The mining industry has undergone seismic changes in recent years. Plummeting commodity prices and currency fluctuations have dented profitability.
Complex extraction has necessitated investment in sophisticated, automated equipment. And, greater scrutiny of operational, environmental, and labor issues has increased pressure on corporate responsibility and financial transparency. Companies can no longer accept boom-and-bust as the norm, and seek sustainable performance, by transforming their operating models.
Despite the best-laid plans, nearly half of all strategic change initiatives fail, due to complacency, internal politics, inconsistent approaches, conflicting projects, and premature declaration of victory.
Some companies, however, have cracked change, to accelerate adoption and minimize productivity dips. They realize that it’s not enough to simply get the right processes and technology; they also work hard to mitigate the impact of change on people. There are three common ways to make this happen: standardization, outsourcing/shared services and divestitures of mining assets.
As a result of growth through acquisition, or lack of funds to invest in newtechnology, many mining companies havedifferent organizational structures, systems, data, processes and cultures.This pushes up costs, limits flexibility, and makes it harder to transformfunctions such as Procurement, Information Technology (IT) and Human Resources(HR).
Successful change is based upon a compelling vision, along with aproactive strategy to reinforce “good” behavior, through targeted training,development and rewards.
Less than half of all mining companies outsource any of their functions.Given the dispersed nature of the sector, initial centralization is generallyrequired before migrating to outsourcing or shared services.
Outsourcing impacts headcount and increases anxiety, so it’s vital toengage and retain your most valuable employees, by communicating the effects of change and assuring them of their roles in the new organization. Knowledge transfer is also paramount, to ensure that detailed working practices are passed to new locations and people.
Divestitures help minimize exposure to underperforming markets or less-strategic assets related to transportation or processing. To reduce disruption before, during, and after the sale, a strong retention strategy is, once more, a must. Employees need unambiguous leadership and a sense of inclusion. They must also be re-educated on new service and operating level agreements with suppliers.
Change management in mining must be approached in a proactive, structuredmanner, in order to build a culture where employees are permanently ready for,and even looking forward to, the next change, confident that they have the right skills and technology.
Find out about two fascinating case studies involving large-scaletransformation in the mining sector:
Case study: Making it real
Communication is the best policy. A large global mining company seeking tooptimize components of its finance, procurement, HR and IT functions waschallenged when its leadership team found itself divided in its support for boththe urgency and approach for changing its operating model. While the leadersworked to get on the same page, initial perceptions of executive misalignmentrapidly translated through the organization, resulting in pockets of conflictingand inaccurate understanding and the associated employee anxiety, confusionabout roles and flight of top talent. Understanding the nature of the problem,our initial focus was on establishing a common vision at the top of the house.We helped the leadership team define the ‘why, how and why now’ for thisinitiative as well as the collective and individual responsibilities forrealizing its benefits. With the vision crystallized, we triaged broaderorganizational understanding gaps with communication that clearly addressed theneeds of employees and external stakeholders. By actively and visiblypositioning leaders in key program communications, we helped reinforceconsistent messages, quieting the rumor mill and improving productivity.
Key lesson learned
Employees mirror leaders. In mining, where ‘we’ll wait it out’ can be thedefault reaction to change, particular emphasis must be placed on seniormanagement behaviors and communication.
Case study: Change leaders at all levels
In a period of growing demand for industrial minerals, a North Americanclient sought to restructure its operations which, after decades of growththrough acquisition, evolved into semi-autonomous business units operating in asiloed, disparate manner. Realizing the need for scale, the company undertook acomprehensive transformation of its finance, procurement, operations, supplychain, S&OP, and sales and marketing functions. Given the degree oforganizational change and the inherent need for buy-in across all levels, weworked with the client to develop project roles that required its people todevelop acumen in the new processes and technology being implemented and thecorresponding change management responsibilities, charging them withcommunicating the change to their leaders and peers, both within and outside oftheir function. By developing this cadre of change agents, we helped groom a newcadre of leaders, effective both as process design experts and confident asstewards and advocates of change, helping increase the reach of the overallchange management effort and accelerating adoption.
Key lesson learned
Challenging your high-potential, lower level resources with driving thechange can be the critical opportunity to identify and develop the leaders oftomorrow.