Surviving the downturn- HR Strategies for Mining Companies

Australian mining companies are facing a very different and complex set of challenges from a human resourcing point of view, than they did just 6 months ago.
By: Briscoe Search & Consulting
 
July 8, 2009 - PRLog -- Australian mining companies are facing a very different and complex set of challenges from a human resourcing point of view, than they did just 6 months ago.  Previously, the biggest issue was finding enough qualified and experienced people to keep up with the insatiable demand for growth.

Now, with mineral commodity prices at a 4 year low and the global economy in recession, the HR challenges for mining companies are how to survive the economic downturn and retain its best people so it can recover when better economic conditions return.

Nowhere is this issue more relevant and urgent that in the junior exploration sector, where the collapse of investor confidence in local equity markets makes it extremely difficult for juniors to raise capital.  Many of these companies are now in “cash preservation mode” and are downsizing as a means of survival.

Needless to say, the economic future your organisation is facing is somewhat dependent on the state / states you operate in. For example, despite the inevitable slowdown from the global crisis, the fundamental economic conditions in W.A. remain strong, and forecasting the 2009 picture can be difficult given the uncertainty around China’s continued demand for resources and the record low unemployment levels in Western Australia. No-one has gone unscathed from the recent turmoil in the marketplace, however, your reaction to it as a business needs to carry some “Sense and Sensibility” rather than decisions based on panic, emotion and media hype.

Even some of the larger mining companies, which expanded their workforces significantly during the boom years, are now undertaking painful and large scale retrenchments.  As a consequence, many qualified and experienced technical people, who only a year ago were in high demand and commanding huge salaries, are now facing the uncertainty of unemployment.

For those mining companies with strong cash reserves and/ or strong cash flow, the recruitment market has seen an increase in highly skilled and motivated candidates desperately keen to find new employment.  For these companies, the current employment market represents a rare window of opportunity to recruit talented, high-calibre employees who are now seeking career stability.

Conversely, recent labour market surveys confirm that the fear of recession and widespread retrenchments in the mining industry have dramatically reduced the number of people considering leaving their current employment.  The priority now is stability, as people are less inclined to take chances on a new job and risk becoming LIFO (Last In, First Out).

From an HR management perspective now is a good time to review staff contractual arrangements.  Company management now has greater leverage to renegotiate contracts with short-term contracting staff who are seeking greater security amidst the uncertainty of gaining future contracts.  

As an alternative to retrenching staff, some companies may be considering offering contracts to their current employees.   This may provide some short-term advantages, however it may also represent a false economy and end up costing more and can carry some Industrial Relations ramifications so needs to be approached with great care and caution.

When downsizing the critical challenge for any company is to identify the right people to retain and the right people to let go.  Where possible, it’s always preferable and more profitable to redeploy good staff rather than retrench them.  Retrenchments have the potential to destroy workplace culture, and unless they are handled with care and sensitivity, can significantly undermine relations between management and staff and have a very negative impact on productivity.

It is worth remembering that the remaining employees will judge the way their former colleagues are treated when they are retrenched, and will tell their friends within the industry about how well or how badly the process was managed.  A badly managed retrenchment program will undermine confidence with the entire workforce which in turn will reduce employee productivity, motivation and loyalty and increase staff u. Companies that don’t respect their employees will have a hard time trying to recruit new ones.

Given the economic growth period that Australia has just come out of, it has been a long time since mining companies have had to retrench large numbers of staff, and there have been many significant changes in State and Federal industrial relations and workplace employment legislation they need to be aware of.  It is highly advisable to seek professional advice from a HR / IR expert before taking actions that could potentially result in unfair dismissal claims, breaches of award, or employment contract provisions.

Despite the current climate of doom and gloom, it’s worth remembering that adversity creates opportunity.  Tough times have a way of weeding out the weak and the under-performing companies, and should leave the Australian mining industry leaner, meaner and more profitable in the future.  The challenge for many mining companies is to survive the current economic downturn and be in a strong position to capitalise on the inevitable recovery, when it comes.

The key is harnessing the creativity, intelligence and energy of a company’s human capital.  Maximising human capital has a direct correlation to maximising profitability.  To do this, it is critical for mining companies to continue to invest in staff training and professional development, provide financial incentives and opportunities for career advancement and most importantly, create a healthy workplace culture where employees feel respected, secure and motivated to succeed.

This remains a difficult challenge in a time when mining companies taking dramatic action in anticipation of a protracted recession.  Some mining companies will not survive this downturn, but most will.

For these companies there are excellent opportunities to seek out and recruit highly experienced technical staff, high-calibre management executives, and motivated contractors who fit with the culture of the organisation and begin the process of preparing for the recovery now.

Briscoe Search & Consulting is an executive and technical search consultancy, with the majority of their assignments conducted within the Mining, Resources, Mining Supply and Engineering Sectors.

http://www.briscoesearch.com.au

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Briscoe Search & Consulting are a privately owned boutique executive search, executive recruitment and talent acquisition firm based in Perth, Western Australia. Briscoe Search & Consulting offer a range of HR services including Renumeration consultancy and Staff Development.

We cover a wide range of industries including: Mining, Resources, Oil & Gas, Supply Chain, Education, Local Government, Wholesale, Construction, Engineering and more. View our website at http://www.briscoesearch.com.au for more information.
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