for the positions.

The interview panel consisted of a board sub-committee the executive responsibility for human resource and the executive director. All the candidates were interviewed and the jobs were awarded.

“Those candidates who were not successful were made redundant. We had a very attractive redundancy package. We did not use the contract terms which simply require you to settle at three months income. We went to the severance act to allow the unsuccessful candidates to get the maximum compensation possible. Along with that, I gave commitment in the severance letter that I will be willing to give references,” she said.

Carrington said she tried to lighten the burden of the severance as much as possible by reaching out providing all that was legally available to these unsuccessful candidates.

“The restructuring continues and as people become redundant, where we can absorb them they will be and where we cannot absorb them they will be released but we will provide them with support. For example they would have access to the employee’s assistant programme for a maximum of six months, they will also have access to the group health plan for a maximum of three months,” she said.

When asked if the restructuring had a negative impact on the corporation Carrington said a negative impact would be reflected on how people respond to the products and services that is offered.

“When I look at what has happened for the year thus far, what we are seeing that the trend is quite favourable. In 2011 we had net capital inflows of $563 million for the year to date we had net capital inflows of $293 million which is 52 percent of net capital flows for 2011. When you look at our fund performance, we continuing to benefit from our fund performance in 2011. The corporation’s universal retirement fund posted a rate of return of 10.24 percent which is a very attractive rate in this environment. Followed by our growth and income fund generating returns of 7.49 percent.

“We had our income funds providing investors with positive returns and when we look at our fund performance relative to our peers our international funds were all second,” she explained.

Carrington admitted the lowering interest rates impacted corporation’s earning potential. She said in 2007 rates in the money market across the maturity spectrum declined from an average of seven percent it declined by 5.6 percent to a level of 1.36 percent and that decline to less than two percent occurred in 2009, thereafter interest rates consistently trended down and by the ending of 2011, rates averaged 25 basis points or 0.25 percent.

“The rate of interest is reflected on the rates of returns on the funds and it impacted the earning potential of the corporation. we generated investment income of 6.96 million in 2011 compared 780 million in 2010,” she said.

She said investors continued to see the institution as a safe, sound and secure investment as well as to see its rates as competitive.

Carrington believes that investors have become more confident than they were a few years ago and she attributed that to the way Government handled the Clico bond issue.

She also believes that the economy was poised to do better than last year however the level of economic activity the country will see is dependent on the speed with which the public sector investor programme is executed.

“The Government is a critical catalyst in the economy I would expect that the economy will recover but the rate of recovery will depend on that programme,” he said.

Questions have been raised about Carrington’s decision to stay on as executive director at the corporation given that she celebrates her 60th birthday tomorrow. She explained that it was not her decision as she was contracted by the UTC to be the executive director for a period that goes beyond her 60th birthday.

“The corporation has had the policy in place since 1995 to allow its executive director to serve beyond their 60th birthday. It is not an unusual situation as we have had two executive directors serving beyond their 60th birthday,” she said.

Carrington said as the corporation celebrates 30 years it was important to note that its mandate has since been expanded.

“Thirty years ago, we were given a statutory mandate to create the vehicle for ordinary people to invest in the capital market and to establish a mutual fund industry and by 1993 that was firmly established. We would continue that mandate but we have expanded it to include improving the financial well being of the investing public of Trinidad and Tobago which we will do,” she said.