Shift Miner Magazine www.shiftminer.com

22nd July 2013 3

For the sins of our fathers

THE aggressive cutbacks underway in Queensland’s coal sector signal companies have no choice but to cut costs to survive the current market.

“The state of their business has determined there have to be cost reductions, there’s no choice now,” Confiance director Peter Cross told Shift Miner.

“But most companies are reaching for the low hanging fruit and hitting the suppliers and the contractors.”

Mr Cross said the downturn was a time when companies should be looking to address the sins of the past.

“In the boom, which company didn’t pay massively inflated salaries to lure people into those hard-to-fill rolls?” he asks.

“Which company didn’t turn a blind eye to poor performance just because the poor

performer couldn’t be easily replaced? Who didn’t put people into leadership roles who were barely competent?”

Mr Cross said the outcome of a recent Confiance survey confirmed that many companies were hamstrung by management teams appointed during the skills crisis who weren’t sufficiently experienced. They were set up to fail – put in bigger jobs than they were capable of doing. He said now there was the opportunity to rectify the problem and move leaders into roles which better suited their experience levels.

“The skills crisis is well and truly over and there are lots of highly experienced quality people on the job market. They should be identified and brought on board at the right level within the organisation. We have time now to do some upskilling so we are not

caught unawares in the next upturn.”At the height of the boom, mining pay rates

went through the roof as companies competed for the same small pool of skilled workers.

Not surprisingly, many companies would now like to reel in remuneration, but Mr Cross said it must start at the top.

“Salary reductions have to start at the highest levels of management,” said Mr Cross.

“It’s not just about cutting out costs of contractors and suppliers. Senior leaders need to lead the way on this.”

Some companies have already started down this hard road, with the axe falling on the wages of company managers and directors.

Nickel miner Panoramic Resources has cut the pay of its top executives and board members by 10 per cent.

“Like a lot of businesses, we got a bit fat, dumb and happy,” Panoramic’s managing director Peter Harold told the Australian.

“You can’t ask suppliers to make cuts if you, at the top level, aren’t willing take some pain yourself.”

BHP Billiton’s new chief executive Andrew Mackenzie is on a base salary about 25 per cent below his predecessor Marius Kloppers, and with a more restrictive bonus package to boot.

Despite the change in conditions, Mr Cross said companies should always have their eye on long term retention.

“There are ways to do this [attraction and retention],” he said. “You’ve got to have the workforce aligned and understanding your business model. The workforce has to be prepared to make some sacrifices. They have

to be a part of the change.”He said strong and capable leadership

was crucial.“The workforce should understand the

business imperatives, which will help them understand the need for cost reduction. Encourage them to contribute ideas to the cost reduction programs. It’s about transparency and leadership.”

Mr Cross said how a business managed a downturn would determine its reputation into the future.

“During times like this it’s all about how you treat your workforce (and your service providers). People have long memories. Your company’s reputation will be there longer than the managers who are running the place today.”

Mr Cross gave the example of a client who took the gutsy decision during the GFC not to retrench any operators at its open cut mine. Instead, a massive retraining program was launched to upskill workers on other equipment and new technologies.

When the boom swung around in 2010-11 its labour turnover was a quarter of the industry average.

“Their brave and costly choice to retrain and upskill their workforce paid off with loyal and steadfast workers, happy to stick around for the long haul,” said Mr Cross.

“This is not the first downturn the industry has had and it won’t be the last. The most successful companies will be prepared when the good times return.”

PUSHING for increased productivity during a time of job insecurity may just achieve the opposite, according to an industry psychologist.

Naomi Armitage, director of Gryphon Psychology, specialises in psychology services for the mining industry and said the uncertain environment is having a big impact on workforce engagement.

“What we’re getting is a lot of queries about at the moment is from management saying their workforce seems to be really disengaged,” she told Shift Miner.

“But disengagement is a product of an uncertain environment. If you are

uncertain over a long period of time, then you don’t put a lot of effort into what you do. In an uncertain environment, you are even more stressed, so you become more disengaged, and when you’re disengaged you tend to withdraw.”

The question for leaders is how to build that engagement back into the workforce, and Ms Armitage will be presenting at the MAIN Bowen Basin Safety Conference on Thursday, July 25.

Ms Armitage said it comes down to what sort of leaders you have. There are two types.

“The first type is the authoritarian leader. When they get stressed, they tend to become even more authoritarian.

“They are the ones who will say: ‘You lazy so and so, get working, do this etc’. People will comply, but as soon as you walk away, they will put down their tools and they won’t perform,” she said.

The second type of leader - and the one that is far more effective - is the cooperative leader.

“This leader works with their workforce and communicates. They will say to their workforce that they are in this situation

together, so how can we manage it? These people ask for feedback, are more involved and they take more responsibility.”

There are more of the authoritarian leaders in the industry, and the more stressed they get, the more they tell their workforce to knuckle down.

“It makes the situation worse,” Ms Armitage said.

It is about modelling behaviour, she said. If you are a leader who will take a cut in pay or will take on extra tasks yourself, your workforce will be more willing to do the same.

“This is no different to how you manage your kids. If you wear your seatbelt, your kids will wear their seatbelts. I talk about parenting a lot.”

Engaging your workforce is also linking issues and policies to what people value.

“Know what your workforce wants. If it is productivity, we know that people value job security, so it will be talking about how cutting costs here etc will make your job safer.

“It’s about getting leaders to understand that.”Most companies are already taking this

approach when it comes to safety. If you have a rule, it’s about going back to your workforce

and asking them why the rule is there.“It’s linking it to a personal value. For

example, if you don’t follow a certain process and you lose your arm, how would that affect your life?

“We forget about that.”To register for the MAIN safety

conference, go to www.main.org.au.

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