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Performance Management System Helps Freeport-McMoran Freeport-McMoRan to shift gears. It was a boom, help their teams think through problems with Freeport-McMoRan Copper & Gold is a case marketplace or for competitive reasons? Situations second-largest copper mining company in the world completely turn around its strategy due to a changing point. The company, which is based in Phoenix, is het It employs approximately 35,000 workers and be mining operations that span five different continens But it wasn't a poor market condition that caused Instead they were the Case Study 2 Switch Strategic Gears do when your such as these are common in today's fast-paced busi- ness environment. How does a firm manage drastic changes like this? A good performance management system can help of copper was Freeport-McMo Ran. 00e. During much of the 1990s and 2000s, the price making mining less profitable than it had been in the past. Mining a large amount of copper therefore became less of a priority than keeping costs low for However, after the price of copper jumped sharply upward and hit $4.50 a pound, Freeport-McMoRan realized it needed to change its strategy--and fast. It needed to ramp up production and invest in new people and equipment in order to mine as much cop- per as possible while its price was high. The question became how to implement the change. Compound- low-only about 75 cents per pound- out the system to 500 employees as a pilot program. When it proved to be successful, the entire company began to use the system. The software keeps everyone in an organization focused on a company's most important goals, which can have a strong impact on the firm's financial per- formance. It also helps organizations measure the contributions of its employees and to nurture, moti- vate, and reward employees based on their achieve- ments. "Managers need reliable real-time data and pragmatic e-tools to measure, identify, analyze, and understand their organization's people capability, and what capability is needed to compete in the fu- ing the task was the fact that each mine was run sepa ture," explains Jonathon Hogg, with PA Consulting rately. The firm's top managers did not even know how Group, an IT and management consulting firm. The its employees were organized at the separate mines, let performance system, along with the company's stra- alone what their goals were or the metrics they were tegic move into oil and gas seems to be working for expected to achieve. The company had also acquired a Freeport-McMoRan. In 2013, the company posted rival mining company twice its size-Phelps Dodge a 19 percent return to shareholders, despite copper which made coordinating the performance of its prices plummeting again. people and operations even more difficult. In 2013, Freeport-McMoRan went to into a completely new Questions line of business-oil and gas-making the coordina- tion even more difficult. 1. Why did Freeport-McMoran need a perfor- To align the goals of everyone in the company mance management system? How might it have and get all of its various mines performing at top helped the company adjust its strategy? capacity, Freeport-McMoran needed a new perfor 2. Do you think a pen-and-paper performance mance management system. The system would hope management system could have been as effective fully enable the company to quickly implement and as the web-based system Freeport-McMoRan ad monitor the changes needed, while giving it the agil opted? Why or why not? ity to change strategies again if or when the price of copper dropped. Sources: Josh Bersin, "Performance Management Creates Agility Many of the employees who work in its mines in Copper Mining Bersin & Associates [blog] (February 24, 2008). and oilfields do not use computers regularly on the http://www.bersin.com; Jessica Twentyman, "Talent Management: Software Highlights Stars and Slackers Financial Times (April 20, job, so Freeport-McMoRan needed a system that was 2011), http://www.ft.com: David Lee Smith, "You Can't Afford to Pass easy to use. For this reason, the company adopted a Up Freeport-McMoran, Motley Fool (April 5, 2011), http://www.fool. web-based performance management system that com; Matt Dilallo, "Freeport-McMoran Copper & Gold Inc's Big Oil Deal Still Looks Smart," DailyFinance (January 23, 2014), http://www. employees could use at home. Initially, the firm rolled dailyfinance.com