Reference no: EM133106099
Change at AngloGold Ashanti
Background to the company
In 1917, Sir Ernest Oppenheimer and JP Morgan founded a gold mining company and based on each of their heritages, named it Anglo American Corporation. The success of the company's mines located as far afield as Zambia and Canada enabled the company to become one of the world's largest gold-mining groups by the middle of the twentieth century. On May 24 1999, Anglo American Corporation merged with Minorco to form Anglo American. The merged entity spun off its gold mining operations into a separate AngloGold Corporation. In 2004, the separate AngloGold Corporation that housed the gold mining operations of Anglo American plc merged with Ashanti Goldfields Corporation, based in Ghana, to form AngloGold Ashanti Limited. Headquartered in Johannesburg, South Africa, AngloGold Ashanti is now a global gold producer with more than 20 operations on four continents and several exploration programmes in both the established and new gold producing regions of the world. The company employs over 62,000 people.
A change in leadership
In late 2007, Mark Cutifani replaced Bobby Godsell as chief executive officer of AngloGold Ashanti. At the time, AngloGold Ashanti was in dire need of a new strategic direction. The return on capital was decreasing, operations were delivering well below their potential, costs were increasing and the organisation had the largest gold hedge book. The company was losing money fast. Cutifani recognised that if the company was to survive, drastic action would need to be taken.
Change was necessary. The company simply could not move forward on the basis that it had been to date. It was against this background that AngloGold Ashanti, under the leadership of Mark Cutifani, launched the business improvement project known as Project One.
Project One
Project One had two essential elements. One of the first elements introduced was the business process framework (BPF). The BPF itself had three key elements. The first key element was that doing the right work, at the right time and in the right way will deliver the required performance. An effective management model was developed to include the components necessary to define the critical elements of the physical process, and production and service strategies (the right work at the right time and in the right way) needed to deliver the expected performance targets for the process. The second key element was that if the work is planned, scheduled and properly resourced ahead of execution, the desired outcome will be achieved more consistently and at lower cost. Hence, ensuring that all production and service strategies are effectively executed at the correct time requires good work management processes. The third key element was that a culture of engaged employees believe that their leaders' behaviour demonstrates positive values. An engaged workforce will be the most productive. The purpose of the BPF was to ensure that processes deliver the business expectations established by management and thus, more sustainable results.
Thereafter, the system for people (SP) was introduced. This element could best be described as being born from the organisational value that people are the business. It recognised that systems within an organisation ought to be designed to support people. The executive team identified that certain management practices must be followed to set the context for the organisation and ensure that people understand how the work they do assists in translating the vision of the organisation into daily tasks that are relevant to the organisation and that make the people relevant. The systems were designed to ensure that the organisation has the right person with the right experience and skills to do the right work at the right time. SP was all about behaviours. It was about designing the organisation, designing the work structures, defining authorities and accountabilities in the work, and understanding the crossfunctional working relationships between roles.
The intention with Project One was to introduce a singular way of working at AngloGold Ashanti, to create one business, one team, and one future at AngloGold Ashanti and to move forward as one organisation and not as 20 isolated, disparate operations in more than 20 countries. With the BPF and SP, the organisation has begun to develop a common DNA through the business, a common approach to managing systems, work processes and managing people, a common definition, a common terminology, a common set of values and a common way of doing work.
Continental Africa: The new frontier
As a continent, Africa certainly holds more than its fair share of the world's natural resources. Africa covers only 20 per cent of the world's landmass but is estimated to hold 90 per cent of the global reserves of platinum, 65 per cent of diamonds and 40 per cent of gold. This presents an exciting prospect for AngloGold Ashanti. Given that Africa continues to be an area of significant interest when it comes to mineral endowment and that many areas of the continent are underexplored, the potential for new discoveries remains significant. Indeed, if any company is serious about becoming the leading gold mining company, Africa must be on its radar as a key growth opportunity for the future. AngloGold Ashanti has identified continental Africa as a significant future global producer of gold.
The challenge ahead
Against this background, the challenge of finding the right people and building the right team becomes all the more important. Having capable people form part of the team is essential. Before 2009, AngloGold Ashanti only had one Africa region. During 2009, the company was restructured and, among other things, the Africa region was split into South Africa and continental Africa. Continental Africa includes the Democratic Republic of Congo, Ghana, Guinea, Mali, Namibia and Tanzania. Most of the Africa region's management team elected to join South Africa. This naturally left a void in the continental Africa region.
In continental Africa, the regional management teams had turned over at least three times in the three years since 2009. The staff turnover in this region was the highest in the organisation. Over this period, the only mainstay had been the region's executive vice president, Ted Milne. It seemed that no sooner had Ted recruited and trained a new team that his efforts would fail. Every new team brought with them their own ideas, processes and systems that needed to be "unlearnt" before training and instruction in the company's business improvement initiatives could begin.
Without a strong, robust team, the organisation would struggle to introduce and implement stable systems, processes and procedures in continental Africa. Even though the BPF and SP had not yet been fully embedded or integrated throughout the organisation, continental Africa was falling behind. Indeed, some senior executives had remarked that if the company was not able to tap into its African resources effectively, its prospects for success would be low and the company would surely fail.
The dilemma
Ted was aware that certain areas of the organisation had begun to demonstrate that Project One was working and firmly believed that the change initiative could work across the entire business. Project One was already showing very strong signs of delivering improvements in operations. He felt that it was an important tool for them to reduce variability in underlying performance and to help improve productivity and profitability. However, he was not entirely certain of the best way to proceed to ensure the region not only implemented Project One but that its new systems, processes and procedures would become embedded as an improved way of working for the region.
Question
- Effective leadership is crucial in any change process. Without adequate leadership, planned change will not work.
- Recommend a suitable leadership style for continental Africa's executive vice president, Ted Milne, to adopt in his effort to implement Project One in the region, given the challenges he faces with his management team as described in the case study. Substantiate your recommendation with valid reasons from the case study and motivate your opinion in detail.
- In your opinion, should there be a difference in the leadership style of Mark Cutifani when he initiated and envisioned Project One and the leadership style adopted by Ted Milne in executing Project One in his region? Motivate your answer.
- Taking in consideration the challenges faced by Ted Milne, advise him on the most appropriate leadership behaviours that he should display in this specific change situation as well as the most appropriate actions that he could take to help make the process more effective.