Speaker A We saw the Australian mining industry in competition with low wage countries such as Brazil or South Africa, and with high productivity companies who were located close to the major markets in America or in Europe. And we wanted to be certain that we could be competitive with them. And we started by comparing ourselves with Canada and we found there was a big opportunity for improvement. I read a couple of hundred books about how you could improve organization to see if I could catch up with what the latest thinking was. And in this absolutely unreadable book that you've probably all heard of, I saw a graph on page 173 and there's the graph or put in a rather larger form. That's what it looks like. Sorry, can you just stop there? Okay, you can continue. And I thought, that looks like the energy levels of electrons going round a nucleus. And I said, this is the first time in any of the reading I've done that there seems to be some scientific analysis underpinning some suggestions to improve operating what. So I said, I've got to meet this man. And we got on to Elliot through Wilfred Brown and through Mark Turner in London, and that's where we started. What happened when Elliot came is we suggested he start by going to our Nor business, Hammersley. And he did that for six weeks or so. And he came back and he said, you have to organize the whole of the CRA group in a different set of principles so that the people in Hammersley can improve their productivity. And so we started on a program for the group as a whole, but we started in a particular area and went on from there. We selected Woodlawn as the mine in which to start because there was a man called Mike Blackwell. He was a very clever man, a road scholar. He'd worked in the group for ten years and he wanted to make certain that everybody felt that Woodlawn was a good place to work. And Woodlawn was a very good place to work, and people wanted to work there, but it wasn't getting the output that was necessary. So we thought if we started to work there to see whether we could improve the productivity, that was a sensible way of starting. Well, the first thing was to ask how do the managers add value to the people who are actually digging the ore out? And how do we make certain that the managers all add value? And that can only be measured through the productivity that's actually achieved and the progressive improvement in that productivity. Woodlawn was a lead and zinc mine, it was near Canberra, had about 400 employees, and that was where we started. And having worked out some principles, looked as though they would add value in Woodlawn, we then went and extended that within the lead and zinc group that at this time, Jack was running both in the smelter at sulfide Corporation and at the mine at Broken Hill. If you asked me what were the key principles that we learned, it seemed to me there were four or five. The first one was the definition of the manager and that the manager ought to have four authorities over all of his subordinates. First was the opportunity to select somebody onto his team. The second was the ability to remove somebody from his team after going through new due process. The third was the power and authority to assign the work that had to be done, what is to be achieved by when. And the fourth was to have the opportunity to differentially reward people on the basis of their performance for authorities. The manager had to have them. And those were absolutely fundamental as our starting point. Second, I think, principle was that work in managerial terms is the exercise of discretion focused around moving the international competitiveness of the business ahead. So that was a second principle. I think a third principle was a commitment we made as a group to training people to improve their personal effectiveness. And that meant a commitment of 5% of our wages bill to training. The fourth was, I think, a shared terminology, a common language used across the whole of the group so that we were able to communicate more effectively. One of the things which we found is that we had had a five year planning process where you plan for five years, et cetera. And we found that that was the last two years of those year. Four and five were really adding no value. So we cut that back to a three year plan and we found that that turned out to be much more realistic to all the general managers throughout the group who were really the people doing the planning work. And that laid the basis for the planning meetings with the managing director of the business unit, with the general managers, et cetera. True.
Speaker B Well, I was subpoenaed into the role because Mike Blackwell, whom you heard Rod talk about as the GM at Woodlawn, reported to me as the managing director of that particular unit. Mike and I discussed the problems we were having in getting product out of the gate, and I agreed with Mike's suggestion that he should contact McKinsey and see what could be done through them to improve our processes. Rod, unbeknownst to us, was talking to McKinsey at the same time about their views. And as soon as he heard he had a couple of willing bunnies, we were brought into the fray and we were happy to agree to piloting the program. And we used McKinsey to help us in the analytical work and the principles that Elliot had brought because Elliot came out with us and although he wasn't working on site, he visited site. And then we worked with some of the woodland people under Mike's general direction to do a survey of what, in fact, was going on when people were managing well, when you that sort of.
Speaker A Scale of operation, some of them were smaller, like salt, and some of them were bigger. But it was a very big undertaking to improve the managerial effectiveness across the whole business over a ten year period.
Speaker B The other important point I want to add to what Rod said earlier. One of the commitments that he has made as CEO was to training, and the key principle was to what was called the General Managers Development Program. The general managers are operating at what we call level four, and they were in charge of the various operating sites across the group exploration and the whole spectrum of CRA's activities. They attended a ten day residential course, and we were able to use those people as a sounding board for the practices and principles we were developing using Elliot's work and our own observations. So one of the ways of disseminating, which is a key way, was in fact running the General Managers Development Program. I wouldn't use the word collegiate in the sense of the accountability of general managers. That was absolute, and they were absolutely accountable to their superior, the managing director of the union.
Speaker A We had the feeling that people had to work together in a common language, but that was different from the accountability that a person had for his job and for his subordinates getting the output to work done.
Speaker B That's right. Inputting and their understanding.