1. We summarize the key points from the document in 3 sentences: The document discusses strategies for mining companies to manage through an economic downturn, including focusing on retention through leadership, communication, training and rewards rather than voluntary turnover; bringing remuneration under control after high pay during the boom; and engaging workers to create a culture of commitment through performance management and incentives. Knee-jerk cost-cutting will not strengthen companies long-term, and the industry has an opportunity to address past issues to help future viability.

1.
Con
We
res
co
ex
No
co
ca
mi
wa
Ins
did
did
Wh
It
do
1.
We
he
Ab
It i
ha
rec
ex
tra
us
No
ex
bu
2.
Du
op
eq
the
up
Tra
im
tec
Inv
ins
3.
As
an
red
pre
fiance Austra
e continue
sponse to
mpanies, b
xtreme case
ow you all w
nsultancy. S
reers of so
ning bandw
ant to be se
stead we w
dn’t pay m
dn’t turn a
ho didn’t p
is time now
ownturn as a
Grow
e have see
eap in a bid
bsolutely.
is not rocke
ave workfor
covery mod
xperience w
aining, supp
e them to tr
ow is the
xperienced l
uild robust p
Provid
uring the G
pen cut min
quipment an
eir labour tu
p skill their w
aining oper
pact. Train
chnical or lif
vesting in t
secure, lack
Long
s we emerg
nd talented
dundancies
eparing plan
A
alia (Holding
to be stag
the much t
both large a
es, survival.
will be expec
Should we
o many peo
wagon, lurin
een as the in
want to focu
assively inf
blind eye to
ut people in
w to rectify
a period in w
leadership
n enormous
d to cut big
et science t
rces who h
de, Baby Bo
with them. L
port, mentor
rain up the
time when
leaders are
pipelines of
de real valu
FC one of
ne. Instead
nd new tech
urnover was
workforce p
rators to bo
ing doesn’t
fe skills can
training se
king loyalty
term reten
ge from the
people on
s and staff
ns to get on
Address
gs) Pty Ltd.
ggered by t
talked abou
and small, a
cting us to w
talk about t
ople who le
ng them wit
ndustry’s m
s our mess
flated salar
o poor perfo
nto leadersh
these sins
which to sa
p talent
s numbers
g salary cos
that compa
have highe
oomers will
Leaders wh
ring. Whilst
younger lea
n companie
e mentoring
new and se
ue-adding
our clients
a massive
hnologies. H
s a quarter
paid off with
oost produ
t have to b
n make a hu
nds a solid
and in man
ntion strate
downturn,
nce again
cuts rema
n the front fo
sing the
AB
the rapid a
ut downturn
are exhibiti
wave the em
the travesty
ess than 20
th the seem
oral guidan
sage on cor
ies to lure
ormance jus
hip roles wh
of the pas
feguard aga
of highly cre
sts out of c
nies that a
r morale a
have more
o have bee
we have th
aders who h
es should
subordinat
enior leader
training
took the g
retraining p
Have a gue
r of the indu
loyal and s
ctivity using
e complica
uge differen
d message
ny instances
gies
voluntary tu
become sc
ain prevale
oot when th
e sins of
BN 65 128 5
and aggress
n. It’s impr
ng in the a
mployee fla
y of cutting m
0 months a
mingly endle
nce officer s
rrecting the
people into
st because t
ho were bar
st. It is time
ainst poor p
edentialed
company b
re ahead o
and higher
e confidenc
en put into
he baby boo
have been p
be investi
tes and sha
rs.
gutsy decisi
program wa
ess what ha
ustry averag
steadfast w
g modern t
ted or expe
nce to mora
e to workfo
s unproduct
urnover will
carce. Des
ent and rec
he inevitable
f the pa
00 434
sive cutbac
essive to w
attempt to m
ag. Confianc
massive ch
ago, compa
ess reward
o we will re
sins of the
o those “har
the poor pe
rely compet
e now to p
people decis
and experie
alance she
of the game
productivity
e to leave t
jobs beyon
omers capt
put in their r
ing in effe
aring their
on to not re
as launche
appened in
ge. Their br
workers, hap
technologie
ensive – re
le.
orces in thi
tive.
l inevitably
pite today’s
cruitment lo
e economic
ast
www
cks mining
witness the
maintain a p
ce is, after a
unks out of
anies were
s of mining
frain!
e past. In th
rd to fill” po
erformer cou
ent?
