Week 05 - Application Assignment

This week, I interviewed the Director of Communications at Barrick Gold of North America, Lou Schack.  Lou has worked in communications for over twenty years.  He started his career as a journalist in Ely, NV and moved to Reno, NV after two years to continue working as a journalist for the Reno Gazette Journal. Lou was recruited out of Reno in the late 90’s to come to Elko and join the mining industry.

Barrick Gold of North America is a regional business unit of Barrick Gold Corporation. Barrick Gold Corporation is a global company with twenty-seven operating mine sites on four continents. The North American Communications Department recently went through a major reorganization. I wanted to ask Lou about concepts from this week’s reading and then also see if the reorganization is aligned or not with some of these concepts.

Question 1 – In recent years, Barrick has grown quite a bit as a company and now operates in four continents with a corporate headquarters in Toronto. How has growth impacted corporate communications?

“We deal with many different languages, time zones, and have different ideas about what is appropriate to say publically and what isn’t. For example, in the Dominican Republic you might need to come out with a fairly aggressive statement during a crisis or controversial situation. You wouldn’t necessarily do this in other markets, but in the Dominican Republic this is the only way to get the media to pay attention and so this is how we have to operate.  When you have a few operations and a few thousand employees, it’s much simpler to do business than with twenty-seven mines spread across the world.  A lot of us who have worked for smaller companies yearn for those days to return, but like most businesses if the company isn’t growing then you won’t last very long.”

Question 2 – With all the growth, it might be difficult to keep the CEO and senior leaders involved in communications.  In every Barrick publication there is a letter from the CEO or regional president, but do you think senior leaders are as involved as much as they should be (Argenti, Howell & Beck, 2005)?

“No, the CEO is not. More involvement from senior leaders would create closer ties with the workforce and would communicate a business strategy to employees; it provides direction.”

Question 2a – Do you think this is because we focus too much on investor communications? What are the positive or negative consequences?

“Yes, there is too much focus on investors relative to other types of communications. We need to have a focus on investors, but that cannot be the main focus of our communications strategy. Our heavy focus on investor communications is having a negative impact because others in the corporate office who want to have more of a focus on employees and other stakeholder communications are looking for other jobs because they disagree with the overall strategy.”  

Question 3 – If it is important to have the CEO and senior leadership involved in business communications, should they also be more involved in social and political issues? Our communications and community relations departments are heavily involved with social and political issues, but should we try to get senior leaders more involved (Argenti et al, 2005)?

“We can improve slightly in this area, but part of our problem is that a lot of the people in these roles are expats (they’re mainly Canadians) and so it is difficult to involve them in political issues. For example, most of them can’t vote. Also, because of the size and diversity of the company, we have to be careful with authorizing people to get involved with these issues.  Generally, our management and employees are quite involved in social issues at the local level, and to the extent that it’s appropriate we’re involved in a few select social issues at a regional level. In the region, we’re primarily involved with education, youth development, and engagement with Western Shoshone Tribes.”

Question 4 – Shifting to stakeholder communications, stakeholders have different and often higher expectations for companies operating in their backyards.  Do you think stakeholders in northeastern Nevada have unrealistically high expectations for mining companies (Bonini, Mendonca, & Oppenheim, 2006)?

“Yes, that’s often the case because we’ve been here a long time and Newmont (Barrick’s main competitor) has been here a long time too, and we’ve been generous over the years and have built up some dependency over time causing people to have unrealistically high expectations about what Barrick should and shouldn’t fund.”

Question 5 - One suggested method for keeping informed of social issues is to partner with non-governmental organizations (NGOs) (Bonini et al, 2006).  Barrick recently announced a partnership with the Danish Institute for Human Rights.  How do you think this will help Barrick’s reputation and knowledge or involvement in social and political issues? Will it give us any strategic advantage?

