beyond the paycheck: stanford gsb lecture to net impact conference

Beyond the Paycheck

Placer Dome’s CSR Program in Southern Africa

PLACER DOME

Bridging the Gap: LEADING SOCIAL INNOVATION ACROSS SECTORS

Net Impact Conference

Stanford University Graduate School of Business

November 11, 2005

Presented by

Wayne Dunn

’97 Sloan

PLACER DOME Net Impact Conference: Stanford University Graduate School of Business – Nov 2005 Slide 2

Objective

• Case study of innovative developmental CSR

• Demonstrate application of CSR strategic

principles 1. CSR/Sustainability Policy

2. Strategic interventions vs. reactive approaches

3. Impact metrics vs. expense metrics

4. Partnership strategies (financial, operational,

technical)

5. Leadership and leverage


Presentation Overview

• Background – how did this get

started

• The Care Project –Developing and implementing the

plan (challenges, partners,

learnings)

–Business value created

• HIV/AIDS – The Crisis and why does it matter

– Programs and activities

• Other CSR Activities

• Relate Activities to CSR Strategy

• Discussion


Background

• 1990s saw massive changes in South

African mining industry – over

100,000 jobs lost as the industry

restructured;

• 1999 – Placer Dome purchased a

50% interest in South Deep (WAL), a

mine located just outside

Johannesburg – This was the first major post-apartheid

foreign investment in the South African

mining industry


Background (cont)

• In late 1999 after detailed study

management realized that

economic reality dictated major

restructuring at South Deep

• 1/3 of the South Deep workforce

(over 2,500) workers were

retrenched – Industry standard retrenchment

packages consisted of 2 weeks

salary per year of service plus

access to onsite training


Families & Communities must benefit from mining


Sustainability Policy

• Industry standard didn’t meet the spirit of Placer

Dome’s Sustainability Policy

• Need to go…

BEYOND THE PAYCHECK


The Care Project

• A commitment to mitigating the social

and economic impact of retrenchment

at the family and community level

• A target of assisting at least 70% of

the retrenchees and their families to

become economically active

• A commitment to develop HIV/AIDS

programming initiatives

• A commitment to enable spouses

(women) to be able to benefit directly

from retrenchment benefits

• 2 year time frame and R15 million

(CAD$3.6 million) budget was

established


Implications

• The Care project decisions and

commitments had a huge

implication for South Deep

management

• Entire industry watching to see

what this Canadian newcomer

will do


The Mine

2560 Retrenchees

•Mozambique

•Lesotho

•South Africa

•Swaziland

•Botswana

How to successfully

provide socio-economic

support across remote

rural regions of five

countries


The Initial 4-Step Plan

1. Consultations with retrenchees in their villages

2. Recruit (from amongst the retrenchees) a group

of 25-30 fieldworkers who would provide

frontline support to the retrenchees and their

families

3. Locate and register the retrenchees

4. Provide them with training and support to

enable them to become economically active

All of the above to be done in partnership with

MDA, TEBA and other partners


Reality was different than we expected

• Retrenchees and their

Unions were still angry

over the contested

retrenchment

• Retrenchees’ homes

were difficult to locate

and registration was

often problematic

Consultations with

retrenchees

Walking to a remote retrenchee

homestead in Lesotho


Reality was different than we expected

• Placer’s lack of socio-economic development experience was an issue

• Partnerships took longer to form and more time to manage than expected

• Industry skepticism • Mozambique floods • National borders • Micro-finance • HIV/AIDS • Fieldworker training programs • Retrenchee education levels • Centralized delivery didn’t work • Project was under-financed • We couldn’t do it in two years • Etc.

Yes, it shows in Africa!


Meeting the challenges

• Negotiated a public private

partnership with CIDA that

contributed CAD$ 2 million in

additional resources

• Kept working at getting our

partnerships working for everyone

• Leading by example gradually

demonstrated our commitment to

industry, unions and others

• Continual revision of plan and project

delivery to ensure it met the needs of

the recipients


The Care

Process

Business Operation

1. Ongoing availability of Technical Assistance

and Business Counselling

2. Ongoing faclitiation of skills training needs

(i.e., business, agriculture, vocational, etc.)

Decision on Economic Option

Employment StreamEnterprise Stream

Evaluation of Micro Finance Application

Retrenchee is Re-Integrated

and Economically Active

Personal

Economic Plan

Prepared &

Assessed

Personal

Employment Plan

Prepared

Business &

Financing Plan

Prepared

Employment Planning & Preparation

1. Identification of Employment Options

2. Skills Training (Vocational/Agricultural, etc)

3. Employment Counseling / Placement

(Job search/Resume, etc.)

