The importance of managing change in mining

What makes a good leader in the mining industry today?

It’s an important question and, given the nature and scale of change the sector is facing (and believe me, we’re just getting started), the ability to manage and be comfortable with change is fairly high on the skills wish list.

But there’s more to change management than meets the eye.

Enter Friska Wirya, change management consultant, trainer and coach. Formerly head of change at Newcrest Mining, Wirya has helped lead many organisations both in and outside of the industry successfully through change.

“More and more organisations now realise that STEM [science, technology, engineering and mathematics] skills are important for leadership, but they are very much insufficient in isolation,” she explained, in response to my original question. “Today, qualities such as curiosity, empathy, sincerity are sought after, because they are key to nurturing an innovative mindset and an open culture.

“As the rate of digitisation increases, so does the need for soft skills. The ability to connect with people is going to be really critical to cut through the noise and inspire the workforce to embrace change.”

In the ‘good old days’, people used to think that intelligence quotient (IQ) determined future success and suitability for leadership, but today, it’s the bare minimum required to get a job or start a business.

In the late 80s, Daniel Goleman popularised the concept of emotional quotient (EQ); the ability to manage not only your own emotions, but those of others as well. However, as 2020 proved to businesses in every sector, a good dose of adaptive intelligence is also now essential.

“Adaptability quotient (AQ) or the measure of one’s adaptability, reflects the ability to evolve and regenerate yourself, and your people,” Wirya told me. “We need leaders who can visibly and actively sponsor change, because change is only going to happen faster.

“Technological change is already happening at a breakneck speed. In five years from now, what we know is going to be irrelevant.

“And so, it’s really a leader’s AQ that’ll determine how successful they are over time. That’s what’s going to keep mining companies relevant, valuable, and maintaining their competitive edge.”

Are we ready?

In general, are mining companies well equipped to manage change? I asked.

“Hell no!” said Wirya with a laugh. “I recently had a call with a very large mining organisation to talk about the transformation that they wanted to drive across the business.

“And their plan covered everything: safety, innovation, employee wellbeing… It was big, but the value they were placing on this change – supposedly the most important transformation of their business – was laughable. It was severely under-resourced, without an influential sponsor to back it.

“Mining companies often regard change as an afterthought. It’s only when a project has gone pear-shaped or their social license to operate is threatened, that they realise change management is needed.

“The majority don’t invest appropriately nor early enough, and don’t really understand just how much is involved to get people to even be open to doing something differently, let alone executing it.”

Change management isn’t just about communication and training. That’s where it’s usually relegated because those are the most visible, tangible outputs of the discipline. The tenacity and persistence it takes to change mindsets and, ultimately, behaviour is sorely under estimated.

“I think a bigger part of the picture is that a significant portion of remuneration policies – throughout organisations – focuses on short-term targets, like cost-down, throughput-up,” said Wirya. “That short-term thinking leads to long-term fixing.”

I guess that, as an industry, mining talks a good talk and, despite the ‘this is how we’ve always done things, so that’s how we’ll continue’ ethos that seems to be ingrained at an operational level, I assumed that, at the macro-scale, organisations would have a better handle on managing change. Clearly not.

“To enable transformation, you need a transformational leader,” said Wirya with a smile. “And the CEOs of most mining companies are cut from the same cloth. They’re either ex-chief financial officers, or ex-METS [mining equipment, technology and services].

“I think boardrooms definitely need a shakeup, because most aren’t a circle of change, they’re a cage of complacency. Groupthink and conservatism are prevalent.  

Is there anyone you would point to and say, ‘they’re doing a good job, they’ve got their arms around this’, in the mining space? I asked.

“No,” Wirya said, definitively. “At an organisational level, mining companies are not good at managing change, but there are good examples of successfully managing change on a smaller scale.

“For example, BHP, Fortescue Metals Group and IGO are doing a good job in pushing the diversity and inclusion needle. BHP is the stand-out, they are putting their money where their mouth is. And at FMG, the entire executive team is female.”

When it comes to change maturity, there five levels that can be used to gauge a company’s development.

