Doing a Better Job of Management with Requisite Organization

Speaker A Well, I started in the Rio Tindo group, then called CRA, about 35 years ago in Broken Hill. My first line management role was any significance was about 30, 32 years ago, when I was in charge of underground maintenance for the Zinc Corporation crew of about 100 and spread across an underground mine. Seven days, 24 hours of people on shift, et cetera.

Speaker B And I suppose that's the first time.

Speaker A You started to think about the roles of the supervisor and the foreman and what my role was, et cetera, et cetera, over the next 30 years. After that, I've had a variety of roles in our group and I've been chief executive of the Rio Tindo group for the last five years. But before that, the ten years before that, I was running various divisions and to say, how did I get first involved with Elliot Jarks and his work? Well, it was about 20 OD years ago, I got a call from my boss to go to Melbourne to meet the then chief Executive, Sir Rodrigue Carnegie, and I was given an extract an extract, mind you, of general theory of bureaucracy, about 20 pages. And my boss said, you better read this because Rod wants to have a talk to you tomorrow. Look, I thought someone had come down from another planet. Just having an extract of the general theory of bureaucracy is not really an introduction to management theory. I thought it was a test. I had to really say, this is gobbledy gook. And I knew it all the time. I suppose a few months after that, I got to meet Elliot and I was given a new role on the organization work. The reorganization that Rod was leading in conjunction with Fred Hilmer and some other people. Fred Hilmer from McKinsey.

Speaker B And I'd have to say that was a very interesting couple of years. It really highlighted the challenges of making organisation change in a big organization. And I'd say that as we went through that process, elliot's ideas contributed a lot.

Speaker A Now, that doesn't mean every aspect of them was something that was perfectly thought.

Speaker B Through, but I think the spine of.

Speaker A What he was saying, or what I call the spine, really had some relevance.

Speaker B And it particularly had some relevance down at the front line of the organization. The industrial relations challenges. It wasn't confined to CRA or Rio Tinto at the time. It was really an issue around the whole of the Australian workforce. And I'd call it sort of empowering.

Speaker A The front line.

Speaker B Of our workforce. If you think about an organization, we're.

Speaker A Currently nearly 30,000 people, but there's probably.

Speaker B 28,000 down at the front line. And when they're over managed, when they're really asked to check their brains at.

Speaker A The gate, that's not the best environment.

Speaker B To get something to get productive, innovative, creative, good work out of people who are increasingly better educated, et cetera. And I think Elliot's ideas about the output team and the mutual recognition unit, the line management and each level of management really adding something had a lot to commend it. Now, I think a lot of the other aspects I think maybe the concepts weren't as thoroughly developed but they had some relevance, the idea of support and service, et cetera. But of course, if you ever go through and implement these things in a very doctrinaire sort of fashion, I think then you can make some mistakes. And I'd have to say we made some mistakes. That doesn't mean net net we got it wrong. I think we really improve that line management, that output team functionality. The creation of the business units within Rio Tinto, I think it really helped me think, and I think many of.

Speaker A Us in the group think that the business unit notion, the P l accountable business unit manager.

Speaker B It was very useful for if you look measured have we measured the effect of all of this? I'd have to say we haven't.

Speaker A I think the group and our business.

Speaker B Units function more effectively through the notion.

Speaker A Of the business unit structure.

Speaker B The P L accountable managing director or president of our business units. That's how we structure our businesses. What has contributed? I think we're doing a better job of management. I think we are recognizing that important part of better employee relations is empowering the people at the coalface, if you like. These people are a lot better educated than 30 or 40 years ago. And I think that's really been an important contribution, I suppose. Do we use this day in, day out? No, we don't in a sort of a direct sense. And some people are quite skeptical about many of these aspects, especially those who are sort of watched from afar. I'd have to say, though, that subconsciously we do because we're sitting here at the moment, as I sit here in 2005, we're sitting here saying, how do we run this global organization where we have various product groups spread around the world? Business units where the MD of the business unit has businesses spread around the world 24 hours, seven with instantaneous communication. And we have got expertise within our group which we're trying to share between operating sites, share between business units, share across the group. I can think of a couple of skill sets. We've got like geomechanics, rock, mechanics, engineers. We've only got a few of them. How do we have that technical support interrelate with our business divisions? Some of these people are in demand. And how do we make sure they're not just poking a bit of information through the door and saying, pick this up if you want. We really want them to have some skin in the game as far as some of this support work goes. So we've got to think about that. And I'd have to say, at the moment, we're grappling with how do we organize in an environment that's quite different from, say, the work of 20 years ago that we're talking about. If you're talking about what's changed over 20 years in our group, I think you've got to look at you can't sort of generalize because we've got operations in the developing world, we've got operations in heavily unionized operations, what I'd call using the typical North American non union operations. Then we've got most of our employees in Australia are in what we call all staff or arrangements where they choose to have a direct relationship with the company. And I'd have to say that if you cast your eye back 20 years, there is significant reduction in time loss through industrial disputation. But I think part of that is it's not all attributable to it's about thinking about how you interface with the.

Speaker A Front line of our employees.

Speaker B We're in a business at the end of the day to make a good return for the men and women whose savings are invested in the company. And what we've got to do is take business decisions. Now, sometimes that means taking tough decisions, but I think broadly speaking, thinking about organization, thinking about some of these aspects that I first came into contact with 20 years ago, 20 plus years ago, I think they've NetNet have improved the performance of the business.