Lynas Corporation tell their story on how they manage to attract and keep employees amidst a negative media environment where they are being claimed to dump radioactive waste
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Lynas Corporation - Building a new business and creating an organisation that meets its vision
1.
2. Lynas Corporation
Building a New Business and Creating
an Organisation that meets its vision
HR Leaders Summit
8 May 2013
3. Introduction
3
• Imagine in that environment attempting to attract, on board and train
employees at a rate of 1 per day for 2.5 years
• Keeping 360 employees engaged and focussed on building a new
industry in an environment where
• You drive to work every day and the car in front of you has a sticker
telling people that your employer should not be here
• That your employer is simply using your country to dump radioactive
waste
• Where you go to restaurants and are refused service based on what
your uniform carrying your employers name
4. Company overview
4
Mount Weld Concentration Plant
Lynas Advanced Materials Plant
CLD Rare Earth Deposit
Mt Weld Project and
Concentration Plant
LAMP, Malaysia
Primarily involved in the exploration, development, mining and processing of Rare Earth minerals
ASX-listed, market capitalisation of A$1.2bn as of February 27, 2013
Owns and operates:
Mt. Weld – the highest grade known Rare Earths deposit in the world – located 35km south of Laverton
in W.A.
Mt. Weld Concentration Plant – commissioned in 2011 and located 1.5km from site
Lynas Advanced Materials Plant (“LAMP”) facility – located in the Gebeng Industrial Estate (“GIE”) near
the Port of Kuantan in Malaysia
Phase 1 production capacity of 11,000 tonnes per annum (“tpa”) REO and Phase 2 production capacity of
22,000tpa REO
Location of key assets
Building a fully integrated source of Rare Earths from mine to customers
Lynas‟ vision is to be the leader in Rare Earths for a sustainable future
6. Mt. Weld Mine & Concentration Plant
6
Overview of Australian assets
Mt Weld Project and
Concentration Plant
Location of the Mt. Weld Project & Concentration Plant
Mt. Weld Mine
The highest grade known deposit of Rare Earths in the
world
Consists of the Central Lanthanide Deposit (“CLD”)
and Duncan Deposit
Located 35km south of Laverton in W.A.
Simple, conventional open-pit mining operation
Stockpiled ore is sufficient to sustain Phase 1 steady
state production for 6 years
773kt mined at 15.4% REO (116kt contained REO)
Mt. Weld Concentration Plant
Commissioned in May 2011
Located 1.5km from Mt. Weld mine
Phase 1 capacity: 33,000tpa REO concentrate
Expected capacity including Phase 2: 66,000tpa REO
concentrate
Proven REO flotation technology
~15kt of dry bagged concentrate ready for shipment to
Malaysia
7. 7
CLD is the world‟s highest grade known Rare Earths orebody
Recent drilling on the western side of the CLD has increased confidence levels in the
resource with a large portion of the resources in the measured and indicated categories
Above a REO cut-off of 2.5%, the CLD has a resource of 14.9mt at an average grade of
9.8% REO for a total of 1,460,000 tonnes of REO
CLD resource
category
Ore (mmt) REO (%)¹
Measured 6.9 12.2
Indicated 7.0 8.1
Inferred 1.1 4.6
Total 14.9 9.8
9.8%
6.4%
4.9%
2.6%
2.0%
1.4% 1.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
CLD
(Lynas)
Mountain Pass
(Molycorp)
Duncan
(Lynas)
Nolans
(Arafura)
Hoidas Lake
(Great Western)
Thor Lake
(Avalon)
Kvanefjeld
(Greenland)
Source: Company filings
Note: Figures may not sum due to rounding
1 REO (%) includes all the lanthanide elements plus yttrium
Central Lanthanide Deposit
Rare Earth Grade – Mt. Weld vs. some other projects
REO grade (%)
Lynas cut-off grade – 2.5%
8. 8
The LAMP facility is strategically located in Malaysia
Stable operating environment and a
sovereign credit rating of A3
Gebeng is a hub into Asia with exceptional
infrastructure
Located in close proximity to Kuantan deep-
water port with bulk material, liquid and
container berths
Key reagent products located nearby due to
large chemical industry on the east coast of
Malaysia
Established supplier / manufacturer network
within the Gebeng Industrial Estate
High quality and well-maintained
infrastructure and utilities
Access to skilled and competitive labour force
Tax free period granted by the Malaysian
Industrial Development Association under
“strategic pioneer status”
Malaysia operations – Lynas Advanced
Materials Plant
Kangar
PERLIS
