BHP Billitons Global Strategy to Control HIV and AIDS in the Workplace - Research Paper Example

Global Strategic Management Case Prepared by Name Surname, University of Technology, Sydney (Student ID 101763) Subject: Global Strategic Management 21811 block/weekly Autumn 2012 Word Count: 2635 excl. appendix and footnotes BHP Billiton’s Global Strategy to Control HIV and AIDS in the Workplace Table of contents BHP Billiton is the leading diversified resources corporation globally. It leads in providing energy, aluminium, metallurgical coal, coal, iron ore, ferro-alloys, copper and titanium, and has significant interests in gas, oil, nickel, liquefied natural gas, silver and diamonds. The corporation was established in June 2001 following merger a between BHP Limited and Billiton Plc. It employs 35000 permanent employees, and has another 32000 contractors employed at several operation sites. Approximately 30 percent of the organisation’s activities are carried out in southern Africa. Many of the company’s projects are carried out in regions with incredibly high frequency of HIV and AIDS, yet 40 percent of the permanent employees work in such areas. BHP Billiton prides itself on its dedication to health, safety, sustainable development and environmental accountability. However, during the 1990s, it was obvious that the AIDS scourge endangered all the four aspects of commitment. Grappling with this, BHP Billiton’s administration assigned one of its higher-ranking management staff, Andre van der Bergh, the responsibility address these issues, and requested him to present a report about the AIDS pandemic and its likely consequences on the organisation from the viewpoint of managing risk. Thereafter, it became apparent to van der Bergh that the organisation had to deal with the core of the issue – its practice of employing migrant workers – and establishing a raft of measures for prevention, care as well as assistance. The migrant workers comprised a considerable part of the company’s labour force, residing in boarding houses miles away from their families, and inexorably interacting with sex workers. According to van der Bergh, “any amount of education on HIV and AIDS wouldn’t have a lasting effect unless we addressed these underlying issues (Joint United Nations Programme on HIV/AIDS 2005, p. 29). In the subsequent years, BHP Billiton worked on managing HIV and AIDS and this area has ranked as one of its main business and development matters. Its different activities have conducted prevalence studies to determine the extent of HIV, and over the years, a significant reduction in the prevalence of HIV and AIDS among its workforce has been observed. For this achievement, BHP was recognised by the Global Business Coalition on HIV/AIDS as one of the five winners of the organisation’s 2004 Awards for Business Excellence (BHP Billiton, 2004; The Body, 2004). This paper looks at the strategy adopted by BHP Billiton and how the strategy has depicted the company’s commitment to corporate social responsibility as a component of strategic management in all areas where it operates. Notably, the strategy adopted by the company has been beneficial not only to its employees but also to the communities in the areas where it has projects. The HIV/AIDS problem in the workplace HIV and AIDS has become a major health an economic problem in the business environment. Many of the large business organisations in the world today already employ a significant number of people who are infected with HIV. Global statistics indicate that in 2003, 34.3 million individuals were infected and living with HIV whereas in 2009, 5.4 million people were living with the infection (Maguire, 2007, p. 3). As the scourge spreads throughout the workforce, there is need for human resource personnel in all organisations to be prepared to deal effectively with the issue of having employees infected with HIV or living with AIDS. The virus HIV affects not only the internal system of a person’s body, but the infection rate also impacts business and the workplace. The price of absenteeism, provision of medical and hospital care and the training wages for new employees to replace those adversely affected by the virus is enormous (Maguire, 2007, p. 3). There is also the aspect of employees of a given company interacting with the community as mentioned for BHP Billiton’s case. If the company does not take appropriate measures to deal with the scourge, the repercussions are likely to spread into the community. Implementing measures to tackle the spread of HIV/AIDS prevalence in the place of work is a component of corporate social responsibility (CSR) because the concept of CSR is an all-encompassing term for company measures to guarantee ethical behaviour and deal with social problems that exist both within and outside the organisation (Haberberg & Rieple, 2008, p. 1997). Strategy is predicated on assumptions about the environment, and environmental scanning helps a company to establish the correctness of those assumptions. That is, scanning helps a company to assess if the situation that the organisation is thought to be facing is the real situation that it is actually facing. Scanning moves the company from a point of reliance on intuition to evidence based decision making. From a corporate point of view, effective CSR needs to be integrated into the larger corporate strategy. For this reason, CSR is a component of the overall strategic management process (Coombs & Holladay, 2011). Companies that operate in developing countries have particularly been required to help in dealing with the prevalence of HIV and AIDS as part of