Human Resources Issues in Mining

Human Resource Strategies 660 Monday, Trimester 1 2011, 18th April Assignment 3 HR Case Analysis at Workplace Word Count:2500 I. Introduction The Global Financial Crisis (GFC) in 2008 affected lots of industries including the miners. Employment in mining is particularly vulnerable to a cycle of rapid expansion and contraction, as changing economic circumstances cause demand and prices for certain commodities to rise or fall. Eventually the GFC resulted in lots of labour cutbacks in the resource industry (Australian Government, 2009).

The key human resources (HR) challenges facing the West Australian mining industry for the next few years are considered to be: replacing retirees; the retention of key talent; growing the talent pool training and development; and keeping staff motivated (Dickie and Dwyer, 2010). On the other hand the WA Chamber of Minerals & Energy (CME, 2006) identified a number of HR strategic issues for the WA resource sector like; skills shortage, employee attraction and retention, flexible workplace practices, indigenous employment opportunities and community-regional services.

The company I work for decided to go through downsizing in order to reduce the operating costs during GFC. This article aims to delineate several HR issues as a result of global downsizing process in the organisation. The main focus will be sudden redundancies, decrease in motivation, labour shortage, health and safety issues and recruitment of new employees. Since several HR issues are interrelated to each other, with the purpose of this article, the main focus will be mainly on downsizing policy and its short and long term effects in the organisation. II. The Downsizing Policy and Its Effects

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Organizational downsizing is a prevalent strategy designed to improve organizational performance while selectively decreasing costs. It refers to “an organizational decision to reduce the workforce in order to improve organizational performance” (Kozlowski et al. , 1993). Therefore stemming from the desire to become more efficient and effective, firms in both the private and the public sectors has adopted downsizing strategies (Cameron, 1987). Furthermore, the increasingly dynamic and competitive workplace and the trend toward globalization have prompted many firms to downsize (Appelbaum et. l, 1999). The GFC created considerable uncertainty, in the mining industry. In addition to the recruitment and retention issues, organisations were faced with trying to keep staff motivated at a time when more job losses were predicted and budgets became getting tighter (Dickie and Dwyer,2010). My current employer decided to go through global downsizing as a response to GFC. Fifty percent of the employees were made redundant and number of the projects was tremendously decreased due to the limited budget. The HR department played an active role in that period to manage the downsizing process.

One of the strengths during this process was keeping good communication between HR and the upper level managers. The process was completed with collaborative work between HR and management. The professional assist received from consultants involved improvement the employees’ self awareness levels, increase their motivation and confidence as well as creating effective CVs. However during downsizing process several HR related issues started to rise in the company. The employees who remained in the company lost their trust and motivation.

Besides due to loss of skilled labour the productivity decreased and the incident numbers dramatically increased. The turn-over rates were high and the team dynamics were damaged. Eventually the sudden decision given by upper managerial level due to economical downturn resulted serious HR issues in the company. The downsizing process and its long and short term influences for this case study is summarised in Figure 1 below. Global Downsizing Global Financial Crisis HR Issues Redundancies Survival syndrome in remaining employees Increased turn-over records Skills Shortage Increase number of injuries in the company

Management of HR Issues Aggressive recruitment policy (overseas transfers, secondments , graduates) Employee Engagement Survey Re-evaluation of salary packages and staff benefits Job Analysis and Talent Assessment Improved Graduate Development Program Maintaining trainings and developments Improvement in Health and Safety System Figure 1. The HR Issues of company. II. A. Survival Syndrome Since company mainly focused on those who lost their jobs; the employees who remained in the company suffered more after redundancies. Employee resentment and concern, loss of morale was high among the remaining employees.

The labour shortage created several issues for employees like job burnouts, working longer hours, increased pressure, and role overload and decrease morale. Unfortunately the bad influence of downsizing on the psychology of remaining employees was not well managed by HR department of the company. Brockner (1992) defines ‘the survivor syndrome’ as impact of downsizing on the remaining employees. There is considerable evidence that remaining employees feel shocked, embittered towards management, fearful about their future and guilty about still having a job whilst colleagues have been laid off.

Such employees are more likely to have lower morale and increased stress levels, be less productive, and less loyal with increased quit levels. According to study 70 percent of senior managers who remained in downsized firms reported that morale, trust, and productivity declined after downsizing those who lose their jobs may seem the most affected by downsizing, it is more likely that the employees who remain suffer the more negative effects (Appelbaum et. al, 1999). Eventually the HR was not able to create good strategy to keep the remaining employees’ motivation high during downsizing process.

