MANAGING INVESTING IN PEOPLE

Jobs at all levels of mining are being slashed in the headlong rush to improve productivity and cut costs. As a result, corporate loyalty is dying. Although money has been saved in the short term, there may be adverse consequences for the mining business in the long term. Inco Ltd. provides a typical example of how the industry has cut back. Costs have been cut 47% since 1981. To do this, Inco’s workforce had to be reduced 55% in the past 10 years; there are now only 60 men under 30 years of age. The average mine worker at Inco is 45 years old and has 21 years of service.

In the U.S. over the past two years, nearly half a million white collar jobs have been eliminated. Many of those who have kept their jobs at all levels in industry throughout the turmoil of recent years feel under great pressure. There is the continual need to improve efficiencies and the ever-present threat that their jobs, too, will become redundant. Demotions and fewer promotions have reduced advancement opportunities. For those who have been laid off, there is the stress of transition. Confidences can be shattered when someone who was once corporate muscle is told he is now corporate fat.

Largely because of pressures on people, stress-related disease is taking a heavy toll. The Financial Post recently stated that yearly cost to Canadian business attributable to absenteeism, accidents, illness and premature death i s about $1.7 billion.

Much of the pain associated with job loss, anticipation of job loss and on-the-job stress was avoidable, it was found. In some cases layoffs were not necessary. Employees properly remotivated and retrained would have made real, positive contributions if given the chance. In other cases people were kept on too long — people who should have been released long ago. They suffered needless agony and many now find it difficult to adjust. In a large number of instances dismissal was given with little notice, minimal compassion and limited assistance.

Many employees now feel they have been “burned.” People who have survived massive cutbacks feel a sense of distance between themselves and their companies. Loyalty has been seriously eroded. People are learning to show allegiance only to their own careers, and a new style of employee-corporate relationship called “Me Inc.” has blossomed. A recently dismissed manager told Fortune magazine: “I see things I neglected. I gave my soul to that damn company — and was it worth it? I’ll allocate my time better in my next job.” In a recent poll, Business Week magazine found that 65% of middle managers in the U.S. believe salaried employees are less loyal than they were 10 years ago. In the rush to downsize and streamline, many of our companies have achieved short-term gain for long-term pain.

Companies must begin to use their most important resource — people — more effectively. Up to now most attempts at increasing productivity have been to eliminate labor rather than to improve the effectiveness of existing labor. There must be more emphasis placed on getting the most from people and a greater appreciation of the fact that the greatest advances are made through people.

In a recent article in the Harvard Business Review, Wickam Skinner observed that the way we think about productivity and the way productivity is measured may be at the root of America’s crisis over competitiveness. Most productivity programs concentrate on reducing labor by making existing procedures more efficient. What is missing from many of these programs is a serious look at entirely new methods, markets and products. Skinner says a manager who is immersed in a conventional productivity-directed organization for 10-15 years will suffer “severe limitation of vision.”

Where have all the “people” gone in our organizations? They’ve been replaced by “human resources.” Many of our corporations have lost the basic sense of how to work with people. There are too many complicated administrative programs which allow managers to become divorced from their employees. People are the key to improvements. By motivating people, listening to them and treating them with dignity and respect, real improvements in business performance can be made.

A good example of “people-power” is given by R. C. Sproul in his book Stronger Than Steel, which describes the life of Wayne Alderson. He was brought in as a vice-president of operations to try to improve the performance of the chronically sick Pittron steel plant in Pennsylvania. Labor and management were openly hostile to each other and violence was commonplace. A variety of conventional productivity programs had failed.

Alderson believes there’s a difference between efficiency and effectiveness. Efficiency is doing things right, he says, whereas effectiveness is doing the right things. By listening to people and treating them with dignity, he has made the plant run profitably. In just 21 months, it went from a yearly loss of $6 million to a profit of $6 million. Alderson did two things initially: he moved his office to the shop floor and traded his white hard hat for a black one. You don’t do that sort of thing for productivity; you do it to get the plant to work profitably. Examples such as Pittron challenge us all to put our faith and values to the test in the real world.

IBM is an example of a corporation commited to people. One of the most successful and admired corporations in the world, it has long followed a stated corporate goal of showing “respect for the individual.” Even during the difficult times the company is now experiencing, there are no layoffs, and annual company turnover in the U.S. is less than 3%. The company isn’t standing still either. People are being retrained and re-assigned. Leaner staffs serve to free up people to go into the field as sales people and systems engineers. Ibm’s attitude toward people assumes that a high- quality workforce is in the best, long- term interests of the shareholders.

How must our mining companies change? We must provide opportunities for advancement and growth. We must show respect for the individual. If layoffs are inevitable, we must be generous and compassionate. Everyone in a company, from the president to the janitor, must begin talking to and caring for one another. Above all, we cannot allow investing in people to become passe.

Failure to see these things will permanently mar the economic gains we have made in the past few, difficult years. Our mine managers must see past the short-term horizons of the next quarter’s earnings; they must appreciate the long-term advantages of a motivated and high-quality workforce.

As Wayne Alderson has put it: “Words like love, dignity and respect are considered weak. They’re not. Those words have strength; they’re stronger than steel. William Stanley is director of national mine services at Coopers & Lybrand Consulting Group.