their operations. According to one company CEO quoted in the Financial Times, while the cost of HIV and AIDS in terms of human life has been given much deserved attention, there are indications that businesses are after a long time beginning to recognise the economic threats that they face (Hond, De Bakker,Peter Neergaard, 2007, p. 27). See figure 1. Figure 1: Top companies’ access to treatment and prevention of HIV programme (Courtesy of EIRIS, 2008, p. 2) Nevertheless, despite the importance of issues about HIV and AIDS and organisational activities, many firms have not paid particular attention to the issue. As such, dealing with aids is not part of the social agenda of many firms, nor do these firms find their most salient stakeholders calling for social activities related to HIV and AIDS (Husted & Allen, 2010, p. 243). In some cases, it has been argued that many programmes implemented by mining companies in southern Africa initially had a little impact on the HIV and AIDS epidemic (Rajaram, Dutta & Parameswaran, 2005, p. 282). The steps taken by BHP to incorporate AIDS and HIV issues in its day to day activities in all areas of operation are therefore a major interest to study. BHP Billiton’s strategy to deal with HIV and AIDS BHP Billiton’s intervention to curb the spread of the HIV and AIDS pandemic among its employees and the community within which the company operates involves surveys that are conducted every three years to determine the prevailing levels. The surveys are done in collaboration with labour unions, and many have involved arranged discreet diagnosis of workers for HIV through saliva-based tests. BHP Billiton notes that, generally, these interventions received significant support and have given all the sites involved a clear comprehension of the level of infection in the labour force. In all the cases that have been conducted, diagnosis has shown that the prevalence rate among the labour force is much lower compared with the rest of the local community. As the project progressed, the workforce prevalence rate averaged 14 percent, and it decreased significantly over a period of three to four years. The reasons given by the company for the decline in HIV and AIDS prevalence, according to the Joint United Nations Programme on HIV/AIDS (2005, p. 29), include: Dissemination of information about HIV and AIDS was linked to behaviour change. A study conducted by the company revealed that this was especially true of the younger personnel of age 35 years and under. Prevalence was noted to be lower in this group than in those workers aged above 35 years. Staff members tended to have higher education levels than those in other companies. This is because the minimum qualification for most of the employees at BHP Billiton is secondary-level education. The current labour turnover at the time of conducting the surveys was low. In the year 2000, BHP Billiton applied actuarial analysis modelling in an attempt to determine the implication of the HIV and AIDS pandemic. By assuming that the prevalence rate would not exceed 16 percent by 2005, the model forecasted that then there would be a 5 percent rise in labour costs directly associated with HIV and AIDS. According to van der Bergh, the company was able to lower the impact of HIV and AIDS more than it had predicted (Joint United Nations Programme on HIV/AIDS, 2005, p. 30). Multifaceted approaches to tackle the pandemic BHP Billiton has dealt with the HIV and AIDS pandemic on a wide array of fronts. It has established and enforced broad instructive and awareness initiatives in all its processes, and increasingly paid attention to care, assistance as well as treatment. Since 1995, the company has also dealt with other issues surrounding the pandemic, for instance the long-term removal of men from their families, the migrant work systems, as well as gender-based disparities (BHP Billiton, 2011, p. 7). According to a BHP Billiton Report presented to the Global Business Coalition on HIV and AIDS, the company’s plan to deal with HIV and AIDS is intended not simply to touch on the disease and its impacts, instead, it is focused on transforming the primary social factors that underline the scourge. Hence, BHP designed its approach to HIV and AIDS in relation to the place of work and the wider community from the wider standpoint of its dedication to human rights and sustainability as stipulated in its charter. The company sees this as its duty to integrate HIV and AIDS into its core business approach in order to take action in relation to the problem as it affects the societies around BHP Billiton’s regions of activity and the countries involved at large. Thus, managing HIV and AIDS is a key element of the group’s CSR programme according to the BHP Billiton Report (BHP Billiton, 2007, p. 11). Prevention For over 10 to ten years, BHP Billiton’s major focus was the prevention of HIV infection among its labour force by use of education initiatives. In many neighbourhoods where the firm has projects, awareness campaigns have been expanded into local schools as well as to sex workers. Along the same line, BHP Billiton enhances fairness and honesty in relation to HIV and AIDS, and educates employees on their rights and gains (Joint United Nations Programme on HIV/AIDS, 2005, p. 30). The company also conducts periodic “knowledge, attitude and practice” surveys in all the regions where is operates and especially in southern Africa across all ranks of personnel. The data that is gathered is used to develop HIV response programmes that are meant for particular employee needs. The surveys are done again after every one and a half to