Coal, Cost and Culture: “Some People Say”…Culture’s Link to Optimisation and Profit

It's easy to speak and write about equipment performance. Throughput, delays and productivity are linked directly to profits, and their links to cost becomes easy to make when we talk about reducing variable costs associated with production. The reader’s expectations for these topics are clear and quantifiable: investment, time, throughput, capacity… how much, how long, etc.

What if the topic involves culture? When hearts and mindsets are involved, it's a different story. Expectations are often fuzzy but the needs are great. Miners have many skills when it comes to increasing productivity, but culture is our greatest challenge. Linking culture to production, cost and profits can be a challenge. When we can’t easily make that link, we may assume that the link has a minimal impact on performance. 

I believe that we fail to recognize the financial contribution that culture makes to profit because the connecting point involves the hidden potential to improve (i.e., what’s left to get). By this I mean the excess costs that can be reduced but haven’t been reduced, as well as existing capacity that could be used to produce more tons but remains hidden.

Hidden potential is a funny thing… hidden equipment capacity is not recorded anywhere on the general ledger. In fact, to quantify hidden capacity, we must go out of our way to calculate it. Excess costs are recorded on the ledger but are not categorized in a way that makes them easy to spot. As a result, these two categories of hidden potential are not an area of focus and are easily glossed over, even in process improvement work.

SOME PEOPLE SAY that ALL opportunities to reduce costs, increase production and optimize performance can be addressed via process changes at the mine/plant level using Six Sigma, Lean, TQM, etc. There is no doubt that millions of dollars of improvements CAN be captured with process changes, but if process changes are all that’s required, why isn’t every mining operation that has implemented an improvement initiative already optimized?

Improvement potential can be hidden by what people believe about change, especially by management’s beliefs about change – their role in change, what they accept as “normal”, and their role in removing the barriers that hold them back. Further, management beliefs directly affect their behaviors (words and actions) within the team and with the workforce. These behaviors either build trust or tear it down.

• With trust, a “proactive” culture forms that is focused on potential (i.e., what is possible to achieve). When a team is focused on potential, they can talk about ANYTHING that stands in their way, including issues considered politically incorrect or “sacred cows”.
• Without trust, a “reactive” culture forms that waits to be told what to do, refuses to believe that things could be different and does not consider management’s beliefs or behaviors as barriers to potential or culture change, including communications, follow-through and taking responsibility. 

SOME PEOPLE SAY that the management system (management processes, beliefs and behaviors) are outside the scope of improvement work – that management already has what they need to make good decisions and that their method of “operating” their management system has worked for years – why change it now? I have several questions in response to this viewpoint:How much better do you want to be?

• Is it possible that you are leaving significant earnings on the table that hinge on your current mindset and don’t know it?
• What if you focused on creating a culture tied to potential instead of just meeting budget every week, month or year?
• What would happen if all of your people adopted new mindsets - from “Can we meet budget?” to “How good can we be?”
• Do you believe that your property has achieved true optimization?
• What if your management team’s mindset is your biggest barrier to change?
• What would your shareholders expect you to do to optimize performance? 

THOUGHT FOR THE MONTH: SOME PEOPLE SAY that "people should just do what they are told to do and we will make money". How much MORE MONEY could you make with a different management approach?

Author: Kay Sever CMC, CQIA, Sustainable Improvement Consultant and Coach. Kay Sever is a leader in sustainable improvement for mines and plants. She combines over 30 years of mining experience with a common sense approach to improvement that raises awareness about lost opportunity and hidden barriers that prevent improvement success. Her new management training program, The Change Revelation, shows management teams how to remove the barriers that are holding them back.www.thechangerevelation.com.

Read the article online at: https://www.worldcoal.com/coal/24082012/some-people-say-and-its-culture%E2%80%99s-link-to-optimisation-and-profit/