ause and c
sions. Here
enced leade
eets. Effecti
e with respe
y levels. W
the workfor
nd their cap
ive in these
roles prema
ective leade
invaluable s
etrench any
d to up ski
the 2010-2
rave and co
ppy to stick
es can have
elevant train
s environm
rise as une
s tight emp
ow, some
upturn occ
w.confiance.c
companies
clinical eff
positive bot
all a people
f workforces
begging to
g boom? Al
he boom, w
ositions? W
uldn’t be ea
consider ho
e are a few s
ers thrown o
ive? Yes. S
ect to capa
When the e
rce, taking t
pability leve
e uncertain
aturely??
ership prog
skills and e
y operators
ll mine wor
2011 boom
ostly choice
around for
e immediat
ning, wheth
ment, who
employment
ployment m
enlightened
curs. Howev
om.au
are taking
ficiency wh
ttom line or
e managem
s? Ruining
o jump on
as, we do
which compa
hich compa
asily replace
ow to use t
suggestions
onto the sc
Short sighte
ble leaders
economy is
their skills a
els need he
times why
grams, whe
experiences
s in their la
rkers on ot
period! Yep
to retrain a
the long ha
te and last
er it be ab
otherwise a
t falls. Skil
market, whe
d leaders a
ver despite
1 of 2
g in
hich
r in
ent
the
the
not
any
any
ed?
this
s:
rap
ed?
ship
s in
and
elp,
not
ere
s to
rge
her
p –
and
aul.
ting
out
are
led
ere
are
a

2.
Confiance Australia (Holdings) Pty Ltd. June 2013 Newlsetter www.confiance.com.au 2 of 2
myriad of research which shows the negative impact that increased turnover has on a company’s ability
to perform and its profitability, many leaders in our industry fail to recognise the criticality of retention
strategies in tougher times.
Replacing employees is extremely costly. After considering the loss of experience, intellectual capital
and productivity plus the cost of rehiring, companies can expect the replacement cost to be 2-3 times
that employee’s annual salary. Despite these costs, actions taken by many mining companies would
suggest that they believe voluntary turnover will actually increase their company’s profitability!
We believe that companies who are using the downturn as their retention strategy do so at their own
peril. Instead we suggest building strongly motivated and loyal workforces through strong leadership,
excellent communication, training and development, and performance based extrinsic and intrinsic
reward schemes.
4. Bring remuneration under control
Until 2006, mining sector remuneration pretty much paralleled the broader Australian labour Market.
However in 2007 mining pay rates took off, and now run at over 10 percent higher than the national
average. Of course, the skills shortage was largely the reason for the big hike in pay rates. We saw
graduate mining engineers on six figure salaries, skilled tradesmen naming their own price, and a
dramatic rise in one-man-band contractors intent on riding the crest of the wave. How do companies
maintain these standards of pay in such a volatile and negative market? What can we do to rectify this?
According to the Melbourne Herald Sun (17/6/2013), WA workers have been willing to take a massive
27% pay cut for a job in mining. On average, the WA job seeker is now looking for $51.60 an hour down
from $59.80 an hour this time last year. This indicates that expectations of employees are slowly being
reined in from the crushingly high standards that have been allowed to develop in the battle for talent
between companies in more profitable market times.
Historically pay reductions have sometimes been introduced on a tiered basis rather than involving
across-the-board cuts, involving higher wage-earners in firms experiencing larger reductions than lower
wage earners. Elsewhere, where an agreement has been reached to cut pay, claw-back clauses have
sometimes been agreed which lay down that employees will be able to restore or even improve their pay
when firms return to profitability.
Companies have the opportunity to strategise remuneration arrangements that will correct the current
exorbitant imbalances and position themselves in a much more cost effective manner for the future.
5. Engage the workforce to create a culture of commitment and longevity
In our view communication is the most effective people management practice in helping companies
manage in a downturn. Moreover, employee involvement and engagement in developing options for
responding to the pressures placed on the business due to the current climate will provide benefits in
both the short and long term.
If well-crafted, this strategy can translate to dramatic growth where employees are empowered to
behave like owners of the business. Through a customized performance management system,
employees are given explicit operational targets and measured against them. With incentives (such as
bonuses and promotions) determined accordingly, people become accountable for results, which are
aligned with the company’s broader objectives in both the long and short terms.
Summary
Knee jerk cost-cutting methods, such as hiring freezes, staff cuts or across-the-board spending cuts
won’t permanently lower the cost base or strengthen a company over the long term. Mining companies
need to improve performance, and increase production for the same or lower costs in line with their long
term strategy. Our view is that the industry has a window of opportunity to address the sins of the past to
help with the viability of the industry going forward. Let’s hope we can all make informed choices. Good
luck!
Joanne Westh