Transformation Towards A Continuous Improvement Culture

Trevor Krawchyk, Business Improvement Specialist

March 2011 – SME Denver

Today’s Presentation

Barrick’s Culture of Continuous Improvement:

• Why and how we started

• Our implementation strategy

• The critical success factors

• Summary

• Q&A

About Barrick

• Gold Industry Leader

• 20,000+ Employees

• 25 Operating Mines

• One of Canada’s Largest Companies

Background: Change needed?

“It is not necessary to change. Survival is not mandatory.”

Dr. Deming

Barrick’s opportunity (need) for change!

2002 State:

• Low gold prices

• Tight margins

• Rising costs

• Poor equipment effectiveness (OEE)

Background: Benchmarked The Best

Two common themes:

1. Formal CI System

2. CI Culture

Dimensions of CI at Barrick

FOCUS ONVALUE

CREATION

CULTURE OFCONTINUOUSIMPROVEMENT

“Get results, change the culture along the way”

Barrick’s CI Launch - 2002

• Top down support

• Operations focused

• Quick, high impact improvement at Goldstrike property (pilot)

• Expanded to all 9 sites (now 25)

“Get results, change the

culture along the way”

Barrick Vision and Values

To be the world’s best gold company by finding, acquiring, developing and producing quality reserves in

a safe, profitable and socially responsible manner.

BEHAVE LIKE AN OWNER

ACT WITH A SENSE OF URGENCY

BE A TEAM PLAYER

CONTINUOUSLY IMPROVE

DELIVER RESULTS

Vision:

Barrick CI Vision

“Everyone Engaged in Improvement Every Day”

Barrick CI – Critical Success Factors

1. Leadership

2. Focus on Process

3. Measurement

4. People & Teamwork

5. Communication and Visibility

Barrick CI – Critical Success Factors

1. Leadership

• Sustained Commitment from the Senior Leadership

• Highly focused on long-term benefits

• Included in Personal Performance Commitments

• Full-time dedicated global BI Team

Barrick CI – Critical Success Factors

2. Focus on Process:

• Extensive use of all applicable lean/CI tools

• Operations Review Teams (ORT’s) embedded in business cycle (PDR or PDCA)

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Talent Review

ORT / Site gap analysis

Strategic Planning

Budget

Performance Commitments

Tactical Plan

Execution

PLAN

PLAN

PLAN

PLAN

REVIEW

REVIEW

Barrick Business Management Cycle

DO

1. Review

(Assessment)

Objectives

• Current state

• Opportunity

Identification

2. Plan

(Site Visit)

Objectives

• Leadership support and

commitment

• Design solutions

“Go to Gemba”

3. Do(Execute)

Objectives

• Develop & execute action

plans

• Monthly Follow-up

ORT Process

Barrick CI – Critical Success Factors

3. Measurement• Focus on Metrics and KPI’s

• Track the value creation (waste reduction)

• The Culture Scorecard – yes, you can measure culture

Barrick CI Value Creation

2003 2004 2005 2006 2007 2008 2009 2010

Va

lue

Cre

ati

on

Quality Cost Throughput Total

(Illustrative)

Barrick Culture Scorecard

ElementsCurrent

Score

12 month

Target Key Themes To Close Gaps

Vision & Values 1.8 2.5

Business Strategy and Value Streams 2.0 2.3

Standardized Processes 0.7 2.3

Culture of CI 2.0 2.0

Foundation Total 1.6 2.3

Recruited for Fit 1.7 2.3

Employee Performance and Development 1.4 2.4

Talent Management 1.8 2.3

People and Leadership Total 1.6 2.3

Clear Targets and Goals 1.3 2.0

Visual Workplace 1.0 2.0

Regular Structured Reviews (Plan-Do-Review) 2.0 2.5

Workplace Organization (5S) 1.0 3.0

Organization Structured for Performance 1.3 2.0

Business Performance Management Total 1.2 2.5

Employee Involvement and Problem Solving 1.4 2.3

Knowledge Sharing 1.0 2.0

CI Resources/Support 1.0 3.0

Learning & Knowledge Sharing Total 1.3 2.4

Corporate Social Responsibility 0.8 1.8

Sustainable Community Development 0.3 1.0Suppliers, Vendors, Contractors & Consultants 1.3 2.3

External Relationship Management Total 0.8 1.7

Overall Score 1.3 2.2

Business

Performance

Management

Learning &

Knowledge Sharing

External Relationship

Management

Sections

Foundation

People & Leadership

Barrick Cultural Measurement Framework

Major gaps in

basic planning

and operating

standards

(CHAOS)

TimeStrong leaders

making big,

often tough,

changes

(PUSH)

Focused initiatives

in structured

process to deliver

high impact

(DEPENDENT)

Enterprise-wide CI

culture

(INDEPENDENT)

Results

S0

S1

S2

S3

Not happening

Getting started,

limited results

Strong results in

critical areas

Everyone

Engaged In CI

Barrick CI – Culture vs. Value Creation?

Higher Culture Score = Greater Value Creation

Value Creation and Culture

1.9

1.5

1.11.0

Region A Region B Region C Region D

-

0.5

1.0

1.5

2.0

2.5

3.0

Cu

ltu

re S

co

re

Target Actual Culture score

Va

lue

Cre

ati

on

Barrick CI – Critical Success Factors

4. People & Teamwork• Employee Engagement & Involvement

• Employees given accountability for results

• Willingness to take chances & challenge the status quo

• “CI Awards” - Recognition and Reward

Barrick CI Awards

Recognize and reward employees for improvements made during the year in the following 4 categories:

1. Employee involvement and participation

2. Idea generation / innovation

3. Achievement of significant results

4. Knowledge seeking and application

Barrick CI – Critical Success Factors

5. Communication and Visibility

• Create formal systems

• Establish Best Practices

• Share success

(it’s contagious!)

Continuous Improvemen

t Pocket Guide

First Edition

Continuous Improvemen

t Pocket Guide

First Edition

Continuous Improvement Handbook

Our Current Business Environment

• Volatile economic forces

• Fluctuating Gold Prices

(+/- 15% in 1 month)

• Inflationary cost pressures

• Labour & commodity shortages

Summary

2 Dimensions• Value Creation• Culture

Critical Success Factors• Leadership Commitment • Focus on Process• Measurement• Communication and Visibility• People and Teamwork

Thank You