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‘I’m sorry’: Newcrest CEO apologises for autocratic leadership

Sandeep Biswas is trying to build a more inclusive culture after a ‘cold shower’ of feedback made him realise the approach of his early days is no longer suitable.

Newcrest chief executive Sandeep Biswas has apologised to anyone who felt bullied during their time working at the nation’s biggest gold miner and says he is working to change his leadership style and build a more inclusive culture.

Biswas says he now realises he could have achieved the same good results at the miner with a more inclusive management style rather than the “command and control” approach of his early years, and says raw feedback from staff on the Newcrest leadership culture has given him a “proverbial cold shower”.

“If that is how they feel, then that is how they feel and to the extent that I have contributed to it particularly, but also the organisation, I am sorry. I apologise unreservedly,” he tells The Australian Financial Review of staff feedback over the past year.

“That was a very, very confronting thing for me and the management team [to hear that] you really need to change.

“If we are going to be successful to take Newcrest to the next level we cannot lead the way we have been.”

For most of the eight years Biswas has run Newcrest, the internal culture has been one of those things frequently gossiped about in the mining industry, but rarely talked about in formal settings.

When the Financial Review described the culture at Newcrest as “particularly robust” last month in an article on the financial and operational successes of the Biswas era, numerous former Newcrest employees said it was an understatement.

The focus on workplace culture in the mining industry intensified earlier this month when Biswas’ former employer, Rio Tinto, published a bombshell report that declared its workplace culture was riddled with systemic bullying and other types of harmful behaviour.

Industry superannuation fund HESTA subsequently put the industry on notice by asking the boards and management of all major mining companies whether they, too, were presiding over the sort of systemic cultural problems disclosed by Rio.

When the HESTA letter lobs at Newcrest, there will be plenty to discuss; a long list of former employees have scathing recollections of their time at Newcrest.

But the company has also launched a number of programs in the past year to ensure the future is better than the past, with Biswas vowing to change his leadership style to suit a new era that is more inclusive and “psychologically safe”.

Most of the former Newcrest employees who shared their experiences with the Financial Review declined to speak publicly for fear of harming their careers or families.

But the sheer number of Newcrest alumni with bad experiences – and their seniority – has convinced the Financial Review that their stories should not be swept under the carpet.

Culture of fear’

Multiple people who have served on Newcrest’s executive committee – the elite handful of executives who sit below Biswas and are sufficiently senior to have their salaries published in the annual report – say they believe bullying had been part of Biswas’ leadership style during their time at the company.

Many other former Newcrest employees say a culture of fear developed on the back of the extremely high expectations Biswas tended to set, his perceived lack of care for the human collateral damage required to meet those targets and his reluctance to accept any excuse for falling short of those standards.

Targets were expected to be hit even when serious distractions – such as family health crises – distracted or disrupted the lives of top executives.

When targets were not hit, Biswas is said to “go after” people in a way that is “not consistent with contemporary corporate behaviour”, leaving them to feel humiliated in front of peers, and sometimes in tears.

One former executive says Newcrest’s culture had been hard to change because Biswas’ leadership style was “autocratic” and could be described as “do as I say, not do as I do”.

Presented with that raft of anecdotes, Biswas says he wants to apologise.

“That feedback is not easy to hear, but I accept it,” he says. “The thing is, I do expect high standards, that is a matter of fact and that was never more important than in the early parts of [my time at] Newcrest. A lot of personal drive had to go into it and it was tough times.”

Biswas was asked to be a change agent when he was announced as Newcrest’s next chief executive in 2013.

The poor performance of its star recruit – the Lihir mine – had Newcrest reporting huge losses when Sandeep Biswas took over as CEO.

The nation’s biggest gold miner was in turmoil after a big fall in the gold price made debt harder to service at a time when regulators were probing the company over a market disclosure scandal and the poor performance of its star recruit – the Lihir mine – had the company reporting huge impairments and losses.

Investors were angry enough to push out the previous chief executive and chairman, and were not enquiring about employee morale and internal culture as HESTA did earlier this month.

“There is no question, when I joined Newcrest, it needed a very direct style of management. Very command and control,” said Mr Biswas of his early years in charge.

“Back in those days, there wasn’t a lot of consultation, there was a very directive [style], and some very tough conversations had to take place, both collectively and individually because that is where we were.”

Biswas’ “command and control” style delivered improved operational results and with the help of stronger gold prices, he oversaw improved profits, lower debt and a resumption of dividends.

Now the world’s fourth biggest gold miner by market capitalisation, Newcrest’s share price is triple the levels when Biswas took over.

But he concedes those strong results could have been achieved with a more inclusive style and he says the days of “command and control” at Newcrest are gone.

