Draft Speech for Jannie 000 Words Feb 10 (2

Maximising the value people add to the coal-mining industry

– with emphasis on integrating international best practice

Jannie van der Westhuizen, group general manager, Sasol Limited

Presented on Friday February 25 2005

The South African coal-mining industry has a crucial role to play over the next few decades in contributing to the country’s socioeconomic development. To truly maximise our future contribution by harnessing our true potential, we need to remain united in our quest to maximise the value of our people.

At the outset, I would like to offer Sasol's and my personal congratulations and good wishes to the incoming president of SACMA, Tienie Bleeker, his vice-presidents and all the members of the council on their election to this important office. I appreciate being afforded the opportunity to address this audience and I thank SACMA for allowing me time to express a few opinions on how we could possibly maximize the value our people add to the bottom line of our businesses and industry.

Mr President, the years of accumulated knowledge and wisdom seated in this room probably makes this the most influential audience in the South African coal-mining industry. It is a daunting task to add to your well-developed knowledge base on the important role that people play in this industry and to suggest some thoughts on how this value proposition can be improved in South Africa today. It is such a critical topic, however, that one can not talk too much about it.

A people-centred industry

Despite the evolution of technology and the shift towards greater mechanisation, mining remains a labour-intensive industry – and people will therefore remain our most precious resource. In our collective efforts to optimise the value of our people, however, we shall surely underperform if we do not also strive to optimise the vision and value of our leaders.

The quality of our industry’s collective leadership will to a strong degree determine the extent of our future success: not only our abilities to unlock shareholder value and contribute to national economic development, but also our abilities to determine the quality of life and the natural environment as responsible corporate citizens. Leadership is the most vital key we have to unlocking South Africa’s future potential – and we cannot afford to take for granted the need to keep recognising and developing leadership potential within the context of an ever-changing macro environment.

When we look back at South Africa’s first decade of democracy, there is no doubt that our political, social and economic landscapes have been transformed. In some instances, transformation has been so profound, it has reached a scale beyond the expectations of many South Africans. A substantial amount of this transformation is attributable to the vision, diligence and collaborative hard work of many leaders involved in many spheres of human endeavour in South African society, including the coal-mining industry.

The golden qualities of Madibaism

This leads me to an inspirational article featured in a recent edition of the Financial Mail, which focused on what business leaders thought about Madibaism – the influential leadership style of Nelson Mandela. Business leaders such as Lazarus Zim and Frederick Van Zyl Slabbert enthused about Mandela’s virtues as a leader and highlighted some of the golden keys that make the difference between a mediocre leader and an exemplary one.

Inspired by the Financial Mail article devoted to Madibaism, I’d like to share a few pearls of wisdom about great leadership qualities:

inspirational leaders read situations not with a magnifying glass, but a telescope, seeing beyond the immediate to the consequences;

they have a sense of humour;
they believe in the value of long-term thinking rather than being fixated with short-term outcomes only;
they have a clear commitment to goals and values;
inspirational leaders pursue consensus and compromise in highly polarised situations;
they delegate power and authority;
they trust the expertise of those whom they have charged with responsibility;
they develop vision and foresight;
inspirational leaders remain single-minded in achieving their vision;
they show courage, no matter how daunting the obstacles may seem;
they remain visible and communicate effectively;
they control their stress levels;
inspirational leaders stay humble by showing the same respect for children that they would for adults;
they go the extra mile to build consensus;
they are willing to pay the price;
they are tough at times, but always fair;
inspirational leaders also show compassion and care for the needy and disadvantaged; and
they always get the job done without procrastinating and politicking.

Orchestrated leadership can unlock immense potential

My enthusiasm for such golden leadership qualities is far from fanciful idealism. Here, I can speak with authority about the highly successful renewal of Sasol Mining. Towards the end of the last decade, I was privileged to be part of Sasol Mining’s transformation process that culminated in a series of substantial benefits.

After months of extensive brainstorming, discussions, research and consultation, we set ourselves bold performance targets, all of which were attained. These targets covered such critical areas as safety, morale, productivity, customer service, quality and cost performance.