LANGKAWI
Alor Setar
KEDAH
George Town
PENANG
Ipoh
PERAK
KELANTAN
Kota Baharu
TERENGGANU
Kuala Terengganu
PAHANG
Kuantan
Johor Baharu
JOHOR
[Melaka]
NEGERI
SEMBILAN
Seremban
SELANGOR
Cameron Highlands
Kuala Lumpur
T H A I L A N D
M A L A Y S I A
S I N G A P O R E
GEBENG
SOUTH SEA CHINA
Tioman
MELAKA
9. 9
Future milestones
LAMP continues to ramp up toward Phase 1 nominal
capacity (expected Q2 2013)
Commissioning of Phase 2 expected in Q2 2013
Ramp-up of Phase 2 in Q3 2013 in line with customer
demand
First feed to kiln achieved in November 2012
First arrival of Rare Earths concentrate from Mount Weld in
November 2012
Initial first feed of concentrate into LAMP rotary kilns in
November 2012
Successful commissioning of LAMP cracking and leaching
units in January 2013
Initial Rare Earths products produced in February 2013
Lynas Advanced Materials Plant – operational
update
10. 10
REO demand growth outlook
Sector
CAGR
2012-2018 Rare Earths used
NiMH Batteries 3.3% La, Nd
Magnets 10.1% NdPr, Dy
Autocatalysts 6.0% Ce
FCCs 8.0% La
Metallurgy &
FerroSilicon
3.4% CeLa
Phosphors -1.2%
Eu, Tb, Y, Ce,
La
Polishing 4.8% CeLa
UV Cut 3.0% Ce
Optical Glass 5.0% La, Gd
Other 3.0%
La, Ce, Nd, Pr,
Sm, Gd, Y
Total demand 5.8%
2015E Expected Global Rare Earths
demand by application
Demand drivers – Rare Earth uses
NiMH Batteries
10%
Magnets
27%
Autocatalysts
7%
FCCs
16%
Metallurgy &
FerroSilicon
13%
Phosphors
7%
Polishing
11%
UV Cut
2%
Optical Glass
3%
Other
4%
11. Sep „12 Nov„12 Q1„13 Q2 „13
11
Indicative timeline to first sales and operating cash flow
First
shipment to
LAMP from
Mt. Weld
First feed to
kiln
Finished
goods
Customer
qualification
Commercial
shipments
and first
sales
First cash
from sales
Next steps
Current operational focus is LAMP ramp-up towards Phase 1 nominal
capacity
Sales & Marketing focus is on completion of customer qualification process
and commencement of commercial shipments
Commissioning of Phase 2 expected in Q2 2013
TOL issued
External View
Strong cash flows expected in the near term
Nov „12
13. The Challenge
A People and Culture Perspective.
13
• To create and build an organisation that is capable of surviving but also thriving in
a changing external environment
• Recruit, On-board, Train new employees
• 2009 40 employees; 2013 – 490 employees
• Able to deal with uncertainty and continue to grow willing to take on wicked
problems
• Changing Production Parameters, Cost Structures
• Sovereign Risk Issues
• Social License to Operate
• Focus employee efforts on building a company while at the same time getting
ready to Operate a new 800M plant in Malaysia
14. The Challenge - People and Culture Perspective.
14
Biggest Challenge for a start up company
• Align Organisational and Employee Goals in a way that contains
employee anxiety” so that employees can focus on goal achievement
• Development of the Organisational Software
• Values,
• Organisational Structure,
• Role Accountabilities and Responsibilities,
• Feedback Mechanisms, Thinking Tools etc
• Organisational Software allows the Organisational Hardware –
Plant, Equipment, Financial Systems to Operate
15. Psychological Frame
Human Behaviour – Seeking New Experiences and Reducing Exposure
to Unpleasant Experiences”
15
• Gray believed that personality traits and behaviour could not be explained by
classical behavioural conditioning alone.
• Gray proposed a “Biopsychological Theory of Personality”
• Emphasized the relationship between personality and sensitivity to
reinforcement systems of Reward and Punishment
• System 1 - Willingness to try something new – New Goal Orientation
• Approach Motivation; Impulsivity, Willingness to try something new)
, and
• System 2 - Work to avoid unpleasant outcomes
• Motivation (drive to avoid pain, anxiety, punishment, unpleasant
outcomes )
Gray's model of personality is based on two hypothesized brain systems
Gray, J.A. (1981). A critique of Eysenck's theory of personality, In H.J. Eysenck (Ed.) A model for personality (pp 246–276)
Gray, J.A. (1982). The neuropsychology of anxiety: An enquiry into the functions of the septo-hippocampal system
16. A Biopsychological Frame
“Behavioural Activation System”
16
Behavioural Activation System (BAS)
• The BAS includes brain regions involved in regulating arousal: cerebral
cortex, thalamus, and stratum.
• The system is responsive to conditioned and unconditioned reward cues.
• BAS regulates approach behaviours and is referred to as the Reward System.
