Reference no: EM133353014

Case Study

Anglo American plc is a multinational mining company based in Johannesburg, South Africa and London, United Kingdom. It is the world's largest producer of platinum, with around 40% of world output, as well as being a major producer of diamonds, copper, nickel, iron ore and metallurgical and thermal coal. In 2007, Cynthia Carroll was appointed as CEO of the company, the first outsider (non-South African) to manage what was a very top-down, male- dominated, hierarchical business.

Carroll always had the view that safety is a key indicator of rigour and discipline in an organisation. Anglo had been losing about 45 people to fatalities every year for the five years before she was appointed as CEO. Consequently, she started focusing on safety. In 2007, her first year as chief executive, Carroll went to Anglo's Rustenburg platinum mining operation in South Africa, a key part of the company's global activities. Within hours of her visit, she was told that one of the workers had been killed at the mine. She was told at the end of the day that they had yet another fatality. She gave orders to shut down the mine complex, to assess the infrastructure and the standards, and to work to retrain people. She also gave instructions that people will only be returning to work once they feel confident that they will be working in safe conditions. It was a bold decision that affected around 28 000 workers. Carroll knew she would have to win allies for her safety campaign within the wider industry, the unions, and the government.

Workers felt scared and threatened by the decision and resisted the change. Although Carroll felt confident that she made the right decision by making the change, she was not supported by mine managers. At the same time, the company had been transitioning from a largely South African company, to a global company. Carroll also needed to make another change by taking out a layer of people reporting to her early on. Also, these strategic changes lead to changes in terms of the embedded culture and organisational hierarchy. During these changing times, Carroll spent a lot of time with external stakeholders and shareholders and never received resistance to change from the shareholders - they understood the reasons and ultimate benefits for implementing the changes. Also, communications and relationships with labour unions were very good - Carroll never had a major walkout and the company never experienced a strike since they had built a trusting relationship between all parties.

During her tenure, Carroll also had to face down the threat of a takeover, a downturn in the commodity cycle, and criticism of her environmental record and strategy decisions, notably, Anglo's investment in Minas Rio, a Brazilian iron ore project that went into operation four years late and at twice the original budget. Minas Rio is a tier-one asset and identified as a potential acquisition before she was even appointed as CEO. But the fact was, Anglo had changes that it did not anticipate - and nobody in the industry anticipated - in Brazil, in the regulatory environment. These changes delayed the project. Eventually, Carroll needed to make tough decisions, not all popular. For example, she had to reduce the number of people. Eventually, these decisions payed off. The company delivered $3.2 billion of value over and above its committed number of $2 billion. It had a clear strategy - they were joined up. It reduced the number of fatalities by about 70% and that cascaded into the industry, which was reduced by about 50%. That is an achievement.

Source: Smit, Botha and Vrba (2020)

Question

A crisis can be defined as an event that is expected to lead to an unstable and even dangerous environment. Explain the seven categories of crisis, and identify the category pertaining to the safety problem at Anglo.