The Decade Ahead - Global Leadership
The Mining and Resources sector will be facing a number of key issues in the next ten years, in particular the selection, recruitment and development of the next generation of leaders – people who will be comfortable with exercising power, leadership and influence across generational, gender and cultural diversity within a global context. John Murray and The Swann Group were asked by the Board of one of our international clients to undertake an analysis of future trends that will challenge the industry, and to identify the key competencies and qualities needed by CEO’s and leaders of the future.
The process involved a number of Senior Executives from leading companies in the industry. In bringing these discussions to the attention of decision makers, it is anticipated that they will be able to develop solutions to make the industry more proactive in planning for the future, instead of being reactive as in the past.
SCOPE OF DISCUSSIONS
Topics covered included;
- Economies;
- Emerging markets;
- People;
- Energy/power;
- Water;
- Capital;
- The management of manpower and succession planning;
- The Third World; and
- Aging infrastructure and mine life.
PARTICIPANTS
A mix of current and former Managing Directors, Chief Financial Officers and Chief Operating Officers from
In all, thirty people have participated in this study.
SUMMARY
Many participants believed companies are yet to come to terms with building sustainable enterprises within unfamiliar cultures, in increasingly remote regions.
Most participants believe the upward trend in commodity consumption and price will continue for some time, albeit with pricing hiccups.
We were not able to obtain a Brazilian or Indian perspective for the study but hope to include representatives from these areas in the future.
Whilst there is an increase in the number of graduates from non traditional backgrounds in the global industry, we are not yet seeing significant diversity at an Executive Leadership level.
Whilst the spread of executive talent in the industry is currently very thin, it is quite outstanding.
CHALLENGES
- The Mining industry is becoming more complex as talent is becoming more scarce – particularly at General Manager, senior executive and "running the business" level. Major companies are finding that they have to look outside the organization to fill key roles and this trend looks set to continue.
- Public "Licence" to build sustainable businesses in increasingly remote/hostile environments is a significant issue. Production is shifting from First World to Third World locations and an understanding of the dislocation caused in both worlds is necessary.
- Consolidation is set to continue due to significant free cash with high metal prices, the search for value/growth, the size of investments and the need for provide muscle in emerging and capital markets.
- The impact of globalisation of NGO's and labour.
- Increased regulatory control and corporate governance.
· Emergence of ready-made competitors to the big three from Brazil, Russia, India, China (BRIC).
- Need to plan for radical reshape of companies and operations to meet any possible future downturn.
- Capital allocation. Because of the strong cycle some investment decisions are made on "exuberance" and capital is being misspent.
- A couple of people mentioned that the “big three” (BHP-B, Rio and Anglo) would achieve net of earnings of $38B US in the next three years – or less. How will these three deal with this surplus?
CHALLENGES IN EMERGING MARKETS
- The western world has yet to come to grips with many of the cultural aspects of the emerging markets.
- There is a need to add value to communities and countries rather than being perceived as taking advantage of cheap labour, power and underdeveloped assets.
- International mining needs to be moving faster to propose business ventures with the emerging markets, but at the same time exercising patience in negotiations.
- Emerging markets on the other hand need to come to grips quickly with the corporate governance requirements of publicly listed mining companies.
- China is very concerned about the consequences of India deciding to play catch-up and the impact that will have on the commodity markets.
- Young graduates are increasingly aware of the need to have a sophisticated global perspective and a common language, which will allow them seamless interaction on the global stage.
- The expectation of the younger generations of different lifestyles and the need to “drag” talent through more quickly. This means that recipes of the past are not necessarily sufficient for the future.
OTHER MATTERS DISCUSSED
- Availability of people and succession issues and how we can/ should encourage bright people to join the industry, particularly those people who can manage the strength of the current cycle, and who can also manage capital. The Industry needs to attract talented people and support them with strong teams.
- The length of the Super Cycle.
- Access to (and price of) water and energy/ power
- Replacement of old mines – shortage of good assets.
- Rationalization of access to ore bodies – e.g. Inco/Falconbridge (now underway), BHP-B/Rio diamond mines in North West Territories
- Possible disconnect between corporate values, community values, dwindling assets and shareholder returns.
- Industry fails to attract the best and brightest because we do not reward well.
- The need to change sooner rather than later to ensure smooth transition during the "good times".
- Deposits are becoming more complex.
- Challenge the way in which we use technology, build plants, and ensure sustainability.
PERCEPTIONS OF INDUSTRY
NB; There was a mix of responses to "perceptions" and "other matters", which reflects the extent to which participants have received global exposure.
- The industry is still the best game in town, and as such still regarded as an attractive employer
- We are in many cases old, conservative, ponderous and insular.
- Some players are perceived to have missed the boat with acquisitions.
- Technically arrogant, but seen to be very innovative in technology and marketing.
- Industry, by and large, is becoming too small to exercise muscle in the commodity, financial and emerging markets.
- Need to develop new behaviours to meet the challenges of the new paradigm.
- Industry needs to become more agile at analysing opportunities to grow.
- It is still possible to acquire established assets
- Unduly conservative = stagnant = do nothing = will not grow.
- Companies should be values driven
- The big companies are energetic but pragmatic.
- Companies need to plan to deal with legacies of the past that community groups may feel do not now meet the standards of today.
KEY LEADERSHIP COMPETENCIES AND QUALITIES FOR THE FUTURE
The consensus of opinion amongst participants is that CEOs and leaders of the future will require:
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Strategic Agility - Business acumen, with the ability to weave the external environment and industry dynamics into company plans. Leaders will make high quality strategic decisions, such as planning for mergers & acquisitions, with a view to recreating or redefining their organisation globally.
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Integrity and Ethics - Adherence to an effective set of core values and beliefs during good and bad times, with a focus on long term corporate, community and environmental interests.
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Commitment to Results - The use of skills to influence people and motivate them to achieve; exhibiting persistence in the face of setbacks and obstacles. Leaders will have to use resources more effectively and develop new ways to maximise employee and business performance.
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Ability to be a Leader of the Industry - Demonstration of credible influence and impact while representing the organisation to the business community and the general public.
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International Capability - Demonstrated exposure to the international business context exhibiting responsiveness to other cultures with strong language and cross-cultural skills. Leaders will have to understand and support a powerful, multi-disciplinary, multi-cultural global leadership team.
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Intellectual Agility with Common Sense - Analytical and conceptual ability to deal with complex problems with flexibility when working on several issues simultaneously taking to account the global context.
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Effective Relationship Building – Good communication and listening skills, demonstrating concern for other and interacting effectively with all stakeholders, e.g. employees, customers, Board, financial community; wider community and governments.
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Leadership Ability - Development of culture, core values and behaviours, while communicating a clear vision, sense of direction and expectations of individual and organisational performance.
An understanding of change principles and the impact of change interventions will be important, in particular when leading generational and cultural diversity.
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Insight into Self and Others - Understanding and knowledge of how to lead diverse teams, with the ability to create environments for effective succession planning and talent acquisition, management and retention.
CONCLUSION
As evidenced by the challenges/issues identified by participants, it is clear that future leaders of global mining companies will need to be extremely talented and experienced individuals. Therefore, succession planning becomes increasingly important, as does the need to attract exceptional people currently external to the industry.
The Swann Group is a leading Global Executive Search, recruitment and organisational development practice renowned for its expertise and quality service in Mining and Resources; Energy; Engineering and Construction; Infrastructure and Utilities; Supply Chain; Defence and Aerospace; and Government.
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