Rio Tinto Indigenous Employment Program in Australia - Literature review Example

Name) (Institution) (Module) (Course) (Instructor’s Name) (Date of submission) Introduction Rio Tinto is arguably one of the largest companies in Australia with global revenues of US$ 50.967 billion in 2012. It has operations in over 50 countries around from Mozambique in Africa to Brazil in South America with Australia having the largest operations. The firm deals in mining and exploration of both metallic and non metallic mineral s. These include Iron ore, Bauxite, Alumina, Aluminium, Copper, Molybdenum, Gold, Diamonds, Coal, Uranium, Salt, Talc, Titanium Dioxide, and Borates. Globally, it is the fourth largest publicly listed company. This makes the firm to have a wide range of stakeholders and shareholders who are directly and indirectly affected by its operations and strategies. As a mining and exploration company, the firm is faced by a number of local and international laws especially on environment conservation and wealth sharing. In Australia, the unique situation of the indigenous people has prompted the government to enact laws to protect the local population and ensure that they benefit adequately from the resources obtained from their ancestral land. Background Australia basically constitutes two mainstream societies; the indigenous and the non-indigenous communities (comprises of settlers and immigrants). The social and economic divide between these two societies is wide and glaring. The indigenous communities have sought to retain their traditional way of life that relatively shuns away from modernization. While the foregone benefits of modernization might be self inflicted, little has been done in facilitating modernization of these communities (Langton 106). Former Prime Minister Paul Keating began the focus on indigenous communities by appreciating the fact that non-indigenous communities contributed immensely to the present circumstances afflicting such communities. Another Prime recognized the errors of the non-indigenous communities through the parliamentary apology speech by Prime Minster Kevin Rudd followed by that of the parliamentary opposition leader Brendan Nelson. Rudd’s government launched a program dubbed Closing the Gap Initiative that would seek to provide the same economic, social and cultural benefits to the indigenous communities. The Indigenous Employment Program In line with this government policy, Rio Tinto developed its indigenous employment program in 1996. This policy was formulated with extensive consultations with the Aboriginal and Torres Strait Islanders in order to understand their needs and shape the policy to fulfil the organizational, legal, and moral and community obligations. The policy was set to address four main areas namely; regional development and land access agreements; community capacity building programmes; cultural heritage recognition and protection; and strongly governed funding bodies. Ideally, the policy targeted increased recruitment from the indigenous communities in order to facilitate more equitable distribution of wealth, better negotiations of mining rights from in recognition of ownership of ancestral land, capacity building through increased training and empowerment through community programs. Currently, the program has seen Rio Tinto invest heavily in indigenous local communities and massive recruitment of the indigenous people which makes Rio Tinto the largest employer of Aboriginal people in Australia at 2400 out of the total 20 000. Globally, Rio Tinto employs over 77 000 people directly. HR functions in the implementation of the Program and the company’s overall success Rio Tinto’s HR department is thus one key contributor to the success of the Indigenous Employment Program and the company’s overall success. Durai (7) categorises the functions of HR departments into managerial and operative functions. The managerial functions of HR department is planning, organizing, staffing, directing and controlling. The operative functions include procurement, development, compensation, integration, motivation and maintenance and industrial relations. One of the most important functions of the HR department and relevant to this case among the many listed above is staffing or recruitment. According to Durai (7), this procedure involves determining the type of people to be hired, recruiting prospective employees and selecting the best, compensating employees appropriately, training and developing employees, setting performance standards and evaluating performance and counselling and motivating employees. Geet and Deshpande (10) identify the basic functions of recruitment as; Attract sufficient number of candidates having suitable qualities and qualifications as per job requirements Achieve cost efficiency Adjust and hold employees in the organisation by giving them promotions or transferring them to suitable jobs Create more culturally diverse workforce In line with the law, organizations are required to give consideration to the Aboriginal communities in their recruitment procedures. The HR department at Rio Tinto, like any other HR department, is served with the task managing the people element and implementing the Indigenous Employment Program. One of the key functions of a HR department that enables Rio Tinto to achieve an acceptable indigenous workforce is recruitment and employee development. Due the historical injustices that have faced Aboriginals, the skill level in this community is relatively low prompting further training for hired employees. Development of employees at Rio Tinto is only aimed at enhancing their productivity and that of the company but not on employees as an end to themselves. This is because career development opportunities are offered according to job positions in the company. Through collaboration with the Australian Graduate School of Management, the company has been offering Business Leadership Development programmes since 2004 that also target Aboriginal students. Again, one of the functions HR Reviews offered by the company at the business unit level is to “identify key roles and facilitate succession planning” (Rio Tinto, 2009). There are some proposed methods for promoting a positive culture for the organization. Some researchers have discovered some methods to promote positive culture in organizations. Some of these methods are, analyzing the process of induction and employment for new members. The second method is observing attention to observed characteristics. The third one is analyzing organization culture’s beliefs, assumptions and values of promoters and guardians. The third method is carrying out of investigations to extremely serious issues, which usually translate into unwritten organization’s history (Fontaine, 124). Stakeholders involved and their role in the program There are a number of stakeholders involved in Rio Tinto’s indigenous employment programme. The four major ones are the government, the management, employees and the Indigenous people. Each group of these stakeholders is affected differently by the move and each of them has special role to play to ensure the success of the program. Experts in stakeholder management call for in-depth consultation with all groups