Late 2019 and early 2020 witnessed a transition in the top job at several mining and METS firms.
New CEO appointments were announced for BHP, Worley, OceanaGold, Centamin, Yancoal, Great Panther, Highfield Resources, CIMIC Group, Centennial Coal, Panoramic Resources, Katanga Mining, African Gold Group, Alphamin Resources, Codelco, Sierra Metals and others.
While some of these recent CEO hires were made through external headhunting, most were an outcome of internal promotions based on succession planning. This trend was particularly seen in the case of long-serving CEOs who had effectively put into place an internal structure and succession plan to advance younger mid-level executives in leadership positions.
Management consultants, Strategy& estimated the cost of global companies getting their CEO appointments wrong at US$112 billion.
So, it’s understandable why so many firms adopt a succession plan based around people they already know intimately.
It feels like a safe choice, but if the result is the same kind of leadership to address a new kind of challenge, the results may be disappointing.
Succession planning is not an event, but rather a continuous process which requires discussions and participation at board level. There is significant pressure for mining companies at times to reveal details on their succession plan, especially following market uncertainty or issues related to company performance.
The succession planning process usually starts with the board identifying the type of profile for its next CEO, then running a benchmarking exercise to evaluate potential internal candidates against that profile and identifying skill gaps. Several years may then be spent in coaching and training these individuals for the top job.
Top leaders are required to possess particular skills or be flexible enough to develop them quickly in response to the cyclical nature of the industry*.
Today’s CEO needs to be able to navigate the company through the turbulent waters of unprecedented change. While core technical and financial competencies to run a successful mine are obvious practical capabilities they need, the new breed of CEOs also need to be well acquainted with cybersecurity and digitisation.
An adaptive style of communication is critical, given the potential for interactions with activists, protestors and local governments on environmental and taxation issues.
The global pandemic was not on the risk agenda of leaders, though arguably it should have been. Yet for long-running CEOs and new CEOs alike, this became their new reality and primary focus.
Mining leaders were thrust into the spotlight to share details on their strategy to deal with their COVID19 response. While the health of the workforce naturally took primary importance, the CEO has had to juggle with changing local and international government regulations impacting production sites. It became clear that skills once considered ‘new age’ came of age during this recent crisis. Precise and quick public disclosures, Cyber Security and Digitisation became top risk management tools.
The criticality of sustaining business continuity planning was felt across industries and inevitably will have an impact on succession planning.
It remains to be seen in the coming months how the recent pandemic will impact the profile template of an ideal CEO who can navigate the company through such uncertain times in the future.
CEOs will need to be nimble, with demand from stakeholders for faster investment returns even during extended uncertainties. Large mines, large returns and longer timelines will no longer satisfy stakeholders in this age of sustainability, increased scrutiny and the evolving image of the industry.
The new breed of CEOs of large mining houses will need to review their approach to act like fast-moving juniors.
And that might mean looking beyond their carefully crafted and nurtured succession plans for internal talent.
Audrey Lopez, Senior Associate – Research (Melbourne)
Image (c) Shutterstock | Andrey_Popov