2.2.4 Managing Change - A Case Study
If it depresses me as an outsider to read of - and in some instances experience - the impact of the current Qantas disputes, then I cannot imagine how it must impact on the lives and families of those directly affected by it.
I don’t wish to take sides - as I am quite certain that each party has valid arguments to support their case - but I do want to take issue with the Qantas management for their apparent reluctance to communicate with their employees over the years that have preceded the present turmoil.
Over my career, I have had relatively little direct exposure to industrial relations. However, there was one episode in the 1980’s that displayed many similarities with the present Qantas dispute, namely a changing competitive and business environment, the introduction of new technology, the out-sourcing of a critical service and a union that felt that its power, influence and membership were under threat.
A lesson in change management from experience
In the early 1980’s, I worked as the Queensland Business Development Manager for ICI Explosives (now Orica). My role was to develop and negotiate long term supply contracts for the supply of bulk explosives to the new wave of open cut coal mines that were spreading across the Bowen Basin in Central Queensland.
By way of background, the most common form of explosive used in these open cut coal mines was ANFO - a mixture of Ammonium Nitrate (AN) and Fuel oil or diesel. The explosive was used to break up the overburden to facilitate its removal by the giant walking draglines. Beneath this rock lay the thick coal seams that could usually be removed by mechanical means. If the blast holes were wet, ANFO was substituted by waterproof packaged explosive.
The ammonium nitrate was delivered by road from the plant at Newcastle to the mines in Central Queensland in polythene sacks. The truck was driven onto the mine bench and the requisite number of sacks was unloaded by the bull gang and stacked around the collar of each blast hole. Some of the larger blasts would use several hundred tonnes of ANFO so adding fuel oil to each bag and then slitting it, and pouring the contents down the hole was a labour intensive operation. The rather crude method of adding the fuel oil resulted in pockets of diesel rich and diesel poor ANFO, resulting in less than optimum blasting. Lastly from a materials handling perspective, it made little sense to manufacture AN in bulk, package it and then turn it back into bulk at the point of use.
In response to these changing customer needs, ICI developed its “Down-the-hole” service whereby the Company would supply bulk ANFO from what was called a Mobile Manufacturing Unit - MMU. Essentially, the MMU had two compartments, one for AN, and the other for diesel. The MMU was driven onto the mine bench and the required amount of ANFO was dialled up on the control panel inside the cab. As the AN moved from the storage area on the MMU to the hose, it was sprayed with a precise amount of fuel oil before being blown down the blast hole. Office and storage facilities were set up on the mine lease and only two ICI employees were required to operate such a service - one to drive the MMU and the other to look after the loading.
The ICI team received their instructions from the mine’s own engineers and instead of invoicing the mine per tonne of AN, the mine was invoiced per tonne of ANFO loaded into the blast hole. The mine itself was responsible for the blast parameters, initiating sequence, hole patterns, drilling, collar heights, initiating explosives, hook up and firing.
Everybody happy ...
The mine was happy with this arrangement as it relieved them from the hassles of loading bagged AN, greatly reduced the head count of the bull gang and produced a greatly superior result that meant that the draglines could operate more efficiently. ICI was happy too - a great deal more value was added to the service provided and it differentiated ICI’s offering from those of its competitors. Moreover, handling bulk AN in conditions of heat and high humidity was a tricky exercise if one were to avoid tons of AN fusing into one amorphous lump that rendered it incapable of further use.
That left the union which, in this case, was the QCEU - the Queensland Collieries Employees Union. This Union had coverage of all direct mining activities that included all aspects of blasting. Thus when the first of the down-the-hole services was being negotiated with BHP, the then owners of Gregory open cut coal mine, it seemed only rational that the people that ICI employed to run its on-site plant should be members of the QCEU. The Union’s secretary at the time was the redoubtable John Maitland who was later to head the CFMEU - Construction, Forestry, Mining and Energy Union.
ICI had already set up two down-the-hole services with Gregory and the German Creek mines when we were informed by the QCEU that a decision had been taken at their latest Board of Management meeting that although they would not contest the two existing contracts, these were to be the last down-the-hole services that the QCEU would tolerate. This pronouncement came as a major surprise and at a time when we were in discussions with three more mines regarding the supply of bulk ANFO and bulk waterproof explosives. It was now highly problematic whether we were capable of delivering the service that we were offering these three prospective customers.
Or not?
At subsequent meetings with the Union executive, it became apparent that, despite ICI’s on-site personnel being members of the QCEU, the Union Board of Management regarded ICI as contractors and as such were regarded as the thin end of the wedge. If contractors were employed to load blast holes, it would only be a matter of time before contractors were employed on more and more of the mine’s activities over which the QCEU had coverage. Furthermore, the mine management would see such outsourcing as a means of not only enhancing the efficiency of operations but also an opportunity to weaken the power of the Union. There would be no obligation on the contractor’s mine site employees to be members of the QCEU.
ICI’s counter argument to the contractors issue was to claim that nothing had changed - it was, as before, simply a supplier of explosives. It was just that the supply chain had dramatically shortened. Instead of manufacturing explosives off-site at a fixed facility, they were now manufactured on-site in a mobile unit. This argument did not appear to cut much ice with the Union executive and the Board of Management but in subsequent discussions an interesting fact emerged.
Of the ten member Board of Management, only a handful had even seen an open-cut coal mine, let alone having much idea of how they operated. As the word “Collieries” in the Union’s title suggested, most of the Board members only had experience of underground coal mining around Ipswich, near Brisbane in the South of Queensland and at Collinsville, North West of Mackay. At that time underground mining for coal was fast declining but Ipswich remained the Union’s heartland. However the future of the Union lay in Central Queensland and open cut coal mining and the Board of Management could clearly see the threat to its membership numbers if other suppliers to the mining industry were to follow ICI’s lead.
