Your scribe had the pleasure of giving a presentation on the minerals sector and the global economy to a group of senior mining types at an end-of-year corporate function last week. Being keen to keep everyone entertained between drinks, the presentation included audience participation by way of a number of impromptu quiz questions. So thankyou to all who played along and for knowing – among other things – how to put a giraffe in a refrigerator (the first warm-up question).
Most of the question and answer-style parts of the presentation went closely to script. So in the “Spot the International Economy” round of questions, a photo from the climax of the Thelma & Louise Hollywood film was instantly recognised as being analogous to the state of the US-economy and the looming ‘fiscal cliff’.
Further, in the “Know Your Mining Industry Remuneration” round of quiz questions, your scribe was highly impressed by the ability of the group to select the correct remuneration package for various senior mining industry roles to well within a $50,000 range.
But one question did not quite go to the script. However, this fills your scribe with confidence for the future of the mining sector. Let me explain further by trying the same question here to see which of three possible answers you believe to be the correct one. Here is the business case.
Some years ago, I was engaged to conduct an operational excellence ‘audit’ across a number of operations for a large mining company. One mine site stood out, in that morale among the frontline troops differed markedly between departments, as did operational performance.
In the mining department the morale was bleak, as was performance. In the engineering department, things were somewhat better. In the processing part of the operation, morale was very strong, as were the operating results.
The following pithy quotes summed up the situation from the frontline, which my consultant colleague summed up with a green, amber and red traffic light ranking system.
The processing department received a ‘green light’, with the frontline comments along the lines of “I really love my job. We already generate lots of ideas, but more feedback (from management) will really accelerate things”
The engineering department scored an amber traffic light on the informal ranking system – with paraphrased frontline feedback along the lines: “Morale is OK. We need to see action on implementing improvement ideas. We’re not sure our supervisors are really prepared for frontline engagement”
Finally, the mining department was flagged with a red traffic light: Why? Feedback towards the line management was not particularly good. It went along the lines of the following: “We don’t trust ‘em. With all the favouritism and politics, I don’t think anything is going to happen by way of improvement”
So which department do you think improved most over the next year? That’s right. The processing department lifted even further (from an already strong performance level).
The engineering department nudged its performance higher too, but the mining department continued to struggle.
When I have told this story in the past and asked an audience which department would improve the most in the year following the initial assessment, the most common answer was the mining department.
Why? One presumes that either people are anticipating some form of stellar turnaround case study to be recounted – or that from such a low performance base things could only get better.
This time around, the audience picked out the processing department as the one most likely to further lift performance from an already high level. That’s good.
It shows the message that high morale drives even higher performance is hopefully being heard.
It’s simple really!
Happy festive season.
Allan Trench is a professor at Curtin Graduate School of Business, a research professor (Value & Risk) at the University of WA’s Centre for Exploration Targeting, a non-executive director of several resource sector companies and the Perth representative for CRU Strategies, a division of independent metals and mining advisory CRU group (email@example.com).