“Those sorts of alliances with NGO groups are valuable to the extent that they support financing for large projects overseas. There are a lot of standards applied to the financing arrangements for large projects abroad and alliances with NGOs, such as the Danish institute for Human Rights, are viewed as positive enhancements to our corporate presence in other countries.”

Question 6 - Another suggested method for staying in touch with social and political issues is to collaborate with other companies in the industry.  The International Council on Mining and Metals (ICMM), which Barrick is a member of, was mentioned by Bonini et al (2006) as an example. However, the Nevada Mining Association (NvMA) is a better local example. How has NvMA helped the industry stay aware of social and political issues?

“Since we’re the largest member of the association, this relationship usually involves us helping the association stay informed. We’re usually better informed about market trends, stakeholder concerns, and other issues but we’re often better off working through NvMA so that we’re presenting a unified front for the industry. Because we’re the largest member (membership is based on mineral ounce production) we often have to restrain our desire to be out in front on some issues. Over time, I think we’re coming to the conclusion that maybe we do need to be out in front and not always following NvMA because of our status as the largest member and largest business entity in the industry. NvMA and associations can be difficult because we have to try to agree with what others in the industry are doing even when we don’t necessarily agree with it. “

Question 7 - Argenti & Beck (2005) argue that communications need to be integrated into all parts of the business and, “the communication function must ensure that communications emanating from the business units are aligned with and support the company’s overall strategy” (p.88). Would you agree with this statement?

“Yes, I would agree with that statement and no, this is not present at Barrick. We have conflicting and misguided communications between the regions and the corporate office and the root of the problem is a lack of leadership in the function at a corporate level and a lack of coordination between the members of that function.  What communications strategy does exist is thin and not well articulated and not well delivered internally.  There is a very low frequency of communications efforts between the corporate office and the broader employee population.”

Question 8 - Eisenberg (1984) discussed the importance of ambiguous communication and the importance of ambiguity in maintaining flexibility and strategic position. Barrick’s vision is, “To be the world’s best gold company by finding, acquiring, developing and producing quality reserves in a safe, profitable and socially responsible manner” (http://www.barrick.com).  With the recent acquisition of a copper company, should we have been a little more ambiguous in communicating our goals?

“Ambiguity does give flexibility that you don’t have when you’re specific. Barrack has paid a price for diversifying and not admitting as much to the market and stakeholders. We haven’t changed our vision, but we’re at the point where we’ve established a copper region within the company next to our three operating gold regions.  I don’t think most people understand what we’re trying to do because you have a mine in Zambia, Saudi Arabia and Chile that make up the copper division within the company and managing those three together with that kind of geography doesn’t make sense. There is a value in ambiguity as long as you maintain it for legitimate business purposes rather than leaving yourself room to be wishy washy.  In communications, you want to be as precise as you can be while offering a little bit of flexibility depending on the topic.”

Question 9 - What guidance is in place at Barrick and how to you know when you need clear or ambiguous communication?

“There isn’t any strategy officially; it’s generally left to the expertise and wisdom of the few communications professionals in the company. We’re very careful with how the primary messaging is worded to the point that it keeps us from doing a lot of things that we should do. I cannot think of any guidelines or policy related to appropriate ambiguity in messaging; it’s subjective and depends on topic and time.  It helps to have experienced people in the communications function.”

As I mentioned before, the company went through a major reorganization in the communications department as well as a few other functions. Lou and I are both struggling with the change and struggling to understand what benefit the change will provide. There is some room for improvement and I appreciate Lou’s honest responses.

References

Argenti, P., Howell, R., & Beck, K. (2005). The strategic communication imperative, MIT Sloan Management Review, 46(3), 88-89.

Bonini, S., Mendonca, L., & Oppenheim, H. (2006). When social issues become strategic, The McKinsey Quarterly, 2, 19-31.

Eisenberg, E. (1994). Ambiguity as strategy in organizational communication, Communication Monographs, 51, 227-242.

http://www.barrick.com