Shook and Roth (2010) explained that failure to identify employee issues in the pre-downsizing due diligence phase creates a chaotic workplace atmosphere and increases employee fears and stress levels. These change events affect career uncertainty, fear, and stress in employees. Employees have long-term memories of their old comfortable culture and they fight to keep it. Employee resistance includes a variety of passive as well as aggressive techniques. Culture change may take years to complete and can be difficult to manage, even when HR is fully engaged and supported.

These transitions are more difficult to manage when HR is not involved. In fact, culture change may never be fully realized without HR support because of the human resistance (Szabla, 2007). Furthermore due to limited professionals the remaining staff started to have difficulty to maintain the work and life balance. The consequences of imbalance between work and personal or family life were visible at the workplace. The emotional exhaustion, cynicism and burnouts were common. Unfortunately The HR department was not fully aware of the situation until the employee turnovers increased and also effectiveness decreased.

With shortages of professionals and an active economy the pressures on existing employees looks set to rise and therefore this is an area which needs to be benchmarked and revisited with a view to adopting best practice throughout the sector (Wilkinson, 2008). II. B. Skills Shortage On the other hand downsizing affects employees’ affective commitment to the organization both directly and indirectly. However, its indirect impact is much stronger (Lee and Corbett, 2005). Apart form the short term sudden effects the long term effects of the downsizing started in the organisation.

Working with less force resulted in company to have inadequate supply of talent, increasing number of health and safety incidents at workplace and delays in production due to limited talented labour force. Especially after the recent mining boom, the company decided to increase the number of production activities in spite of limited skilled labour. It is a big challenge nowadays to find the specialised professionals in the mining industry. Apparently the HR division and management team chosen to concentrate on short-term needs rather than the organisation’s long term eeds during GFC. Sheaffer et. al (2009) claim that whereas downsizing affects the short-term performance of larger and established companies positively, it generally affects long-term performance inversely. A common mistake for HR managers is to concentrate on short-term replacement needs rather than on the organisation’s long-range HR requirements. Such a non-strategic approach causes management to be caught unawareness by changes in employee availability and quality of labour, creates a series of short-term dilemmas.

Stone also adds that of the right numbers of qualified and skilled employees are not available, an organisation may not be able to meet its strategic business objectives (Stone, 2010). The mining companies are now beginning to acknowledge that the current supply shortage is already impacting the productivity, efficiency and profitability of their operations. The shortage of skilled workers in combination with high turn-over rates are among the top factors impacting industry growth, either by stopping or delaying projects that would otherwise proceed, or by significantly adding to the cost of new projects (Schultz and Grimm, 2008).

During boom times, mining companies find it difficult to attract staff, even though huge salaries are on offer. This highlights a challenge quite unique to mining; namely, attracting highly skilled people to the remote location of most mine sites (Ednie, 2004). Eventually the skills shortage is still one of the biggest issues in the organisation. Since most of the experienced (high-cost) employees were made redundant company faces challenges in finding the experienced professionals. The HR department started the recruitment process however the mining market is still sparse of skilled professionals in specific roles.

This is one of the biggest challenges for the HR department. II. C. Health and Safety Issues Poor occupational health and safety (OHS) performance equates with poor human resource management (HRM), and poor ethical, legal and social responsibility (Stone, 2010). Since the mining boom hit the market recently the mining organisations increased their production activities in order to compete among the resource market. However the number of the staff stayed same while the number of projects was tremendously increasing. This lead to enhance health and safety related incidents at work place.

Specifically in this case during the downsizing process most experienced staff with extensive safety culture made redundant. This created a big gap in management of health and safety issues in the company. When employees leave, they take valuable process knowledge, customer and supplier relationships and a host of organizational know-how with them (Schultz and Grimm, 2008). The inexperienced new employees (i. e graduates, overseas staff) have difficulty in implementing the high quality safety standards due to their sparse knowledge about the safety system of the organisation.

Therefore increased emphasis on HR management is particularly important to the development of safety culture in the organisation. On the other hand once the crisis in the division was more visible due to increased number of incidents and low quality work the HR department started to take active role in collaboration with upper management. The pro-active recruitment strategy implemented in order to attract more skilled employees. Moreover “global employee engagement survey” was performed in order to evaluate the current employee’s satisfaction and asses the major HR related issues at that time.