two years to determine changes in attitude and behaviour, and to measure the usefulness of the intervention initiative. The outcomes of the KAP surveys at one region where the company operates showed a substantial improvement in the knowledge, attitude and practices of employees, most probably due to the HIV response programmes. The employees supported voluntary counselling and diagnosis as well as the need for confidentiality of other workers’ HIV status. As a result, there was a commendable reduction in the number of workers who were fearful of contracting HIV by working together with, being served meals by, and sharing sanitation amenities with, individuals living with HIV. However, they were still engaging in unsafe sex with many partners, and other did not use condoms consistently (Joint United Nations Programme on HIV/AIDS, 2005, p. 30). According to Andre van der Bergh, in regard to prevention, the major problem was to keep the 86 percent of the labour force HIV-free. To facilitate this, the company made several pamphlets on HIV and AIDS, which were extensively distributed. In addition, condoms were made freely accessible to the workers in all the company’s departments. All programmes were facilitated by peer educators trained by an organisation known as Lifeworks, which is an independent illness control organisation. The training encompasses employees across all levels, and the peer educators persuade all people to attend psychotherapy and testing, whose costs are offset by the company. BHP Billiton has ensured that psychotherapy and diagnosis are available to all personnel through on-site clinics and a system of meticulously selected and trained private doctors in the local neighbourhood. The company also conducts periodic on-site campaigns to encourage voluntary counselling and diagnosis. BHP Billiton’s strategy on prevention of HIV also includes a transformation in recruitment practices in that it now hires a smaller number of migrant labourers and more locally based workers. The company was the first one in South Africa to deal with the fundamental concern of using migrant labour. Its viewpoint is that mining is a long-standing venture that necessitates hiring of vastly qualified personnel as well as the continuing development of staff. According to company, this can only be attained in a steady local environment. As such, most of its employees in southern Africa are now live in their own homes instead of boarding houses. This new policy in the company’s view of HIV and AIDS took many years to achieve, and entailed deliberations with employees and labour organisations. At the beginning, employees were given housing stipends to encourage them to live with their families. Afterwards, the BHP Billiton decided to offer a bond allowance to enable employees acquire mortgages so as to purchase their own houses. In some regions, the corporation collaborates with local authorities to help in establishing housing plans (Joint United Nations Programme on HIV/AIDS, 2005, p. 31). Care, assistance and access to medication As noted by the International Labour Office 2004 (2004, p. 48), workplace programmes on HIV and AIDS are most successful when they are wide-ranging; that is, involving prevention, care and strategies to avoid discrimination; and designed through employee-worker collaboration. BHP Billiton has integrated hospitals into communities, and employees receive financial support to make sure that the family’s essential healthcare needs are met. Membership to a medical plan is also a proviso for employment and workers choose the schemes that best suit their needs and of their dependants (Joint United Nations Programme on HIV/AIDS, 2005, p. 31). All employees of BHP Billiton benefit from the organisation’s wellness programme that encourages healthy lifestyles. Those living with HIV have access to consultation, pathology, cure of opportunistic diseases, and antiretroviral medication. The company also noted some inadequacies in the medical plans and started enforcing managed healthcare schemes. Such programmes seek to ensure that HIV-positive people are accorded high-quality care. By working with Lifeworks, BHP Billiton is able to manage voluntary counselling and testing programmes. Lifeworks also emphasises the need for providing care to people living with AIDS through access to regular medical consultations and monitoring, counselling, treatment of related infections, and nutritional and vitamin supplements (Joint United Nations Programme on HIV/AIDS, 2005, p. 31). Costs In South Africa alone, BHP Billiton spends approximately US$ 990 on treating an employee with antiretrovirals. The medical scheme system offers a mean annual HIV/AIDS treatment of about US$ 2890. The company was also paying about US$ 25 per month for counselling service for each employee who needs it by 2005 (Joint United Nations Programme on HIV/AIDS, 2005, p. 33). Challenges Despite the success of BHP Billiton’s intervention, challenges still arise on two fronts of the HIV and AIDS pandemic: The labour force turnover is low. The average rate at the site operations as well as corporate offices is 5 percent. However, over time as the workforce ages, the company will have to hire more staff from the local communities where prevalence is still higher. External communities are being used more frequently than in the past due to the restructuring operations within the company. There is a problem here given that surveys have indicated that prevalence among external contractors is approximately twofold that of the company’s workforce (Joint United Nations Programme on HIV/AIDS, 2005, p. 33). APPENDIX Discussion questions 1. What would be the scenario if BHP Billiton had not undertaken to intervene in the management of HIV and AIDS among its workforce? 