“There is no doubt that if I had known what I know now, because I have grown as leader, I would have got the same results, but I think I would have done it differently,” he says.

Biswas’ critics say the harsh culture was reinforced in the secondary and tertiary management levels.

Newcrest’s frequent use of external consultants was said to leave many Newcrest employees feeling bypassed, not trusted, undermined, superfluous and ultimately insecure in their jobs.

The appointment of MacMahon to provide mining services at the struggling Telfer mine in 2015 was a particularly bruising affair for many Newcrest staff.

One former executive said the “fractured” and “dislocated” culture deterred employees from chasing promotions and achieving their full potential because life was easier below Biswas’ demanding radar and without his ruthlessly frank feedback.

High staff turnover

Biswas’ critics believe the culture contributed to a high turnover of staff at what should be one of the mining industry’s most attractive employers: a cashed-up, multinational company whose head office on leafy St Kilda Road has beautiful views across Albert Park Lake to Port Philip Bay.

The executive committee role with the most tangible connection to Newcrest’s culture – general manager of people and sustainability – has been a revolving door since Biswas effectively took control of the company on January 1, 2014, ahead of his formal shift into the chief executive role in July that year.

The incumbent, Lisa Ali, announced in October that she was leaving about 20 months after she joined Newcrest from Trinidad.

Ali is now serving out her notice period, having announced in November that she has accepted effectively the same role – chief people officer – at a smaller gold miner; Alberto Calderon’s AngloGold Ashanti.

Ali’s predecessors in the role – Boom logistics chair Melanie Allibon, APA group people and culture boss Jane Thomas and Mission Australia director Debra Stirling – served 15 months, 21 months and six months, respectively, on Biswas’ executive committees.

All four are said to have left for a mix of professional and personal reasons, some of which do not relate to Biswas. Stirling’s exit in the early days of Biswas’ leadership came after a six-year stint on the executive committee.

But critics say the trend is clear.

Media relations has been another revolving door during the Biswas era. Whenever Newcrest publishes its quarterly production report on the ASX announcements platform, a primary media contact person is listed.

That slot has been filled by eight people during the Biswas era and the number would be higher if short-term media consultants and other communications department employees who were not the primary media contact were included.

Those in technical, operational and financially focused roles at Newcrest have tended to last longer.

Phil Stephenson, the chief operating officer for Newcrest’s Australian and American mines, has done close to seven years on the executive committee.

The chief operating officer of Newcrest’s Papua New Guinean mines, Craig Jones, has served every day of the Biswas era, while former chief financial officer Gerard Bond had also served the entire Biswas era until he retired late last year.

Bond was on Friday announced as the chief executive of mid-tier gold miner OceanaGold.

Biswas is a chemical engineer by training and his critics say the contrast between the tenure of those with “soft” and “hard” skills is emblematic of the company’s performance over the past eight years; impressive operational and financial performance has been delivered alongside an “unhappy” culture.

Gender imbalance

The long-term survivors on Biswas’ executive committee also tend to be men; less than 16 per cent of Newcrest employees were female in fiscal 2021, meaning the company lags peers like South32, Fortescue and Rio Tinto on female participation.

The industry outlier, BHP, had 30 per cent female representation in fiscal 2021.

There are exceptions to the gender rule: Francesca Lee was Newcrest’s chief legal officer for six years to 2020 and the company has the same types of programs to boost female participation that other big miners have.

“Lets face it, the industry has had a very blokey style culture and how strong a leader you were was something you wore with a badge of honour back in the day,” says Biswas of his early days as a junior employee in the Mount Isa metallurgical processing plants in the 1980s.

“We were a product of that environment and it is only as we have learned, as society has changed, and as we have been educated about what sort of leadership is more effective, then you have seen the industry start to change. And I think it is starting to change.”

Newcrest’s cultural issues came to a head over the past two years, when the tools that measure staff morale revealed a deterioration in sentiment.

Newcrest uses a McKinsey product called “Organisational Health Index (OHI)” to gauge employee sentiment on cultural matters.

Biswas says the index has shown the company’s culture has improved from being among the worst 25 per cent of companies that used the tool in 2014 to among the best 25 per cent by 2019.

Former Newcrest people say the devil is in OHI’s details and the program has regularly revealed negative sentiment toward senior management during the Biswas era.

But neither side disputes that employee morale went backwards in the two years to June 2021.

New leadership style

The pandemic was an obvious influence on people’s lives, but Biswas says the commentary employees fed into the survey convinced him that Newcrest needed a different style of leadership to that which drove the company’s financial recovery between 2013 and 2017.

“You could see through that commentary that the expectations of people had changed, society had changed,” he says.