Individual BAS Sensitivity
• In general, individuals with a more active BAS tend to be more fun seeking, like
novelty, change , are more disposed to goal seeking, will respond to seeking
novel or new experiences
17. A Biopsychological Frame
“Behavioral Inhibition System”
17
Behavioral Inhibition System (BIS)
• The BI also includes brain regions involved in regulating arousal: the brain
stem, and neocortical projections to the frontal lobe.
• BIS is responsive to punishment, novelty, uncertainty, and non-rewarding stimuli.
• BIS regulates avoidance behaviours and is often referred to as the Punishment
System.
Individual BIS Sensitivity
• Individuals with more active BIS may be vulnerable to negative
emotions, including frustration, anxiety, fear, and sadness
• See the risk in things, try to avoid pain or lower anxiety by mitigating risk
• Anxiety lowered for Individuals with High BIS sensitivity by
• working within prescribed systems and when given work that allows avoidance of
something unpleasant – e.g avoid uncertainty in outcomes
18. Psychological Frame – Mapping to People and
Culture Systems and Organisational Culture
18
• In an environment that is facing rapid
discontinuous change, where social
licence to operate and other issues
create uncertainty in the workplace
• How do we develop and build an
organisation and its People and
Culture Processes and Systems in a
way that enables employees to
remain engaged in the business.
• How do we deal with BIS and BAS
sensitivity in a way that allows
ongoing Employee Engagement
“The Lynas Way”
“A System to Contain Employee Anxiety”
19. Viewing HR System Elements with this Frame in
Mind – The Lynas Way
19
20. Viewing HR System Elements with this Frame in
Mind – The Lynas Way
20
BIS Sensitivity - Put decision making at an
efficient level (consistent with control and risk
management) ; Match human capability to
role/task complexity
BAS Sensitivity – Time Span of Discretions –
Pushing Accountability and Empowerment within
Time Span of Discretion.
BIS Sensitivity – Provides a Frame when the normal
gaps in Policy, Procedure and System miss but
where people need something to connect to
BAS - Sensitivity
Codifying Breakthrough Thinking and Risk Taking
Provide space for people to try something new
BAS - Sensitivity
Encouraging “Entrepreneurial” and “breakthrough
Thinking Approaches” – Higher Levels of Thinking;
Spiral Dynamics; Deep Change
BIS Sensitivity
Emotional Safety Creation through Values Based
Discussions and EQ toolsets
BIS Sensitivity – Clear
Context, Purpose, Quality, Quantity Resources and
Timing for Task Work Assignments
21. -21-
Dimension 1 - The Way We Organise
The Challenge of Leadership
“The difficulty is that we have put ourselves to work in organizations so badly put
together as to mitigate against our working together effectively.
We have too many layers, undefined cross-functional working relationships, false
concepts of leadership, unclear leadership accountability and authority, chaotic
compensation systems, phony performance systems, unfair incentive
systems, false notions of capability and its growth, poor career development
processes and on and on. It is these systems that have to be mended. The art is
to mend them in such a way as to elicit the behaviours we want in the process.”
Source: Elliot Jaques, Requisite Organisation, Cason Hall 1996
Employees come to new organizations from these experiences,
effective and creative leadership and behavior in organizations, requires changing
the systems and not by trying to change the people.
22. Principles of Lynas Way – The Way We Organise
-22-
• Role clarity- Accountabilities and Responsibilities Clear
• Levels of work (Stratums) – Individuals working within their
time span of discretion are naturally expected to have lower
anxiety
• Task Assigning Role Responsibility (TARR’s) and Task
Initiating Role Responsibility – (TIRR’s) – It is clear who can
give me work
23. -23-
Role Clarity
• Clearly Defined Position Descriptions based on application of RACI Mapping
across the organisation
• Enables people to perform and deliver the required results and behaviour
• Ensures people understand how their role and personal performance
contributes to the achievement of business strategy
• Specifies real accountabilities able to be measured with clarity
• Clarifies interdependencies within and between teams and people – who does
what!
• Provides a framework that focuses on accountabilities, authorities and
capabilities required to deliver expected outcomes
24. -24-
Stratums - Human Nature and Capability
Organizational hierarchy is a natural human phenomenon and forms
according to a relatively predetermined formula, based upon human
capability
Capability is defined as the extent to which an individual can handle the
complexity of any task
A key measure of capability is how far an individual is able think/project
into the future
▬ i.e. Each of us have a different starting point, however, the longer
time horizon a person has, the more complex roles they are typically
capable of undertaking
.
Appropriate Structure Contains Anxiety
Allowing Structure to Follow Strategy (Removing ambiguity) and
allowing individuals discretion to complete work in a way that fits
their planning horizon
25. -25-
Levels of Work (Stratums)
Levels of work define the relative complexity of the tasks that make up the
work requirements of particular roles in the organisation.
