2017 annual report family

2017 Policyowners' Examining
Committee Report

It has been a privilege to serve on the Policyowners’ Examining Committee at such a transformative time. As a mutual company, Northwestern Mutual has always focused on doing what’s right and delivering on its promises, and its strength derives from the trust and quality of its products and people. Those values must remain a mainstay of the company, but today’s clients expect more. Companies in the digital economy have raised the bar for convenience and user experience, and consumers have come to expect tailored, convenient service at their fingertips in all areas, including their financial lives.

Three fourths of a circle with quotes in the center. As a mutual company, Northwestern Mutual has always focused on doing what’s right and delivering on its promises..."

We applaud senior leadership for having the vision to see the need for change and the courage to transform how the company offers financial security to its clients, especially when the company is strong and its existing business model remains successful. We wholeheartedly believe that the company is on the right strategic path in its efforts to move to the center of its clients’ financial lives and recognize the substantial progress that has been made toward that transformation — but encourage you to do more, faster. While we appreciate the scope and scale of the changes required, time is of the essence.

Continue to communicate the “why” behind the transformation — the client — and continue to drive mindset shifts around being more client-centric, taking a more data-driven approach and becoming a more digital company. Continue to clarify the strategic vision for what the company hopes to become — building off a foundation of its long-term value propositions while bringing together the best of human relationships and digital capabilities.

We encourage leadership to be clear about what will be delivered to future clients — not just in terms of products and services, but also in terms of the intermixed human and digital experience — and how those strategic choices will impact the company’s positioning against both current and future competitors. While we agree that it is important to continue to offer the best products backed by the company’s unsurpassed financial strength, in this age of seamless digital interactions, we believe it is the experience that effectively delivers financial security that will be fundamental to winning with clients in the future.

Three fourths of a circle with quotes in the center. We wholeheartedly believe that the company is on the right strategic path in its efforts to move to the center of its clients’ financial lives..."

We fully support leadership’s commitment to disciplined expense management and recommend an even greater focus on cost savings. You have made great progress, and we urge you to stay the course and continue to make the difficult choices to find even greater efficiencies to redirect savings into strategic priorities.

We believe you must also accelerate the talent and cultural transformation that will establish the “Northwestern Mutual of the future.” We urge leadership to more clearly define its holistic human capital strategy and articulate the behavior and mindset shifts required of leaders and employees. These behavioral shifts must then be translated into actionable steps. You must reinforce the desired behavior through metrics-driven, cross-functionally aligned performance management and compensation. We fully support the company’s move to a more agile approach — not only in software development, but also in its ways of working. We encourage leadership to focus on ways to increase the speed of decision-making by ensuring that decisions are being made at the right level by the right people.

There must be urgency to the company’s efforts to recruit, train, retain and elevate a more diverse workforce. The company’s clients of the future will be more diverse; nearly half of today’s college graduates are nonwhite, and more than 40 percent of primary wage earners are women.1,2 It is a critical business imperative to have a field force that reflects that target demographic. As the strategic vision and value proposition become clearer, we implore leadership to continue to prioritize the recruiting and retention of women and people of color as a strategic focus area and business imperative, particularly in the field. Keep celebrating successes and create more ways to share best practices that accelerate the culture change required to recruit and retain diverse talent.

Finally, because trust is at the core of the company’s value proposition and is essential to its ability to deliver financial security, the importance of cybersecurity cannot be overstated. This is not a future imperative. It is with us today. Continue to make cybersecurity a top priority and ensure it receives the consistent, high-level attention, expertise and resources it demands. The key is to defend against potential attacks as effectively as possible; protect core systems and data, ensuring resilience; and prepare with plans in place to react swiftly and transparently should breaches occur.

Three fourths of a circle with quotes in the center. Northwestern Mutual has always focused on its clients and policyowners, but this moment for the company is about transforming the client experience from the clients’ perspective."

Northwestern Mutual has always focused on its clients and policyowners, but this moment for the company is about transforming the client experience from the clients’ perspective. We believe that if the company can build on its legacy of trust, it can create a distinct competitive advantage not only for the company, but also its clients, and continue to succeed for the next 160 years.

1 U.S. Department of Education, National Center for Education Statistics. (2018). Digest of Education Statistics, 2016 (NCES 2017-094), Chapter 3

2 Sarah Jane Glynn, “Breadwinning Mothers Are Increasingly the U.S. Norm,” Center for American Progress, December 19, 2016

Nicole Arnaboldi photo

Nicole Arnaboldi

Chair of the 2017 Policyowners' Examining Committee, vice chairman of Asset Management and head of Direct Equity Partners business of Credit Suisse.

Robert Black photo

Robert Black

Former group president of Kimberly-Clark Corporation and former Chief Operating Officer and board director of Sammons Enterprises.

Sheila Marcelo photo

Sheila Marcelo

Founder of Care.com.

Randy Melville photo

Randy Melville

Senior vice president and general manager of Frito-Lay North America.

Juan Zarate photo

Juan Zarate

Chairman of the Financial Integrity Network, the senior national security analyst for NBC News and visiting lecturer of law at the Harvard Law School.

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