Business Planning & Preparation

1. Business Orientation

a) Introduction to Business

b) Skills/Product Training

2. Develop Draft Business Plan

(to be reviewed with Counselor)

(plan will contain market assessment,

financial, operational and skills upgrading plan)

3. Preparation of Micro-Finance Application

Orientation and Awareness Phase

1. Registration & Homestead Visits

2. District Counselling Sessions

3. Open Days/Career Fairs

4. Financial Lifes Skills Training

5. Feedback and Choices Session

Ongoing Processes

Follow-up sessions/ activities to monitor effectiveness of interventions

Communication and consultation with stakeholders

Continuous improvement process (review feedback;

enhance programs, procedures, processes)

13-step process

Delivered

18 times

Across

Five countries


Some results

• 92% (2,232) of the retrenchees have been located and registered

• 56% of those (1,250) making a living wage

• 65% (1,556) have received financial life skills training

• Many of the trainees were women • Care process is becoming an

industry standard in RSA and replicated elsewhere in Africa and globally

• Development infrastructure and partnerships throughout the five country region


Chicken raising business


Furniture making


Unique training programs


Rice farming in Mozambique


Spaza (convenience) shop


And the business value is…

• HIV/AIDS, Black Empowerment, new mining legislation, social scorecards, escalating security challenges and a myriad of other issues are the daily facts of mining life. Mines and mining companies must demonstrate an ability to create meaningful value for people, communities and other social stakeholders – and they must do so while meeting increasingly challenging financial targets.

• Placer Dome is not a charity and the

Care project was not just some sort of corporate philanthropy


• “We are determined to provide multi-

skilling to workers and assist them to

cope with retrenchments. This is a must

and not a choice for industry”

• “It is important for mining to ensure that

economic benefits accrue to society as a

whole and more specifically to

communities affected by mining . . . The

social environment has not, in my

opinion, been adequately addressed in

the past”

Hon. Phumzile Mlambo-Ngcuka

South Africa Minister of Minerals and

Energy

The Mining World Has Changed


Reputational Capital Gain

• Kgosietsile Mogaki, Social Plan Director for the South African government’s Department of Minerals and Energy sums up the project. “When PDWAJV laid-off 2,500 workers in 1999 we expected it would be similar to other retrenchments, where the workers and their families received little support other than some on-mine training for the worker. However, we have witnessed the Care project making life changing impacts, helping workers and their families to develop alternative incomes. Today we (the DME) see the Care project as an example that we encourage other mines to follow. The Care project has changed the social face of the South African mining industry.”


What’s in it for Placer Dome?

We believe that our ability to effectively manage social issues is a competitive advantage as we look towards the future of the industry in South Africa and globally

Through programs like Care we are better able to manage risk and are securing our long term future in South Africa and throughout the sub-continent

Piet Kolbe Mine Manager, South Deep


And then there is HIV/AIDS

• RSA ACCOUNTED FOR NEARLY 1 IN 8 OF THE NEW HIV INFECTIONS THAT OCCURRED WORLD WIDE IN 2000

• HIV+ PREVALENCE RATE IN WOMEN ATTENDING ANTE-NATAL CLINICS INCREASED FROM 0.7% IN 1990 TO 24.8% IN 2001

• AVERAGE OF 1700 NEW INFECTIONS PER DAY

• LIFE EXPECTANCY WILL DECLINE FROM 65 TO 40 BY 2011

65

40

0

10

20

30

40

50

60

70

2001 2011

Life Expectancy


HIV/AIDS Facts

• ESTIMATED THAT 12% OF TOTAL RSA POPULATION AND 25% OF MINEWORKERS ARE HIV+

• ALREADY 400,000 PEOPLE ARE AIDS SICK, AND THIS WILL INCREASE TO 1,4 M BY 2010

• YOUNG WOMEN PARTICULARLY VULNERABLE – 23.9% AGED BETWEEN 15 – 49 ALREADY INFECTED AND WILL RISE TO 29.7% BY 2007

• AIDS ORPHANS AT PRESENT AMOUNT TO 660,000+ AND WILL RISE TO 1,8M BY 2015

• ACCUMULATIVE AIDS DEATHS WILL RISE TO 9M BY 2015


HIV/AIDS Impact • REDUCED ECONOMIC GROWTH RATE – 2010 GDP 20% below a non AIDS

scenario

• REDUCED POPULATION – RSA population 10M smaller than non AIDS scenario

• SKYROCKETING DEMANDS ON PUBLIC HEALTH SYSTEM -

• RADICALLY CHANGED PRIVATE SPENDING PATTERNS – to healthcare and funeral costs

• IMPACT ON SOCIO-ECONOMIC STABILITY? (orphans)

HIV/AIDS is the worst epidemic in human history. At every level it is causing

devastation, destruction and suffering throughout Southern Africa

This is the reality for business operating in much of

Africa today. Nobody can afford to ignore it


HIV/AIDS and Gold Mining

• $10/oz impact if nothing is

done (5% of production

costs)

• ~$3/oz with maximum

intervention

• Impact on social and

political stability?