Each level of work:
- Requires a different way of thinking
- Must provide information laterally
- Sets overall Context and Purpose for the Level below
- Allocates tasks to the Level below (direct reports)
26. -26-
Levels of Work (Stratum)
6 10 - 20 Years Value Delivery
5 5 - 10 Years Strategic Direction
4 2 - 5 Years Strategic Delivery
3 1 - 2 Years Operational Direction
2 3 - 12 Months Operational Delivery
1 0 - 3 Months Operational Execution
27. -27-
How Flat Should a Structure be?
Role Compression and Effective Organisation
Stated Organisation
Structure
A
B
C
D
E
F
G
H
I
J
A
B
C
D
E
F
G
H
I
J
What really
happens
I
F
G
H
J
A
B
C
D
E
Should be
After Elliott Jacques “Requisite Organisation”; Cason-Hall 1989
28. -28-
PROJECT
ENGINEER
TEAM LEADER
SPECIALIST
• Safety
• Industrial Relations
OTHER TEAM
LEADER
Role Relationships
Task Assigning and Task Initiating
TARR
- only your team leader
can assign you tasks
(blue box )
TIRR
• if previously
agreed, the people
in green boxes can
initiate certain tasks
with you
TEAM MEMBER
Inevitably people perform tasks that are not given to them by their immediate leader.
This can cause concern and confusion with respect to who can ask who to do what - In these
situations the employee needs to be given clarity on what type of work can be assigned to
them and by whom.
29. -29-
Dimension 2 - The Lynas Way
Work Allocation - CPQQRT
Whenever work is allocated to employees (assigned or initiated) the following information
should be provided:
CONTEXT
Context gives clarity around why the task exists, by describing the events/activities/changes
that have lead to it at this point in time.
PURPOSE
Purpose is the objective of what needs to be achieved in relation to the task being assigned
and should flow directly from the context.
QUANTITY
Quantity is defined as the numeric value attached to any task and represents the amount of
what ever has to be achieved.
QUALITY
Quality is defined as the standard that has to be met and can be either objective or
subjective
RESOURCES
Resources are defined as the materials, information, people, money, accountabilities and
authorities allocated to the individual to effectively complete the task.
TIME
Time is the deadline or time available for completion of the task.
30. Dimension 2 - The Lynas Way
Work Allocation - CPQQRT
30
BIS Sensitivity
• Context ,Purpose, Quality, Quantity, Resources and Timing (CPQQRT)
• Reduces Anxiety for BIS ensures that all information and resources for
task completion are described on task initiation.
31. Dimension 3 - Lynas Way – Values and
Behaviours
31
Values provide a framework that
• provide a sense of certainty in times of rapid discontinuous change
• provide a reference for when the systems, process and procedures that
are either immature-under developed or not in place – a typical start up
.
Care RelationshipRespect Integrity Courage
32. The Lynas Way – Values and Behaviours
32
BIS Sensitivity
• Provides a Frame to fills gaps in Policy, Procedure and System and where people need
something to connect with.
BAS - Sensitivity
• Explicitly States Organisational Acceptance for Breakthrough Thinking and Risk Taking
• Encourage organisational time and space for people to try something new
33. Dimension 4 – The Lynas Way People and
Relationships
33
• Toolsets beyond the Mechanistic
• Cultural Memes, Spiral Dynamics
• Developing the Corporate Heart as well as Minds
in Corporate Conversations and when problem
solving
• Formalised Training in 21st Century leadership
Topics, modelled in project teams and change
efforts
• Thinking beyond socialised norms to challenge
the role that corporations play in “Shared Value”
• Application of “breakthrough thinking” techniques
to creating shared value
• Visioning – “Remember the Future” – pre
meditative states to allow access to subconcious
problem solving and goal setting
• Shared Value Conversations at the heart of
corporate
34. Dimension 4 – The Lynas Way People and
Relationships
34
BAS - Sensitivity
• Encouraging “Entrepreneurial” and “breakthrough Thinking Approaches” –
Higher Levels of Thinking; Spiral Dynamics; Deep Change
• Feeds Novelty Seeking, Encouraging Attainment of Goals not yet
realisable
BIS Sensitivity
• Emotional Safety Creation through Values Based Discussions and EQ
toolsets
• Heart as well as Mind Applied to Problem Solving and People Decisions
mitigating anxiety potential negative outcomes.
35. Impact of the Lynas Way on Retention.
35
Lynas Labour Turn Over Rates are Respective Industry
Benchmarks (2011-Q1 2013)
23.50
18.9
12.2
14.2
0
5
10
15
20
25
Labour Turn
Over WA
Labour Turn
Over MY
Benchmark
Lynas
http://www.amma.org.au/assets/Policy/Papers/20130227AMMA%20Research%20Paper%20-%20Labour%20Turnover.pdf
Hayes Industry Data – Gebeng Industrial Park – Pahang, Malaysia.
36. The Lynas Way – An Integrated HR Framework
for a “Developing Company Culture”
36