Mutuality – People and purpose ahead of profit

24 November, 2021

Whitecap Consulting, in partnership with the Association of Financial Mutuals (AFM) and a number of sponsoring partners, recently published a report analysing the strategic landscape for financial mutual organisations in the UK. The Whitecap team is summarising the key findings in this series of blogs.

In this article, Richard Coates and Chloe Thompson of Whitecap Consulting examine what impact mutuality has on the culture, behaviours and decision-making that are evidenced across the AFM membership. They also discuss the future opportunities for mutuality in light of the increased focus on social purpose, purpose-driven organisations and associated trends including conscious consumerism. In doing so, they pose several key questions for CEOs of AFM member organisations.

The recent report highlights a number of themes relating to mutuality, each of which is discussed in turn below.

Communicating the benefits of mutuality in a way that resonates with current and prospective members

AFM members highlighted the challenge of communicating the benefits of mutuality in a way that resonates with current and prospective members. For example, 71% of AFM member respondents to our online survey believe that mutuality is “acknowledged but not understood” by their members. This is by no means unique to the mutuals within the AFM membership, as a previous survey revealed 70% of building societies to have the same view.

The way members/customers experience the benefits of mutuality can vary but all organisations focus on doing right by their members.

When discussing the benefits that members receive as being a part of a mutual, there were clear consistencies amongst the CEOs. Most commonly mentioned were benefits such as the claims handling procedure being both efficient and empathetic and the fact that the mutual organisations can provide a very personal experience for members when they want to contact them which often is not the case when dealing with large corporate insurers.

Interestingly, there were some distinctions made with regards to the benefits members receive across the different sectors that AFM members are active in. For example, for providers who offer health and protection products, becoming more preventative and proactive in their approach to health care by introducing elements such as free health assessments, appears to be seen as a key benefit of being a member. As well as this, creating mobile apps for members which allow them to access their health data, book appointments and even check for illnesses such as skin cancer were also mentioned as key member benefits by health and protection providers.

This is in line with the direction of the wider competitive landscape, as large health insurance providers such as AXA have been using health data and digital tools to work alongside customers to prevent disease before they require treatment. The insurer is also offering health coaching platforms to their employees, who can follow fitness and health programs or access health advice in order to prevent illness (AXA, 2020). Similarly, Bupa describes its provision as proactive “lifecare”, rather than healthcare and offers a wide range of mental health services and natural therapies in order to try and improve their customers overall wellbeing (Financial Times, 2021).

There appears to be a clear link between mutuality and the influence it has on company culture and the type of employee that AFM members tend to attract and retain.

Whilst communicating the concept of mutuality to consumers can be a challenge, the influence that it has on company culture and internal decision-making means that employees of AFM members not only understand it but strongly believe in the value of mutuality and the benefits it provides for their members. Over one third of the CEOs interviewed explicitly highlighted a clear link between mutuality and the type of employee that it attracts with one AFM member stating, “mutuality is engraved in all our employees, it’s really part of who we are and what we do.” The survey data supports this as 90% of AFM members agree or strongly agree that mutuality is less about the title and more about the culture, values and actions of the organisation. A finding echoed by the building society sector, of which 99% also agreed with this statement.

The mutual structure and the absence of shareholders means that mutual insurers and friendly societies can make more consumer centric and long-term decisions.

As well as the impact it has on culture, the mutual structure and the absence of shareholders means that mutual insurers and friendly societies can make more consumer centric and long-term decisions that are for the benefit of their members and the sustainability of the organisation, with 90% of AFM members agreeing that mutuality influences strategic and operational decision making. CEOs appear to see themselves more as custodians of their organisation with the role of ensuring that it is still around for the generations to come rather than having a focus on profit maximisation or perpetual growth. For many of the AFM members, and for building societies too, their mutual structure means that growth is often not the primary indicator of success in the way it is for shareholder owned organisations where there is an expectation to continually increase shareholder value.

Mutuality appears to align well with the direction that society is moving in, especially post-Covid.

The final observation that relates to mutuality is regarding the direction that society is heading towards and the increasing resonance that mutuality may have going forward. According to the Global Human Capital Trends survey by Deloitte (2018), society is taking an intense look at the impact that organisations have and their expectations for good corporate citizenship are rising. They report that 77% of respondents to their survey cited “good corporate citizenship” as important and issues such as diversity and inclusion, income inequality and global warming are all at the forefront of people’s minds. Corporate citizenship has moved way beyond a CSR marketing tool and should now be a CEO-level business strategy, defining the organisation’s very identity. According to Affinity (2019), 87% of millennials and 94% of Gen Z expect companies to address pressing social and environmental issues, highlighting the increasing importance amongst younger generations.

The shift toward purpose-driven brands was already happening pre-pandemic and has exponentially accelerated since.

Social purpose provides an over-arching, broader social “meaning” to business practice. It is part of the organisational DNA and must be aligned with the business model to bring together employees, members/customers, suppliers, and the communities within which it operates. According to Harvard Business Review, brands that have integrated social purpose into their business models from the start are called “social purpose natives”. The societal benefit of these organisations is so deeply entwined with the product or service that it’s hard to see the brand surviving intact without it.

Executed well, social purpose place’s “purpose” at the centre of the organisational rationale and should encompass strategic and operational decisions and actions throughout the organisation. The authenticity with which a mutual can pursue its social purpose is difficult to match for PLCs, due to the potential for a conflict of interest when seeking to maximise shareholder wealth. For mutual organisations, their core purpose and doing right by their members is at the heart of their decision-making and an integral part of their identity, suggesting they too should be considered social purpose natives.

Questions for CEOs and Leadership Teams

Throughout each key section of the report, a total of 32 strategic questions were posed for CEO and their leadership teams to consider and address as appropriate. The questions in relation to mutuality are as follows:

  1. Are you clear about the role that you want mutuality to play when delivering the core purpose of your organisation?
  2. How do you demonstrate the benefits of mutuality tangibly through each of the different parts of your business?
  3. What targeted audiences of your business do you think currently do not fully understand mutuality?
  4. What are the most prominent channels that your business could potentially use to interact with these audiences?
  5. Have you undertaken research to understand which benefits of being a member with you they value most?
  6. Have you considered getting involved with The Mutual Way initiative in order to drive momentum behind getting the message of mutuality out there and understood?
  7. Could you develop a continuous feedback loop between your members and your organisation with the sole purpose of further crystalising the meaning and manifestation of mutuality?

This is the first in a series of blog posts that focus on key themes addressed in the research. The topics are covered in more detail in the report which you can download via the link below.

Background to report: Analysis of the Strategic Landscape for Mutual Insurers & Friendly Societies 2021

The research underpinning the report was conducted by Whitecap Consulting in partnership with the AFM and involved a quantitative data analysis of all 43 Mutual Insurers & Friendly Societies, interviews with 31 of the CEOs, and an online survey which received a total of 61 respondents.

The project was conducted in partnership with the AFM with support from industry sponsors including: Altus ConsultingBenenden HealthCirencester Friendly SocietyCornish Mutual, Fidelity InternationalHolloway FriendlyMillimanOddfellows (which includes Unity Mutual), PG MutualRussell Investments, and Royal London Asset Management.

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