The mandate of company mgt. is to do what is best for the company and its shareholders. Labor, on the other hand, is generally more concerned with the day-to-day and annual progression of discrete items - pay, qwl, bonus levels and job satisfaction. The two are not really ever in total sync, and their goals frequently collide. When the company finds itself in financial trouble, it must perforce cut its labor costs, as this is usually the only option available-especially if it is involved in Basic Industry (mining, manufacturing, etc). We North Americans are all about blaming our politicians for "sending our jobs overseas." I hate to say it, but it isn't altogether their fault. Basic Industry follows cheap labor, and has since the time of the Phoenicians. Extractive and production costs are generally very fixed. Labor cost is often the only place where a company can increase its bottom line. (cont'd)
Wednesday, July 21, 2010
Management Philosophy 101
I'm sure that I'm going to open myself to some education here, but wish to progress just the same. I don't come from generations of mining men, but I do have a 30 years of experience working at the interface of management and labor. It is the proverbial position of being between rocks and hard places, and the spot most likely, in any organization, to strike sparks. Those sparks can ignite productive combustion or destructive conflagration. The attitudes on each side equally impact the very dynamic equation that exists between labor and mgt. It isn't at all unusual to find hard noses and heads in the leadership of both sides-in fact there is usually something wrong if there aren't. The trick is in managing that dynamic in a constructive way, especially when times are hard or unexpected difficulties arise. The easiest road, often taken, is that both sides end up in a blame game. It takes very strong leadership skills to make the hard decisions in such events, as well as a certain ruthlessness.
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Now to bring all this lofty philosophy down to our company...
What caught my eye in my first explorations of CMM was that it had a "storied and controversial" CEO. Since I liked what I could see of the company, I began looking into the history of CMM's management. There is hardly space here to go into it all - and there is a lot there-but I want to recap a little.
Adrian McNutt and PK go back a long way, and to their credit, have survived some events that would have crushed lesser people and exited them from the mining business forever. You have to understand, though, that girls who grow up on Nevada ranches in hard times become adept at dealing with difficulty. The value of adversity in a life is that it teaches one how to make the most of a bad situation, or at least how to survive in the face of calamity.
I've never met Ms. Kent, but after reading what exists in the public record, I have developed an enormous respect for her intellect, passion for mining and absolute self-discipline. She has that quality of leadership which is willing to sacrifice universal affection for the survival of those whom she leads. It cannot be helped, in battle, that there are casualties. When companies are faced with insurmountable costs, mangement must act to preserve the companies they lead. I want to iterate, for the benefit of Just Wondering and Rick, that nothing in the public record ever suggests that PK, AM or any of the rest of CMM's management have traded the welfare of their companies or workers for personal gain. The labor decisions which have been made, hard as they were, were, in every case, made for the survival and progress of the companies they managed. That is the reason why today, we have a company poised on the brink of a very large success. Whether one agrees or not, the fact remains that if you have not failed, you have neither tried nor learned, and will never have true success. If someone has doubts about our management team, I suggest that they look a little beyond press clippings and the Royal Oak tragedy. We have a BOD composed of seasoned and highly intelligent, professional people who know the mining business - in PK's case, from the very bottom all the way up.
She says in an interview that what she learned about bankruptcy, she later applied when she bought San Juan for a song.
You have to make mistakes. But the smart person makes mistakes only once, then learns from them.
Chillby,, very nicely put. I am not a big proponent of Miss Kent, but you are correct she is a seasoned veteran and most definitely has taken her knocks. What I do admire that she has gotten up off the mat more than once. Since she is at the helm, she takes the brunt of critisism. My critizism has always been centered around over promising and under delivering. Obviously, I am not alone in this arena. The market is not going give her any leeway until she can turn around this haunting fact. Too many have been burned believing in her statements. I just hope with the new players in management and the BOD she can turn this around. Heavens knows that the assets are there to do so.
Rhump,
Thanks...I quite agree. If there's a platform for this company, they have it now. We have to see gold production ramping up on or ahead of schedule (which is currently the case), and how we do with the new equipment. P05 makes a strong case for us going forward as long as we can avoid any blindsides. As long as Mr. Hulley is around, though, I don't think we'll have many bad surprises. He takes this company's prospects very seriously.
I would like to see some incentives for the guys in the mine, as well, as soon as we can make that happen. An energized workforce will go a long way towards meeting and exceeding our goals.
chillby,
Very good analysis of our "storied and conroversial" CEO's management style. In your response to Rhump, you make an excellent point about INCENTIVES to the workforce. Incentives work like magic; they make workors feel part of the organization. They improve worker retention and loyalty. Ultimately, technology only works well in the hands of motivated & dedicated workers. I do hope that your advice filters back to the CEO (they do monitor this Blog).
Cheers, bigjohn37
Wingfong put a lot effort into making some comments on this subject matter. It was posted under an older post. As a result, it might not have recieved a lot of views (I almost missed it myself). Due to the great efforts made by Wingfong to contribute to the converstation, I wanted to ensure his thoughts were read. Here is a copy of paste of what Wingfong previously posted on this subject matter:
``I read with interest just wondering's robust view on CMM's management particularly on PK and MN.