2. How does the recruitment of local workers from the region of BHP Billiton’s operations help in the fight against HIV and AIDS in the workplace globally? References BHP Billiton 2004, ‘BHP Billiton Receives Global Business Coalition Innovation Award For HIV/AIDS Management,’ 21 April 2004, viewed 22 May 2012 BHP Billiton 2007, ‘BHP Billiton Sustainability Report Summary Report 2007,’ http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CKEBEBYwAg&url=http%3A%2F%2Fwww.ethicsworld.org%2Fcorporatesocialresponsibility%2FPDF%2520links%2Fbhpbsustainreport07web.pdf&ei=9728T5CtD8zKrAeStLTEDQ&usg=AFQjCNF_NcD03obmLKU_9TMzXPrMSHitMQ&sig2=nkTmkQ5E4-UxRjuJ7SYhEg BHP Billiton 2011, “BHP Billiton Sustainability Report 2011”, viewed 22 May 2012 http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CGUQFjAA&url=http%3A%2F%2Fwww.bhpbilliton.com%2Fhome%2Faboutus%2Fsustainability%2Freports%2FDocuments%2F2011%2FBHPBillitonSustainabilityReport%25202011.pdf&ei=mte8T86yOIXEsga9uZiiDQ&usg=AFQjCNHtgkA2TeJTUw20VfA5EKaX990hgQ&sig2=l_aD33WMflVVeM2DTKlxjA Coombs, W T & Holladay, S J 2011, Managing Corporate Social Responsibility: A Communication Approach, John Wiley & Sons, New York. EIRIS 2008, “Positive corporate responses to HIV/AIDS: A snapshot of large cap South African companies”, November 2008, viewed 22 May 2012 Haberberg, A, & Rieple, A 2008, Strategic Management: Theory and Application, Oxford University Press, Oxford. Hond, F D, De Bakker, F G A & Neergaard, P 2007, Managing Corporate Social Responsibility in Action: Talking, Doing and Measuring, Ashgate Publishing, Ltd., London. Husted, B W & Allen, D B 2010, Corporate Social Strategy: Stakeholder Engagement and Competitive Advantage, Cambridge University Press, Cambridge International Labour Office 2004, HIV/Aids and Work: Global Estimates, Impact and Response, International Labour Organization, Geneva. Joint United Nations Programme on HIV/AIDS 2005, Access to Treatment in the Private-Sector Workplace: The Provision of Antiretroviral Therapy by Three Companies in South Africa, World Health Organization, New York. Lim, S & Cameron, M 2003, ‘The contribution of multinational to the fight against HIV/AIDS’, in Sullivan, R (ed) Business and Human Rights: Dilemmas and Solutions, Greenleaf Publishing, New York, pp. 170-180. Maguire, M 2007, HIV and AIDS in the Workplace, GRIN Verlag, Munich. Rajaram, V, Dutta, S & Parameswaran K 2005, Sustainable Mining Practices: A Global Perspective, Taylor & Francis, New York. The Body 2004, “Global Business Coalition on HIV/AIDS Honours Winners of 2004 Business Excellence Awards for Fight against AIDS”, April 22, 2004, viewed 22 May 2012 Case Analysis Question 1 According to the International Labour organisation, approximately half of the people infected with HIV are workers. In particular, HIV infection has become a major problem in the mining industry. The mining industry employs many migrant labourers, and such labour has been associated with increasing risk of HIV transmission since migrant workers live far from their families (Rajaram, Dutta & Parameswaran, 2005, p. 281). Studies have also shown that mine workers have a high threshold of risk and that their working surroundings, lifestyle, considerably high income and masculinity make them particularly vulnerable to contracting HIV (Rajaram, Dutta & Parameswaran, 2005, p. 281). Since BHP Billiton is likely to work with such employees at any given point, it is worth noting that doing nothing about the situation would be detrimental to the company with regard to the stability of its workforce. BHP Billiton would have to contend with an unhealthy workforce, deal with a high employee turnover due to exits of those weakened by HIV and AIDS, and face the wrath of the surrounding communities as the company would definitely be blamed for contributing to the spread of the pandemic in the neighbourhoods. This is costly in business sense because the company would have to constantly recruit new workers, yet the mining business is an expensive venture that requires highly skilled and healthy individuals. Additionally, the situation could be a cost to the company its terms of its corporate image to the societies within which it operates. Question 2 The recruitment of local workers rather than migrant workers has helped BHP Billiton in the fight against HIV and AIDS as it ensures that workers live with their families. This reduces the propensity of the workers to engage in high-risk sexual activity with members of the local community. In addition, according to Lim and Cameron (2003, p. 180), in additional to their direct impacts on widening employment opportunities, multinationals are involved in worker training programmes facilitate longer-term development of the workers and the communities at large. As is evident from the BHP Billiton experience, the company has been actively involved in education on HIV and AIDS and has also established many facilities that not only help the workers but also facilitate treatment for the communities in general. Thus, it is indubitable that the company’ operations in various regions of the world including Australia, Chile, South Africa, Ethiopia and Zambia, among others, have enabled workers in these areas to be close to their families rather than work as migrants elsewhere. This has reduced the possibility of spreading the pandemic from one region of the world to another as there are few migrants, and the local workers are well informed about the pandemic. Read More