“We had made a transition from command and control, we were improving to be more collaborative, but we needed a much bigger change and that is where the work started on inclusion.

“If we want to grow this company ... we have to change the leadership model.”

Biswas is a cricket fan and was speaking to The Australian Financial Review barely a week after Australian cricket coach Justin Langer had quit because his players did not believe he was capable of changing a leadership style that had made him the right person for the job in 2018, but the wrong person for a more mature side in 2022 and beyond.

Unlike Langer, Biswas has been given a chance to prove he can change his leadership style to suit the times.

“My reflection was ‘Have I got what it takes to change my leadership style to the one that Newcrest needs?’ That was the essence of the cold shower and I thought deeply about that,” he says.

People want to feel more trusted, they want to be more engaged, more brought into decision-making. — Sandeep Biswas

“I think I can do it. I think I am a different leader today than I was in the past.

“It starts with me, but it has also got to cascade right through the company and it is accompanying a changing from a command and control [style] to a more empowering and enabling, psychologically safe one.

“People want to feel more trusted, they want to be more engaged, more brought into decision-making.”

The company’s top executives have been put through an “inclusive leadership” program run by external consultants over the past year, which is designed to increase self-awareness, empathy, vulnerability and ultimately create a “psychologically safe” culture.

‘Totally committed’

Biswas defines this as a place where “people actually feel they belong to the organisation, they feel free to voice their views without fear of retribution or ridicule”.

Newcrest has launched an app which allows employees to provide feedback to the executive committee on how they are faring on their mission to create an inclusive workplace.

“I have got a coach, I get regular feedback, and it is something I am totally committed to. I get it now,” says Biswas.

The scale of the project to improve Newcrest’s culture suggests the company has come a long way from the days when one of Biswas’ senior executives – after being told he was the subject of frequent complaints from staff – is said to have stuck an A3 sheet of paper on the back of his office door where he kept a list of his own “good” and “bad” behaviours.

Newcrest has latched on to the phrase “psychological safety” because it acknowledges the company’s good performance in reducing workplace injuries and fatalities during the Biswas era, but challenges executives and staff to make similar improvements in the realm of mental health and culture.

“We are quite proud of our safety record ... [But] there is no question that the psychological safety angle was under-appreciated by quite some margin,” concedes Biswas.

“Newcrest is well known for physical safety. I want us to be well known that this is a place of psychological safety as well.

“Part of my learning is I wish I knew five, six or seven years ago and I think there are many conversations and many issues I would have approached differently.”

The challenge for investors like HESTA is to determine whether the unattributed accounts of a poor culture at Newcrest are indicative of the current situation, or whether they are lagging indicators of a company that has come to terms with its flaws and genuinely turned over a new leaf.

Rebuilding the culture

Recently departed Newcrest chairman Peter Hay said in December that the company had put a lot of energy into building a respectful culture.

“Sandeep has in the last two or three years embarked on several projects to increase leadership capacity within the company and that is all about how people behave to one another,” he says.

“The company has become much more conscious of ensuring it is more inclusive, that collaboration is rewarded and all those good things about how people are treated respectfully.”

Newcrest’s attempt at a cultural sea change has come amid the turbulence of a global pandemic, which has forced all businesses to rethink how they manage the physical and mental health of their employees.

Carolyn Haybittle is an occupational health nurse with extensive experience in the resources industry, who was Newcrest’s principal health and wellness adviser between January 2019 and September 2021.

Haybittle says Newcrest’s focus on employee wellbeing improved dramatically in early 2020.

“All the things I had been trying to get across the line in the year prior, once the pandemic hit, literally the company was very open to suggestions, we went ahead and did,” she tells The Australian Financial Review.

“The comments that we were receiving were extremely positive and people felt supported.”

Newcrest disclosed $US53 million of additional “pandemic” related costs in the year to June 2021.

But despite her programs being supported in the early stages of the pandemic, Haybittle left Newcrest in September 2021 and returned to her native New Zealand.

“What I was disappointed about when I left Newcrest was that some things [were] reverting back,” she says.

“Things changed with another restructure and all the work that gained the positive support was kind of lost. I do hope that Newcrest is building back to where they were.”

Biswas says the pressure that pandemic lockdowns put on staff in Newcrest’s most affected locations – Melbourne, Papua New Guinea and Canada – have been an eye-opener, and he pledges the company will not be skimping on support as the pandemic rolls into its third year.

“The costs of COVID-19 came more with quarantine facilities and things like that. The care for people and the showing of it, that is not very expensive,” he says.

“This really made us improve a lot of our frameworks and systems around caring for people.

“I don’t think we have backed off. That is forming the fabric of our go-forward and we will build on that.”

Resources reporter

Peter Ker covers resource companies, based in Melbourne.

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