Human Resource Challenges for Mining Industry in India - Paper for Mine 2009 Conference

Abstract

Mining industry has experienced a boom in the last couple of years, which is likely to continue in the long run, notwithstanding the financial crisis, due to demand for raw materials from the growing economy. Although this growth is fantastic, there are not sufficient human resources to fully capitalize on the boom. Shortage for human resources is likely to be one of most factors for mining industry.

The lack of skilled resources is caused by a number of factors, including an ageing workforce, a levelling of number of labour entrants into the industry, a steady number of people exiting the industry.

Currently, young talent may not be particularly attracted to the resources or minerals industry for a number of reasons. Young people need to be marketed to with the new and changing opportunities and long term prospects in the industry. Reward is often looked at as only monetary payments; however it should be approached from a “Total Reward” perspective, including nature of work, projects, and relationships.

Finally, there are imperatives from the industry, the government and the society at large to look for strategies to mitigate the human resource risks that the mining industry faces.

1. Introduction

Mining industry has challenges related to three Ps – power, procurement and people. The energy costs have been rising as also the timeframe and costs of procurements of capital goods and spare parts. But one of the most important challenges that the industry faces today, in the era of globally connected mining industry, is that of human resources. There appears to be a severe dearth of talent to shoulder responsibilities for growth in mining industry to an extent required to meet the demand for raw materials.

In recent times, Indian mining industry as well has seen serious shortage of skilled human resources. The domestic Indian metal and mining industry grew at 22 % CAGR between 2001 and 2006. In 2001, it was worth $ 20.3 billion which and it grew to $ 43 billion in 2006. The index of mineral production was 155.25 in 2006 as compare to base year 1993-94. The growth in revenue for central sector public sector enterprises in mining is reported as 11.75% in 2007. Private sector investments in the sector are also on a rise. 53 coal blocks with reserves of 13,842 million tonnes allotted during April-January 2007-08 to Government and private sector companies.

At this time, it has been observed that only a small proportion of the graduating engineers passing out of mining institutes are joining the industry. Most industry leaders agree that the industry is facing shortage of qualified and skilled human resources. The industry leaders also believe that this could pose a severe constraint to the ambitious growth being targeted for mining projects and mineral production, so as to support the needs of the mineral resource hungry Indian economy.

Young mining professionals who have the potential to shoulder the responsibilities of break-a-neck pace of growth in production and implementation of new projects and technologies have not been too keen on the industry. There is shortfall even at the intake stage. The seats in mining engineering course in premier institutions in India are not occupied, the average occupancy being 75% of the sanctioned strength. After completion of their course, many of the graduating students choose to walk away from the industry. This is expected to hinder the pace of growth in the mining industry.

2. Risks of Talent Shortage

There are several risks of talent shortage for mining industry. Some of these have begun to show impact on the performance of the industry in terms of project implementation, production and productivity issues. Some of the key risks are listed below:

Failure to sustain growth – in the absence of right talent, the mining organizations may not be able to execute their strategic business plans.
Failure to secure succession – there may be lack of people to take on the responsibilities of leading the organization
Failure to attract emerging talent – the new talent may not choose to invest their time in the industry
Failure to retain top performers – the outstanding performers may leave the industry to pursue opportunities that attract them
Failure to provide board-level direction – key talent issues may not get the attention at the highest level of decision making
Failure to provide effective support – the organization may be reactive to manage talent risk and may not provide effective support for the same
Failure to weed out poor performers – the poor performers with adverse impacts on productivity and group morale may not be identified and weeded out.

For effective talent risk mitigation in mining industry the organizations need to tackle the following questions:

Does the industry have the people needed to sustain growth?
Is the industry finding it difficult to fill critical positions?
Is the industry attracting enough emerging talent?
Is the industry losing top performers?
Is the industry wasting valuable mining project experience?
Is the industry providing effective direction and support?
Are the industry top performers carrying under performers?

3. Challenges of fresh recruitment in mining industry

In India 17 colleges are providing degree in mining engineering. Total sanctioned strength of these colleges is about 600. However, total number of students graduating per year from these colleges is about 370 on an average for the last three years. Of the three most premier institutions for mining engineering education, namely, Indian School of Mines (ISM), Indian Institute of Technology Kharagpur (IIT KGP) and Institute of Technology Banaras Hindu University (IT BHU), ISM has relatively stronger number of students choosing to work in the industry. But even from ISM, on an average only 60 % students accepted on campus job offers from mining companies in year 2006 and 2007. In IT- BHU, only 22 % students accepted on campus job offers from mining companies. Although, statistics were not available, relatively large proportion of students of mining engineering from IIT Kharagpur also tend to choose alternative career options.

4. Survey of graduate mining engineers

PricewaterhouseCoopers conducted a survey of graduating mining engineers from 12 institutions imparting mining engineering education, with the following objectives:

To identify the career expectations of the students currently enrolled in mining engineering degree courses.
Understand the factors which motivate them to join mining industry.
To identify the factors which students consider important while considering a job offer.
Identify the factors which when improved, will encourage mining engineers to work with mining industry
To identify the industry options on managing human resource shortage risks and improve the environment to attract and retain talent
To comprehend the opinions of the industry leaders on how the industry is currently attempting to attract and retain mining engineers.

The results of the survey indicated some obvious and some interesting results.

Majority of Students chose to study Mining engineering because, mining engineering was the best option available to them at their Ranks in Entrance Examinations and not because of their interest in Mining Industry

Nearly 59 % of students are unwilling to join mining industry after their graduation. Only 41% of total respondents gave high priority to the career in mining industry. Out of interested 41 % of respondents 54 % want to join core mining industry and rest want to join mining allied industry.