The cynics sat back, waiting for us to fail in our quest to create our new business paradigm. The cynics, however, underestimated the strength of our team leaders and their ability to translate our shared vision into tangible achievements in the workplace. What impressed me most was the inspirational heights people can attain across all disciplines and locations when they commit their hearts and minds to shared values, aspirations and targets.

We achieved staggering results. Having invested about R50 million to renew Sasol Mining and enhance the value of our employees’ contributions, we achieved a return on our investment far greater than R2 billion – and we shall continue to harvest fruits as a result of our concerted efforts to transform the entire way of conducting business at Sasol Mining.

This exceptional return on investment was achieved without making any substantial changes to our technology base. Our people drove the entire process – from our senior executive team to our young apprentices and trainees.

Benchmarking enables the integration of best practices

I have since become responsible for Sasol’s corporate human resources portfolio too. This is a challenging and exciting portfolio to manage, especially in the light of Sasol’s expansion programme, portfolio diversification and the many domestic challenges we face with the emergence of such issues as black economic empowerment and sustainable development.

Against the complex backdrop of the macro national policy, as well as the accompanying regulatory and systemic changes, the wider business sector faces many challenges, one of which is the increasing impact of globalisation and the rapid dissolution of trade barriers. In order to survive in today’s fast-changing business environment, organisations have to be globally competitive.

This is something we continue to assimilate into our business strategy at Sasol, as well as our standardised approach towards recruiting, developing, rewarding and retaining employees. Key to our strategic development and unrelenting drive to become increasingly competitive is our continuing willingness to benchmark ourselves against leading international companies and to find creative and positive ways of strengthening our business skills and processes.

We continue to explore in our ongoing efforts to define and integrate best practices in all our business units and disciplines. To this end, we frequently commission reputable consultants to appraise and audit our systems and to offer value-adding insights and techniques to help us to improve our skills, our systems and therefore our business performance from a global perspective.

Sasol’s strategic framework for maximising the people’s value proposition

One of the major challenges facing business managers today is the ability to translate strategic intent into practical terms for employees. I can remember being confronted in the late-1980s with a request from the supervisory staff of the mine at which I worked. They wanted me to indicate unequivocally what was expected of them to improve matters on the mine.

In those years, the typical management style was to have a few focus areas and strict rules, to enforce the rules, to allow flexibility in certain respects, to support well and to put pressure on those individuals and teams who appeared not to be performing well. The management team and I had a measure of success doing this.

In the late-1990s, however, we discovered a much better approach that entailed:

diagnosing existing practices in considerable detail;
redesigning practices to precipitate dramatically improved results;
rigorously implementing the new methodologies;
tracking performance against agreed targets;
rejecting negative deviations; and
rigorously entrenching a performance ethic that would continuously produce world-class results.

Supporting and leading this brought about much better results with substantially better outcomes.

Potential can be far greater than imagined

I would like to share my experiences with goal-setting when we launched the Sasol Mining renewal intervention in 1998. The business diagnostic I referred to earlier was done to enable us to design a new and substantially enhanced methodology towards operating Sasol Mining.

Our in-house team for this purpose, together with our consultants, reported back the outcome of the exercise. Part of it was to report on the production rate potential against the actual production rate being achieved. The leader of the group asked all members of the then leadership team to write what they thought the improvement potential would be for the number of tons, on average, from one continuous-miner in one shift. The improvement figures ranged from 5% to 25%.

Then came the shock! The potential, scientifically determined by the team during the diagnostic, was 150%. Some people got so upset, they wanted to quit their jobs. Fortunately, most accepted the challenge that we could improve dramatically and we settled on a target of 75%. Today, the actual improvement exceeds 100% – and there remains potential for further improvement.

The key lesson from this exercise was that if we do not have what we need, then we must create it – not only because we have to, but because we can and we want to! By maintaining an open mind, we aim for what is possible – and not necessarily for what is popular.

Having done this, the next step would be to clearly define and develop roles for people to effectively enable the processes needed to deliver the anticipated outcomes – not only individually, but also for the constellation of roles to form vibrant, goal-orientated and successful organisations and networks.

Keeping a vigilant eye on poor performance

I would now like to focus briefly on why our industry still faces areas of poor performance. Based on Sasol’s experiences in this regard, I have five main points to emphasise – and these are listed as general pointers. One must accept, however, that these do not necessarily apply to your mines – or your businesses for that matter.