ICI believed, quite rightly, that the future belonged to bulk explosives. They could either be manufactured off-site and driven to their point of use or they could be manufactured on-site in mobile manufacturing units. The latter was the safest method since the chemicals only became explosive at the point of use. Bulk explosives were far more efficient as the number of miners required to load them was very significantly reduced. The use of bulk explosives was well established in the iron ore mines of the Pilbara and was being adopted by rival coal miners in South Africa. To continue to supply waterproof explosives in packages or ammonium nitrate in bags was to fly in the face of reality. The mining companies that owned the Central Queensland open cut coal mines could not afford not to take advantage of the latest technology.
Those of us who had been involved in the meetings with the Union executive believed that the executive understood that to oppose the introduction of on-site plants operated by ICI was akin to King Canute thinking he could control the incoming tide but the executive could not - or preferred not to - convince the rest of the Board of Management. So a potential way out of the impasse was to arrange a study tour for all the Board members so they could see first hand what was happening in Central Queensland.
There's nothing like seeing it personally
This tour was duly arranged and during the course of one afternoon, members of the Board of Management and roughly the same number of ICI staff assembled in Emerald in Central Queensland. ICI’s Queensland Regional Manager gave a brief welcoming address and outlined the next day’s program and that evening we sat down to dinner in pre-determined places designed to evenly distribute the two parties and encourage interaction between them. The result was a sober and reserved affair.
On the following day, everyone was taken initially to BHP’s Gregory mine, one of the two mines that had slipped beneath the QCEU’s guard and was operating ICI down-the-hole services. Here the party was shown around the ICI facility with its bulk AN storage silos and witnessed the MMU being loaded with ammonium nitrate and fuel oil prior to seeing it being mixed and blown down each blast hole. The two ICI employees, who were members of the QCEU, acted as demonstrators and tour guides. Before lunch, the party travelled north to the mining town of Moranbah to an ICI off-site facility that manufactured packaged waterproof and ANFO explosive. The finished explosive was supplied to the near-by mines where it was loaded by the bull gang - all QCEU members.
In contrast to the Gregory plant, the ICI employees at Moranbah did not belong to the QCEU but the AWU - the Australian Workers Union. The message to the Board of Management was clear. Gregory belonged to the future; Moranbah to the past. Gregory was an on-site plant with its employees CQEU members whereas Moranbah was an off-site plant with AWU coverage.
Where the past and the future meet
We returned to Emerald for the evening meal except now there were no formal place settings and people could sit where they liked. Over the course of the next few hours as the babble of conversation increased, members of both groups came to the realisation that their counterparts did not sprout horns or hold fundamentally opposing views at the opposite ends of the political spectrum.
The QCEU Board members had been genuinely impressed by the Gregory operation and with that came the realisation that it was not in the long term interests of the QCEU to oppose the introduction of such technology. They were appreciative of the time and effort expended by ICI in putting the study tour together. At their next Board of Management meeting the “ban” on ICI on-site operations was lifted. In a face saving move, the Board members requested that they be kept informed of any future contract that had been signed between a mining company and ICI for the provision of on-site explosives services.
How the lessons of the past can guide the change management decisions of the future
The resolution of this issue between the QCEU and ICI is a classic example of how to successfully manage change:
- Explain the rationale behind the changes proposed
In this case, the study tour was the most effective way to do this, given the make up of the QCEU Board of Management. In the space of one day, every Board member came to appreciate the economic and technological forces at work that simply could not be resisted.
- Understand how those potentially impacted by the changes might feel
Where is each of them in Claes Janssen’s Four Roomed Apartment - in the Room of Contentment, in the Room of Denial or in the Room of Confusion? Only when the great majority is in the Room of Confusion can one move forward to the Room of Renewal. The initial decision taken by the Board of the QCEU to “ban” ICI’s on-site plants because they would lead to a loss of QCEU membership and pave the way for contractors was a reasonable reaction, given these concerns and many members’ lack of knowledge of open-cut coal mining. The Board was in the Room of Denial.
- Permanent change is only ever achieved if one reduces the forces of those opposing change
This was also achieved by the study tour. Whilst what the Board members saw was not ideal from their perspective, there seemed less to lose by accepting change rather than fighting it.
- Communication
ICI management had already used both written and verbal communication in its efforts to convince the Union that their ban on future on-site plants was unjustified. These two media met with limited success although they were invaluable in uncovering the underlying reasons for the Union’s opposition. As always the most effective communication medium is action.
But the study tour did more than inform the Board members about the future of bulk explosives. It provided a rare opportunity for Union and ICI personnel to interact informally in neutral surroundings where family, sport, hobbies and other interests formed the topics of conversation. That second evening dinner was crucial to the destruction of stereotypes that each party may have held of the other. Mutual empathy is a pre-condition for settling disputes of any nature.
In my opinion one of the major underlying reasons for the current industrial turmoil at Qantas is management’s inability to manage change. The rot set in under the reign of the previous CEO - Geoff Dixon - who preferred a confrontational approach to change and this strategy appears to have been continued by his successor Alan Joyce. The problem is that such an approach sets up a vicious circle.
Union representatives and Qantas management become less and less inclined to listen to one another and instead take more and more intransigent positions. Eventually disputes are settled on the basis of which party has the most power over the other. The end result is a disenfranchised and disengaged workforce and a high employee turnover which is hardly the base on which to build the airline’s future.
Read a press release on the Qantas dispute: Strategy Implementation Factors Qantas Needs To Act On To Get Themselves Out Of Trouble