Chapter 8-Case Study 2-Performance Management System Helps Freeport-McMoRan Switch Strategic Gears
Answer the following questions:
· Why did Freeport-McMoRan need a performance management system? How might it have helped the company adjust its strategy?
· Do you think a pen-and-paper performance management system could have been as effective as the web-based system Freeport-McMoRan adopted? Why or why not?
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, trade journals, and publications in EBSCOhost (Grantham University Online Library).
Non-credible and opinion based sources such as, Wikis, Yahoo Answers, eHow, blogs, etc. should not be used.
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case study1500 words Sunday
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Chapter 8: Performance Management: Case Study 2 Performance Management System Helps Freeport-McMoRan Switch Strategic
Gears
Book Title: Managing Human Resources
Printed By: Cedric Turner (cedric.l.turner@gmail.com)
© 2016 Cengage Learning, Cengage Learning
Chapter Review
Case Study 2 Performance Management System Helps Freeport-McMoRan Switch
Strategic Gears
What do you do when your organization needs to completely turn around its strategy due to
a changing marketplace or for competitive reasons? Situations such as these are common
in today’s fast-paced business environment. How does a firm manage drastic changes like
this? A good performance management system can help.
Freeport-McMoRan Copper & Gold is a case in point. The company, which is based in
Phoenix, is the second-largest copper mining company in the world. It employs
approximately 35,000 workers and has mining operations that span five different continents.
But it wasn’t a poor market condition that caused Freeport-McMoRan to shift gears. It was a
booming one. During much of the 1990s and 2000s, the price of copper was low—only
about 75 cents per pound—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 Freeport-McMoRan.
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 copper as
possible while its price was high. The question became how to implement the change.
Compounding the task was the fact that each mine was run separately. The firm’s top
managers did not even know how its employees were organized at the separate mines, let
alone what their goals were or the metrics they were expected to achieve. The company
had also acquired a rival mining company twice its size—Phelps Dodge—which made
coordinating the performance of its people and operations even more difficult. In 2013,
Freeport-McMoRan went to into a completely new line of business—oil and gas—making
the coordination even more difficult.
To align the goals of everyone in the company and get all of its various mines performing at
top capacity, Freeport-McMoRan needed a new performance management system. The
system would hopefully enable the company to quickly implement and monitor the changes
needed, while giving it the agility to change strategies again if or when the price of copper
dropped.
Many of the employees who work in its mines and oilfields do not use computers regularly
on the job, so Freeport-McMoRan needed a system that was easy to use. For this reason,
the company adopted a web-based performance management system that employees could
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use at home. Initially, the firm rolled 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 performance. It also helps
organizations measure the contributions of its employees and to nurture, motivate, and
reward employees based on their achievements. “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 future,” explains
Jonathon Hogg, with PA Consulting Group, an IT and management consulting firm. The
performance system, along with the company’s strategic move into oil and gas seems to be
working for Freeport-McMoRan. In 2013, the company posted a 19 percent return to
shareholders, despite copper prices plummeting again.
Questions
1. Why did Freeport-McMoRan need a performance management system? How
might it have helped the company adjust its strategy?
2. Do you think a pen-and-paper performance management system could have
been as effective as the web-based system Freeport-McMoRan adopted?
Why or why not?
Sources: Josh Bersin, “Performance Management Creates Agility in Copper Mining,” Bersin & Associates [blog]
(February 24, 2008), http://www.bersin.com; Jessica Twentyman, “Talent Management: Software Highlights Stars
and Slackers,” Financial Times (April 20, 2011), http://www.ft.com; David Lee Smith, “You Can’t Afford to Pass Up
Freeport-McMoRan,” Motley Fool (April 5, 2011), http://www.fool.com; Matt DiLallo, “Freeport-McMoRan Copper &
Gold Inc’s Big Oil Deal Still Looks Smart,” DailyFinance (January 23, 2014), http://www.dailyfinance.com.
Chapter 8: Performance Management: Case Study 2 Performance Management System Helps Freeport-McMoRan Switch Strategic
Gears
Book Title: Managing Human Resources
Printed By: Cedric Turner (cedric.l.turner@gmail.com)
© 2016 Cengage Learning, Cengage Learning
© 2020 Cengage Learning Inc. All rights reserved. No part of this work may by reproduced or used in any form or by any means –
graphic, electronic, or mechanical, or in any other manner – without the written permission of the copyright holder.
http://www.bersin.com/
http://www.ft.com/
http://www.fool.com/
http://www.dailyfinance.com/