of stakeholders in order to understand the degree to which they will be impacted by organizational decisions and also seek their support in implementing such initiatives. Sharma (68) recommends that organizations should undertake stakeholder analysis using a number of mapping tools in the market as a way of linking their HRM strategies to corporate social responsibility programs (CSR). This way, the organization can ensure that the negatives impacts on any one of the groups are addressed adequately before the strategy or decision is implemented. The government sets the labour laws which the firm must abide by. The report by IIEBD (70) indicates that there is no standard role of the government in labour relations in any given country. This is confirmed by the Australian government’s practice of interchanging centralised and decentralised system. A government has to facilitate flexibility at the least as shown by a number of European countries. In the 80’s Belgium, France, Britain and Spain eased their laws on dismissals to allow employers to adapt better to changing economic conditions. Other such as Netherlands and Britain removed minimum wage requirements. A weakened role of the government in influencing industrial relations such as through minimum wage requirements has reduced workers bargaining powers and has led to huge disparities in earnings between CEO’s and lower level employees thus contributing to the larger economic problem of economic disparities in a number of OECD countries. Contribution of the program to the company’s strategic objectives As part of the Australian society, Rio Tinto recognizes the political importance of addressing the needs of the indigenous people. Since the adoption of the closing the gap initiative, a number of laws have been enacted to support the initiative. The initiative was driven by the need to correct the transgression that the non-indigenous people and past governments have committed against the people. The greatest transgression of the non-indigenous Australians was the belief that aboriginal culture was inferior and so the race. According to him, this was expressed on many settlers’ personal beliefs as well as government policies (Gallery of Modern Art and Queensland Art Gallery, 2008). For instance there was a wide reaching convection that half-caste children being separated from their aboriginal homes and mothers to be taken care of by government and church-ran institutions for their own good. Others were placed for adoption in white families as a way of ‘rescuing’ them from the seemingly primitive aboriginal culture. Such practices did not recognize the wishes of the aboriginal people. The attempt to increase the number of Aboriginal people in Rio Tinto workforce and inclusion of their culture into the firm’s organizational culture in one way or another recognizes the importance of the cultural diversity that the Aboriginals give to the firm and the country. Fontaine (125) writes that a firm’s organizational culture is a function of national culture. Some organizations fail to acknowledge the huge role culture plays in the success of MNEs. Adidam, Gajre and Kejriwal say that, “The causes of business failure internationally are rarely financial, economic or technical. Failure arises from serious errors and misjudgment concerning the social, cultural, and political environment of the international countries” (667). Many multinationals have embarked on what Caruth, Caruth and Pane call “thinking globally and managing culturally.” The success of MNEs such as Nike, HP, Toyota and Sony among others lies in their ability to adapt to local market needs and culture. A fundamental determinant in succeeding in a new market is the ability to adapt to the local culture. This paper seeks to highlight the influence culture has on the managerial level for MNEs drawing support from a number of published sources and also giving examples of real life MNEs depicting how culture has shaped their operations. HR and other strategic challenges The most potent threat and challenge to Rio Tinto in effecting the program is resistance to change. According to Sharma (43), change in organizations is not about changing the structures or processes in an organization but rather changing the attitude and the mindset of the people to implement the change. Therefore, Rio Tinto faces the challenge of making the existing non-indigenous employees understand the preferential treatment given to the non indigenous people as part of affirmative action informed by legal and moral considerations. For instance, in a bid to increase the number of indigenous senior managers in the firm, the promotions structure might be overlooked in some cases and some indigenous employees given preference based on their race as opposed to merit. This is likely to cause some friction in the firm and likely resentment for the aboriginal people. So how does the management address such concerns? This might require increased in-house training for the Aboriginal people to increase their knowledge and skill base to ensure to ensure that promotions in the firm are merit based in the long term. The success of the Indigenous Employment Program cannot be only measured by the number of Aboriginal employees that Rio Tinto has. The number of Aboriginal employees must have a positive impact on the overall performance of the firm. Such change in overall performance of the firm is hard to assess. For instance a snapshot check in the case the firm while undergoing the current change at a time of the ongoing global financial fluctuations may not capture the real effects of the program as there are other externalities impacting on the company. While it might be hard to capture the actual change brought in by such changes, Jackson and Schuler (292) say that working in autonomous teams has its own benefits to an organization. They say that “where employees function in teams, especially autonomous teams and with job rotation, they develop important skills that are highly idiosyncratic to that setting- learning the tasks of other jobs, developing routines unique to that team, learning along to get along with that set of individuals etc”. For Rio Tinto therefore, it is suggested that the success of the program be based on assessing performance of teams that have a higher percentage of Aboriginal people. Furthermore, it can also be assessed by the uptake of the Aboriginal culture in the overall, organizational culture and the involvement of the Aboriginal employees in organization culture activities. Another possible challenge is skill deficiency among the indigenous people. Uptake of higher education among Aboriginals is relatively lower than the national average. This implies that the talent pool among the aboriginals is poor compared to on Aboriginals. This means that based on matching skills set with job requirements, the HR department might have problems delivering the needs of the program. As a result, the organizations might be forced to recruit under qualified staffs to meet the programs objectives. Alternatively, additional training is required to equip the staffs with needed skills which increase the cost of doing business for the firm. 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