This survey added tremendous value to the group to define the major problems in the organisation. The HR department in collaboration with upper managers performed well by initiating extensive survey and also by following up the survey results. III. Improvement in HR Strategies Successive HR planning is essential in order to solve any HR issues at the workplace. During the downsizing process HR department has an important role. Chadwick et al. (2004) indicates that downsizing is more likely to be effective in the longer term when accompanied by accompanied by practices that reinforce the contribution of HR to financial success (e. . , extensive communication, respectful treatment of redundant employees and attention to survivors concerns over job security). Levin (2009) identified three broad priorities in Australian businesses: (1) Retention strategies. (2) Downsizing or “Right sizing” activity will continue. (3) Organisations need to continue to invest in their people. In a downturn economy, HR practitioners need to be emphasising to their organisations that it is necessary to do the right thing for the long-term value and sustainability of the business (Levin,2009).

This includes recognising the link between leadership and performance, and hence ensuring that leadership talent is retained, developed and, most importantly, allowed to lead through the tough times (HRL, 2009). Based on the literature survey several strategies are proposed in this section to manage the previously defined critical HR issues: A. Investment in HR systems in the organisation: Especially during the global decisions the HR should be in collaboration with all levels of management.

Alignment between the business and human resource management (HRM) strategy is the key factor of success for organisations (Wylie,2005 and Wang and Shyu, 2008). Implementing proactive HRM practices and succession planning programs should be one of the targets. B. Gap Analysis: Clear understanding of the problems is severe in HR practice. In order to manage the ‘survivor syndrome’ HR should focus on motivation of remaining employees. The department can make detailed gap analysis and survey in order to assess the staff morale and expectations. This should be followed by upper management actions.

C. Optimising Human Capital: Mining companies needed to communicate the reasons for staff redundancies and budget cutbacks and engage their staff in decisions going forward in order to generate trust among their remaining workforce so that they could remain competitive once the economy improved. HR should create serious strategies in order to make people connected to the organisation (Dickie and Dwyer, 2010). D. Talent Assessment: The employee talent assessment in collaboration with HR and line managers will address the current skills gap in the organisation.

This will also give good understanding about the skills and expectations of the current staff. E. Training and Career Development: Developing a collaborative, cross-industry strategy for training/educational programs and employer-provided training to facilitate the availability of a skilled labour force is one of the retention strategies. Company should actively support and enhance the people skills and relational abilities of all employees through training and development programs (Dickie and Dwyer, 2010).

With this perspective well structured graduate and mentoring program also can be attractive especially for the Gen Y workers. F. Focus on improvements in leadership: Training managers to actively manage retention in their areas also adds value. Besides the leadership competencies of the management should be improved ino der to solve the current challenge. Pick et. al (2010) proposes action reflection learning (ARL) methodology as an HR tool to improve the skills of leaders in the organisation. G. Improvement in Health and Safety: The current safety culture should be measured by HR.

Sexton et al (2006) describes Safety Attitude Questionnaire (SAQ) as an HR tool which helps to measure the team work climate, job satisfaction, perceptions of management, safety climate, working conditions and stress recognition. Also learning from incidents as well as improved safety system should be managed by HR. On the other hand visible leadership and supervising on sites should be maintained to assist the new employees. H. Growing the Talent Pool: Since it is a big challenge to attract the best employees in the market, employee benefit offerings such as full medical, dental, profit sharing and wellness programs could be effective.

Attractive packages in a work culture with a family-oriented atmosphere need to be developed. Recruitment strategies should be improved to persuade the skilled specialists in the market. I. Communication: The mostly effective companies have two-way communication between senior leaders and employees. A good communication plan on how to deliver HR initiatives would be beneficial (Dickie and Dwyer,2010). IV. Conclusion Since mining operations operate with a finite resource, often remote locations, require specialised skills, with high capital intensity and are subject to political, social and environmental global issues.

Downsizing policies will be choice of the organisations in the market with plunging commodity prices and falling demand (Dickie and Dwyer,2010). Strong HR strategy creating a link between leadership and performance is a key factor to cope with these trends in the resource sector. References Appelbaum, S. H. , A. , Everard, and L. T. S. , Hung. 1999. Strategic downsizing:critical success factors. Management Decision, 37(70): 535-552. http://www. emeraldinsight. com. dbgw. lis. curtin. edu. au Brockner, J. 1992. Managing the Effects of Layoffs on Survivors, California Management Review. (34): 9-27.

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Levin, A. 2009. HR Priorities in 2009: The Landscape Continues to Change, Brisbane. http://www. astorlevin. com Lee, J. , and J. M. Corbett. 2005. The impact of downsizing on employees’ affective commitment, Journal of Managerial Psychology,21(3):176-199. Pick, D. , K. ,Dayaram and B. Butler. 2010. Regional development and global capitalism:the case of the Pilbara, Western Australia, Society and Business Review, 5(1):99-110. http://www. emeraldinsight. com. dbgw. lis. curtin. edu. au Schultz, R. and M. , Grimm. 2008.

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