Much of what we use to decide where people fit into an organisation is still based on

our perceptions and fragmented experiences with those people. I am sometimes concerned that we do not properly and appropriately use the correct tools to measure our people’s potential to match them effectively with the roles we want them to play and the roles that best suit them so that they and the business gain optimally.

Processes are sometimes fragmented with huge gaps in between, which, in turn, lead to poor systems and accompanying results. Excellent techniques, developed to bridge these gaps, are not used appropriately, thereby preventing dramatic improvements in bottom-line results. For instance, having perceivably good action plans are not good enough. Tracking the impact of specific action steps, to ensure the desired impact or to replace it when the impact is not prevalent, has to be added to guarantee results.

A focused and structured approach towards aligning processes with company strategies is sometimes completely absent, with groups of people still following a functional approach only. An example is maintenance outcomes, measured in terms of availability and reliability only, instead of in terms of productive minutes to allow operational people to produce maximally and tracking the success by which it is done.

Talent management does not always include all the required elements to deliver maximally. For instance, we have discovered that middle management almost have an identity crisis in pockets of our business. This implies that their roles should be effectively reinvented and better integrated up and down. In addition, they have to be trained and developed to play these roles productively. Having moved around among employers, this might be true of other companies in our industry.

Managers and leaders seldom appreciate that their HR colleagues have the capacity and inclination to be good business partners. In many cases, paradigm shifts are still required to position them appropriately in this regard and to expect bottom-line contributions from them. If they cannot do this, develop them – and, if they still cannot, then replace them. Do not accept a reactive approach whereby they principally act as administrators, mainly delivering on the supply side of the equation. They should also be key players in inventing the demand side.

Conclusion: some advice for the future

In conclusion, ladies and gentlemen, I would like to offer some advice for the future.

We need an improved agenda for the leadership challenges in South Africa. We need a think-tank approach to create party lines for suitable leadership competencies for our industry. We most probably still rely too much on what we got used to, and not enough on what will help us to speedily transform our industry and companies to accommodate the aspirations of all our stakeholders.

There are excellent interventions in this regard. Let’s research them; let’s participate; and let’s extend them where appropriate to have optimal benefits in our businesses.

One such intervention in Sasol, which could be equally useful for any coal-mining company, is talent management, which has been identified as one of our chief executive’s priorities. Our corporate talent management project aims to add the people dimension to all Sasol's strategy and business processes. As Sasol grows globally we need to have a sound understanding of the people capacity needed to support our growth initiatives and the sustainability of our businesses globally. Talent management in Sasol is an integrated approach that helps us to understand the people demands in terms of our business strategy and how we can meet the supply of people through key HR processes such as leadership development, succession management, performance management and resourcing.

We need improved homegrown leadership development programmes based on action learning methods. These should be focused on exposing our people to those activities that enable them to develop the competencies and sensitivity needed to drive the successful transformation of our businesses.

I advocate the new-generation network approach, rather than the traditional hierarchical approach. This approach implies that you consolidate what belongs together in terms of role players and resources to address specific issues, and that you always remain vigilant, opportunistic and flexible.

The focus should be on maximising performance levels to deliver world-class results. We need to find creative, new ways to eradicate mediocre performance. We know we have the capacity to rise above this possibility, and to deliver on the expectations imposed on us from many influential quarters.

As mining people, we have managed to overcome and master difficult technical challenges. Now is the time to display the same tenacity and commitment towards our people challenges because this is what is going to determine the extent of our future success.

We should seriously consider developing a leadership programme that combines the technique and skills of our influential leaders. How about developing a Madiba Leadership Programme based on the many impressions this great icon has left in his wake, as articulated by so many captains of industry and other national thought leaders?

This could then be added to the successful technical, functional and other management and leadership programmes we already have for leadership development in our companies.

We have many exciting opportunities within our grasp to guide the coal-mining

industry towards a brighter future, so let us not view our current and future leadership requirements with cold indifference or outdated attitudes. Let us, instead, embrace our leadership and human resources management issues with passion and pride!

Thank you!