AEL’s New Plant Achieves Its Promise Through Transformed LeadershipAug 2016Share by Email
When groundbreaking, world-first technology was applied in the first automated explosives detonator manufacturing plant in the South African mining industry, management learnt a trenchant lesson: that good leadership of the people who operated the new plant was as important or more important than the new technology.
The application of the Legitimate Leadership framework helped to set the plant on the road to achieving its full potential through significantly improving the leadership of the people who worked in it.
In the early 2000s, South Africa’s largest manufacturer of explosives, African Explosives Limited (AEL), embarked on a project to replace its plus-100-year-old, labour-intensive detonator manufacturing plant with a completely new, automated plant, called ISAP (Initiating Systems Automated Plant), pictured below.
The new plant held the promise of large cost, productivity and quality gains. But for over five successive years after its commissioning, the gains had proved impossible to reach. Then, new senior leadership, with the help of consultants who could provide support in improving the leadership on the plant, became involved.
The project began in 2012 and Legitimate Leadership continues to work at the manufacturing facility. The project has been a foremost success for Legitimate Leadership, and a testimony to the value of the Legitimate Leadership Model.
1. WHAT WAS ACHIEVED AT ISAP
- Achieved a production target which had failed to be achieved for five successive years. Now exceeding that target and confident that will be able to deliver on a large new contract requiring a further 25% increase in output.
- Quality is now at a world class level. Customer complaints have decreased by 80% since 2012.
- 20% reduction in machinery and 16% reduction in staff at the automated assembly plant with first line managers half the number of 2012.
- Tenfold reduction in overtime.
- 40% improvement in productivity through the relocation of equipment and new ways of working in one area of manufacturing.
- Five attempts to take the site out on strike in 2013 and 2014 were all unsuccessful.
- Significant bottom line savings per year realised through the closure of the old plant and transformation of the new plant.
2. KEY EVENTS IN THE TRANSFORMATION
- Early 2000s: AEL started a project to replace its 100-year-old-plus, labour-intensive detonator manufacturing plant with a completely new, automated plant (ISAP).
- 2006 ISAP commissioned, but failed to achieve targets for five successive years.
- August 2012 appointment of David Harding as Operations Director (Initiating Systems) and Vagner Pinto as Operations Manager (ISAP).
- August 2012 engagement of consultants (Xybanetx and Legitimate Leadership). Xybanetx (which assisted in installing production processes and procedures) completed its assignment in 2013. AEL’s relationship with Legitimate Leadership continues in 2015.
- October 2012 resurrection of the Transformation Forum (meeting of management and representatives of four unions).
- November 2012 agreement to make all the temps permanent in exchange for full flexibility of labour in ISAP.
- January 2012 started to negotiate with unions to restructure ISAP and close the old plant.
- December 2013 major retrenchments (400 people), with further retrenchments in 2014 (although limited to a total of 270 forced retrenchments due to redeployment within the company wherever possible).
- Early 2014 introduction of Lead Operators into the structure.
- August 2014 total closure of old plant and relocation of manual assembly to new site (adjacent to ISAP plant).
- December 2014 total handover of Initiating Systems to Paul Eagar (current Operations Director Initiating Systems) and retirement of David Harding.
3. WHAT WAS DONE?
- Provision of an overall vision, strategy for the transformation and a roadmap for change (David Harding).
- Putting the long-held goal of reaching nameplate capacity on hold and replacing it with the two goals of improving quality and generally getting volumes up.
- Bringing in Xybanetx with a clear remit to put production management (as opposed to leadership) processes and procedures in place area by area. Their job was to teach managers how to manage production by doubling up/twining with managers in each area for a designated period to realise the two goals.
- Bringing in HR specialists to manage the retrenchment processes as well as resurrect good HR systems and practices.
- Establishing a Transformation Forum to engage with formal labour/employee representatives which was later replaced by other forums once the restructuring commenced. At the same time, instituting the means for direct communication between management and employees at all levels.
- Making temps permanent in return for flexible labour but also because it was the right thing to do.
- Assessment by Legitimate Leadership of the managerial capability. In due course making tough decisions leading to changing a number of people and management positions (only one of the plant managers is the same as in 2012).
- Development and execution of a plan for the training and continuous improvement of managers at all levels and operations. This included the formal training of both second and first line managers (at both the old plant and ISAP) in Legitimate Leadership practices, supported by onsite one-on-one coaching. This helped change managers’ day to day leadership practices, cultivate individual accountability and provide managers who left (as a result of the restructuring) with enhanced leadership capability.
- Creation of a Lead Operator position (another layer of management), selection and enablement of incumbents to perform the role by Legitimate Leadership. The lead operator position was created to provide a career path for operators, to ensure manageable spans of control, and to deal with the reality of the site where manufacturing took place in cells which were largely unsupervised due to geographical realities.
- A shift to a 12 hour shift pattern from a traditional eight-hour pattern which was both in management’s and employees’ interests.
- Seizing the opportunity, afforded by the relocation of the manual assembly plant, to institute a new way of working which would realise significant productivity improvements.
- Instituting a focused OD Project in the one plant where management-employees relations were particularly fraught and employees immature.
LESSONS IN TRANSFORMATION
The following lessons in transformation emerged from the process:
- Good leadership is at least as important, and generally more important, than good technology.
- If you empower the people who actually run the plant rather than throwing technologists (engineering and R&D specialists) and extra people at the problem, you do so much better.
- When outsiders treat those who operate the plant as fools, they become fools.
- In any transformation, you need to talk to employees at the start and throughout the process. You need to engage with organised labour through labour (union) structures, no matter how hard this is to do AND with the people directly (by means of mass meetings, shift meetings and one-on-one meetings between managers and direct reports).
- You can’t plan a transformation in detail up front. Nevertheless no transformation is successful without a clear vision, an overall strategy and roadmap. Within that you need to act on the opportunities for positive change as they arise in the process (for example, clinching a deal making temps permanent in exchange for flexible work arrangements).
- You need to help managers make the shift to connecting to people as individuals who have individual circumstances and issues as opposed to seeing them as vessels of skills and knowledge, a human resource which you deploy to achieve some result.
- You also need to teach managers how to empower their people (how to trust and entrust them, how to coach them and hold them appropriately accountable). You cannot assume that managers know how to do this.
- Not everyone will survive a transformation – either due to restructuring or because they cannot fulfil the requirements of the role they need to perform. There is a need in any transformation for some tough conversations and letting go of some people.
- The right structures (for instance, levels and shape of the organisation, and conditions of work like shift patterns and flexible working) can be significant enablers of the transformation.
- Transformation is always a combination of enabling the people who are there and bringing in new people who will help with the change. Getting that mix right is important.
- Leadership’s intent in the process is all-important. Why are we doing this? It has to be to secure a viable future for as many people as possible and to realise the best in people as an end in itself.
AEL Mining Services is a member of the JSE-listed AECI Group. AEL is a world-class mining services company with global technologies that create wealth and growth in the South African, African and select international markets. With over 100 years of expertise and knowledge in developing ground-breaking and innovative blasting solutions in all markets where it operates; AEL boasts a capable team of leading explosives engineers and scientists that contribute to the creation of infrastructures in countries throughout the world.
AEL, established in 1896, is head-quartered at Modderfontein in Johannesburg, South Africa. The company has become one of the world’s leading suppliers of explosives and initiating systems and technologies. AEL comprises various business that are complimented by production facilities and sales offices throughout the African continent, select international regions in South East Asia, South America, Europe and most recently Australia.
For more information visit www.aelworld.com