Level one is when change management is either non-existent or applied in an ad hoc manner; level two is change management applied to some projects; at level three, change management is applied more broadly; in level four, all projects have a consistent approach to change management; and, in level five, the organisation has a dedicated centre of excellence for managing change.

Wirya estimates that most mining companies are currently at level one or two.

Follow the leaders

While it’s great that the industry is finally making strides in diversity and inclusion, if there are no good examples of large-scale continuous change management practice within the mining industry, then who can we look to for inspiration?

“One that I’ve personally been involved in was a A$42 million technology implementation for the world’s largest policing jurisdiction, with 6,500 officers and 1,500 civilians,” she said. “That project was recognised best in class for its change management at a national level.

“A system implementation sounds easy but really, it was like a heart and lung transplant. Everything had to be done from scratch, taking out a diseased heart (a mission critical app nearing the end of its life), inserting a new one then reattaching the arteries and vessels (integrated systems).

“You can imagine the life-or-death implications of sending a police helicopter in the wrong direction, or not dispatching a cop when someone’s been murdered. The stakes were high.

“Another example would be ING Bank in The Netherlands. After the European banking scandal, they undertook a significant culture change. They took swift action and all the toxic people, no matter how (seemingly) high-performing, were exited out of the business.

“They engaged the entire workforce to co-create that new culture. And, most importantly, everyone had a say in determining the behaviours that exhibited it, and how the metrics that would indicate that they had achieved it.

“Job descriptions were re-written, performance management systems re-done, KPIs re-done… It was a massive multi-year effort, and it was very successful.”

It’s heartening to know that change on that scale is not impossible, I told Wirya. It’s just a question of committing to it and putting the right resources behind it.

“Nothing is impossible,” she said. “It’s all about solid commitment, authentic leadership, active advocacy, and effective communication.”

I think all too often the mining industry uses operational complexity as an excuse for stagnation, I told Wirya.

“It depends how badly companies want it,” she said. “That’s why culture change efforts often get disbanded three- or four-months in. Because people are impatient. They want immediate results, but it doesn’t happen like that.

“It’s like going to the gym and expecting to look like Arnold Schwarzenegger tomorrow. It’s unrealistic.”

Preparing for change

The mining industry is undergoing massive change in the face of some existential challenges. However, it is an essential industry, so what can leaders do to prepare themselves and their companies?

“For leaders, particularly those who are more old school, I would imagine it’s like being caught in a rip tide,” said Wirya. “You’ve just got your breath and then suddenly another wave of change comes.

“For that, I think it’s a matter of taking the blinders off and looking at what’s coming down the line, then developing a portfolio view of change. What are the things you know are coming? Who will they impact and to what degree? By doing that, you can better develop contingency plans.”

Agility is now the name of the game, both in mindset and method. And that needs to be built into future human capital and mine planning processes.

“Mining companies need to start building change capability now and upskilling their people,” said Wirya. “It shouldn’t be just the change managers’ job to manage change, because it’s going to be coming from all sides. The more people who have change management skills, the better.

“Now is also the time to decide what change management approach you want to develop for your company. What suits your culture? Co-create a framework with a cross section of people in the organisation then seek agreement. These things don’t just doesn’t happen overnight; they require buy-in to the process.”

To manage transformational change poorly or, ignore the need for it altogether, risks irrelevancy. If not tomorrow, then certainly 10 years down the line.

“I don’t think it’s clicked yet but managing change badly does threaten your social license to operate,” Wirya cautioned. “Because change management includes stakeholder analysis mapping and stakeholder engagement. It’s a strategic approach that is underestimated. It’s not as simple as taking people out for coffee and asking what they think of the change.

“And, with regular bread-and-butter change, for example, a technology implementation…

“Say a new predictive algorithm for conveyor maintenance is implemented, and the operators don’t understand it, or ignore it, and it causes a downtime event. That event could cost millions of dollars and is so easily avoided.

“COVID has accelerated everybody’s digital transformation. But we need to understand that technology is just one side of the coin. And that coin is useless if there’s no adoption.

“Adoption is only possible through effective change management.”

You heard her folks. Get to it.