As a latecomer getting invested in CMM, I happen to have no baggage of past performances of present CMM's key management personnels (frankly I do not know any of those historicals mentioned by just wondering at all)
I like CMM, bought in, saw its share price nearly doubled, followed it back to more or less square one. Of the 3 aspects of projects, share structure and management, my humble evaluation (hope is not naive eveluation) of the 3rd aspect depends heavily, in fact solely on info available in the public domains of the recent and present types.
Risking being mundane and redundence, the followings are what I have considered and together with some recent info abstracted from blog postings, formed the basis of my evaluation of CMM's management quality.
1) Lamaque was left dormand for 18 months since July 2008 and the ability to secure the +$60million funding in the worst of times (took them 11 months in year 2009) impressed me.
2) Able to use the smallish San Juan mine to sustain the co and keep the Lamaque flagship intack is not an easy feat
3) Frank Scola of the Finskiy & Scola team (taking up abt 40%) mentioned in the firat teleconference that in their due deliggence process, they had reviewed abt 100 proposals and settled on CMM in the end. He specifically high lighted that PK has the actual experience in running a mine (possibly what he meant was the San Juan mine?). He further said that he would like to see the co hitting 300000 oz as soon as possible. Believe F&S have reasons to retain the present management team .. cont``
``4) The San Juan labour dispute was resolved speedily showing sign of competancy and management skill
5) It seems that throughout the shut down times, the Vulcan Resource Modelling works apparently went on behind the scence purportedly enabling CMM to secure the first permit and is likely to be on track in getting the second permit. I remember PK mentioned in the first teleconference that the former owners left behind 10000 drill samples and 22000 surface maps and they had continued aggressive data compilation with the aim of adding resources and reserves. In PK's words, the compiled data would take 1 to 2 years to evaluate and it was not possible if it were 3 yrs ago due to the lack of IT softwares. Bravo to management.
6) The start-up and gold pour were 45 days ahead of schedule
7) Now there is checks and balances in F&S in addition to a 4-person operating committee in place for Lamaque. This is business-like evolution of CMM's management structure
8) Committed to a multi-yr drill program to look tro those land parcels in Lamaque. In PK's words at the first teleconference, she said ` for the first time we are able to look at the surrounding areas of Lamaque..` ..cont``
``9) Decision to bring in the low profile equipment that has the potential to up productivity. A first in a North American mine
10) PK stated that by early 2011, co will add 120000-150000 oz tro
synegistic acquisation so achieving 300000 oz fairly quickly. This shows the influence of F&S and management is moving in that direction
Summing up all these, I must say what I see is a management that had delivered the most crucial job in getting Lamaque re-started (otherwise there may not be CMM now and this blog too). I see management's toughness and direction, resourcefullness and important works being done. As it is now, I see a management furiously pulling in all the parts into their right places of a mosaic.
I would rather have a co with a long term major share holding that can amend errors decisively and influence direction of the co rather than splintered holdings needing compromises to work things out and potential harmful infightings. So if one believes F&S are in for the money which I thk should be, then retail investors should be more or less well assured they can ride along with them.
I am biased as I only see/use the recent and present works/events occurred. Never the less it is not to say that history is not important. It has its place in the scope of things.
However, to me, what are potentially achievable in the near future depends more on works done recently and what are continuously being done currently.. cont``
``Additionally, I understand from the various past postings that PK is a negotiator and acquisitor of par excellence. Perhaps our 300000 oz target and CMM shareholders will be well served by her prowess. I like to assume she will move to be the chairperson and bags us the best 150000 oz mine as a starter by early 2011 tro M&A and leave the daily running of the mines to an equally strong and purposeful CEO (who can say that is not what she wants?)``
AGAIN, ALL OF THESE PREVIOUS 4 COMMENTS WERE ORIGINALLY POSTED BY WINGFOND (I HAVE ONLY COPIED AND PASTED THEM ON THIS THREAD FOR VISIBILITY PURPOSES).
Hi Prod05
Grateful to you for teleporting
my postings to the Management Philosophy 101 page. I was just about a few hours early before Management Philosophy 101 was born otherwise would have posted under this page too. Tks again, cheers!
No problem Wingfong! Also, feel free to attach new comments to the post at the top of the queue, even if it is unrelated to the subject matter. This ensures that it will be read by most viewers. The traffic on the blog is heavier now (and will likely continue to get heavier as Century ramps up production and its share price gets revalued). In the future, posts may drop quicker down the queue (and out of sight), thus it`s best to post comments in posts at the top of the queue at the time of the comment.
Even with the heavier traffic, I would like to encourage (invite) everyone (all viewers) to post (either via posts or comments) on the blog - even if it`s just to say hello. I think everyone is capable of contributing constructively and respectfully to this blog community. For example, all of the new blog posters have enhanced the value of the blog tremendously.
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