Although the opinions are divided but most of the mining graduates consider brand value and remuneration offered by a company are the two most important factor for accepting a job offer from a mining company. Other important factors influencing them are opportunity of working abroad and job profile.

Students, who are willing to joining mining industry, are attracted to the industry because of higher initial salary offered. The other most important factor that satisfies them is the opportunity of career development in their field of specialisation.

Lack of social life and remote location are the two most important factors which make career in mining industry an unattractive option. 23% of the respondents stated lack of social affiliations and 21% stated remote locations, which in some ways may even be connected, as the key factors that make mining unattractive as a career option.

32 % of the respondents aspire to take up managerial roles in mining industry within 5 years of their joining, whereas about 22% of the respondents desire to be able to work in cities. Only 18 % of the respondents have given high priority to getting higher salaries than their peers in other industries. About 21% of the respondents desire to get out of the industry within a 5 year period.

Students have attached almost equal weights to the need for improvement in work environment, and in infrastructure facilities, as also to higher salaries and improved job content.

Most of the graduates agree that the remuneration offered by the mining companies are not good and needs to be revised on immediate basis. Infrastructure of the townships and working conditions of the mine site should also be improved upon on high priority basis. Moreover more mining engineers can be attracted to industry by undertaking brand building exercise.

5. Implications for the industry

The results imply serious implications for the industry. These revelations also may help the industry formulate the strategies for acquisition and retention of talent.

Since students are not joining mining by their interest, they may have less focus on the subjects of the course and may not be interested in mining industry as their final career. Since the students are more likely to move away from mining industry and look for other alternatives, the industry may need to make efforts to enhance the levels of interest in the industry and a career in the industry. Brand building exercise with emphasis on improved work environment and challenging roles and responsibilities may help the industry.

Since only 41% students pursuing mining engineering are willing to join mining and mining allied industry, growing mining industry is likely to face the shortage of mining engineers. This may also affect the growth adversely. To maintain the high growth rate, industry needs to attract more engineers to join the industry. Industry need to think and formulate the strategies with academic institutes to counsel the students and motivate them to join the industry. Organizing seminars and counselling sessions, emphasizing the contribution of the industry to the economy, focussing on the challenging job contents and growth opportunities may help attract talent.

Students are more interested in working for the companies which are having global presence and the companies which pay high. It may be inferred that mining companies with lesser visibility and repute are more likely to face the shortage of mining engineers. Brand building exercise together with loosening the strings of the purse may be appropriate. Companies may provide learning and development opportunities through collaborations with reputed companies, make policies encouraging job rotations, ensure better and healthier work environment, improve amenities and provide for recreational facilities. Concerns regarding job location may be addressed through postings in phases at the head offices and mine sites, wherever feasible.

Since initial salary is the most important guiding factor for opting mining engineering as career, the probability is higher for their turnover in future if they are not paid comparable to their peers working in other industries. To retain mining engineers, mining companies may need to assess their salary structures and align them with the other industries. Mining industry may also need to pay premium over other industries due to the work environment and location factors. The industry also needs to blend the job contents of production with opportunities for innovation and creativity. Rotations between production, planning, development, feasibility assessment, safety and such others may help attracting students.

Lack of social life and poor infrastructural facilities in and around mining area creates family pressure on a mining engineer. The difficulty in balancing work and family life force them to leave the industry. It may appear light but some of the respondents and industry leaders acknowledged that mining engineers may find getting a good match difficult due to the work location. It is appreciated that minerals occur where they do. But the industry may do well to provide for improved social affiliation, creation of facilities for recreation, create facilities for providing support to families, create vocational opportunities for spouses and family members and support them in their endeavours, and such other steps that may make stay at mine locations comfortable.

Mining industry may need to provide for a fast track growth opportunities. The desire to opt out within a period of 5 years expressed by 21% of the respondents may indicate loss of trained hands, creating shortage at middle management levels. This may also lead to succession issues and leadership crisis subsequently. The growth opportunities need to be created with significant improvements in the job contents to retain talent. Also, there may be opportunities created for phased alternate postings in cities interspersed with postings at mine locations. Delegation of responsibilities and decision making to the middle level management may make talent attracted to continue with the industry.

Industry may need to invest and spend on creation of better working conditions, improved civic amenities and infrastructure facilities. The investments may also need to be recurring. Salary alignment and job profile enhancement may also be needed, and may mean pressures on margins.

Increase in salary offered to mining engineers and improvement of infrastructural facilities will help in attracting more mining engineers to the industry. Mining industry needs to pay immediate attention to revision of remunerations offered to mining engineers. A detailed salary survey to establish comparisons with other industries may help align the salary structures.

6. Conclusions

It has been observed that less than 50 % of graduating mining engineers are willing to opt for a career in Mining Industry. Majority of students think that mining is unattractive because of lack of social life, unattractive working conditions at mine and poor infrastructure facilities at mine townships. Students who are willing to join mining industry are guided by the thought of development of career in their field of specialization.

It is, therefore, concluded that long term focus of the mining industry should be on:
Improvement of working conditions at mine site
Improvement of infrastructure facilities of mining towns.
Revising salary structure and linking it to performance
Incorporating job rotation policies.
Brand building and awareness programs.
Industry may also need training geologists, geo-scientists, mining diploma-holders and those with sufficiently long experience in mining operations to manage mining activities. It may be good to contemplate on increasing the number of institutes offering degrees in mining engineering to meet the growing demand for mining engineers. If employment opportunities are provided to the spouses of mining engineers, they may be willing to join mining industry.