HIV/AIDS Programming

Our program – multi-level and holistic

• Education • Prevention • Treatment • Impact mitigation (when

one has AIDS)

• On the minesite • In local communities • In rural areas where our

workers come from


Minesite Program

• TRAINING AND

EDUCATION

• STI & TB TREATMENT

• CONDOM DISTRIBUTION

• PEER EDUCATION

• VOLUNTARY

COUNSELING AND

TESTING (VCT)

• WELLNESS PROGRAM

• MEDICAL REPATRIATION


Minesite Program


Current Community Program

• AWARENESS AND EDUCATION PROGRAMS

• MOBILE CLINIC

• CONDOM & FEMIDOM DISTRIBUTION

• PERIODIC PRESUMPTIVE TREATMENT (PPT)

• TREATMENT FOR SEXUALLY TRANSMITTED

INFECTIONS ( STI)


Community Mobile Clinic

COMMUNITY PROGRAM


And when HIV prevention doesn’t work

• What to do when people can

no longer work?

• They return to their villages

where there is little or no

support

• Families are overwhelmed

• Tremendous social and

economic impact

• Addressing it effectively is

too much for one company


Industry Home Based Care

AIDS CAMPAIGN TEAM MINING

• TEBA INFRA-STRUCTURE

• TRAINING OF CARE GIVERS

• SUPPORT STRUCTURE – QUALIFIED STAFF

• MONTHLY MEDICATION

• WORK WITH OTHER STAKEHOLDERS (E.G. TRADITIONAL HEALERS)

• WORLD BANK DEVELOPMENT INNOVATION AWARD (US$100,000)


Home Based Care


INDUSTRY HOME BASED CARE RESULTS (Year One)

Milestone Target Actual

Community Care

Supporters engaged 87 127

Community Care Training

87 123

People under Home

Based Care 696 801

THE PROJECT EXCEEDED TARGETS

IN EVERY AREA


Overview of South Deep AIDS Programming

SOUTH DEEP Sustainable Development Department

•Voluntary Counseling and testing HIV Negative

•Continue working

On Mine Program Community Program

Modified work program Farm

•Agricultural work / Environmental

Medical repatriation

Home Based Care Benefits Care Positive

HBC EC

OPP

Back to work or Re skilled

Wellness Program


But what happens to children and

families when the breadwinner

can’t work


HIV/AIDS and Rural Areas

• HIV/AIDS is having a

monumental impact on the

socio-economic well being

of families throughout rural

Southern Africa

• Workers who used to

support extended families

of 10-20 people are

becoming too sick to work

and are coming home,

literally to die


HIV/AIDS and Rural Areas

• Knowing that their family needs

the income and that there is little

medical care for them if they go

home, these workers are staying

on the job as long as possible

• In addition to the human tragedy,

this is having a severe impact on

business productivity

• There are solid business and

humane reasons to address this

problem

• But, economies of scale are

needed


Where to next?

• The Care project piloted an effective

means of assisting rural families to

become economically active and has

an existing infrastructure and

management system in place

• Industry Home Based Care project

piloted a cost effective, fee for

service, program to support medically

repatriated workers and their families


Our Vision for the Future

Mining Opportunities Partnership

• Integrate the Home Based Care project with the Care process and launch as a fee for service based program to address the social and economic impacts that AIDS is having on rural families and communities

• Start with the mining industry but design the infrastructure and management systems to enable participation by other industries, governments and donor community stakeholders

Care Process

+

Home Based

Care

=

MOP Project


MOP Summary

Virtually no support for familiesChallenge is too vast for anysingle company to address

Current reality

Without interventionthe worker goes home

to overwhelm family whohave no support and no

means of economic sustainabilty

HBC ComponentTraining, Support and

Medical SuppliesAssist Family to

Care for terminally ill

IG ComponentAssists

Family member toDevelop alternative

Economic Opportunity

Family andCommunityPrepared to

RecieveWorker

FamilyCounselling

andIntegration

withCommunity

Services

Financially sustainable through fee for service approach

Scalable beyond the mining industry

Helps to mitigate the social andeconomic impact of AIDS

in rural villages

Mining Outreach Partnership

EmployedWorker

SupportingExtended

Family

Worker becomesHIV Positive and

Eventually developsAIDS

Healthy workerleaves village

for employment

MedicalIncapacitationTerminally IllMan Returns

To Village


Summary of Social Value Activities

• Care project (partnership)

• Home based care (partnership)

• Income Generation support for HIV/AIDS

families (partnership)

• Minesite HIV/AIDS programming

• Community HIV/AIDS programming

(partnership)

• School feeding program (partnership)

• Personal growth and development training

• New mining project with tribal equity partner


Summary and Discussion

• Case study of innovative developmental

CSR

• Demonstrate application of CSR

strategic principles 1.CSR/Sustainability Policy

2.Strategic interventions vs. reactive

approaches

3.Impact metrics vs. expense metrics

4.Partnership strategies (financial,

operational, technical)

5.Leadership and leverage

Beyond the Paycheck

Placer Dome’s CSR Program in Southern Africa

PLACER DOME

Bridging the Gap: LEADING SOCIAL INNOVATION ACROSS SECTORS

Net Impact Conference

Stanford University Graduate School of Business

November 11, 2005

Presented by

Wayne Dunn

’97 Sloan