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Ken Shepard: It's my pleasure to introduce Fred Stanford, who I understand has been connected with various versions of work levels in several incarnations. And maybe you'll honor us by telling us the DNA of your energy and passion and how you've learned to do this and how you've partnered and found resources to carry on. I understand you have an exciting startup, and you're doing it the right way from the beginning, which would be a great story for all of us.
Fred Stanford Thank you. So, after 28 years, I worked my way up from the bottom of the organization to the president of the operations up in Sudbury and was introduced to Requisite in about 1997 by who is Paul's here somewhere? And Michelle Desarda. And then later on in the years went on to work with Ian McDonald out of England quite extensively. So after leaving the large company, wasn't sure what I wanted to do. So I'd heard of a shareholders, but I'd never, ever seen one. And so thought I would try and take a little mining property and try and make it big because I'd already run a big one. So let's do something different. And this is a little bit of the story of what we've been doing over the last four and a half years. So the context about Torx I was employee number one. We raised $300 million on the stock market, and we bought an asset right after the financial crisis when everybody was selling assets to raise cash. Anne Stevens is with me here, and many of you will know Anne, I think if I was employee number one, she was probably number four or five.
And we started on that stuff right at the very beginning. Our strategy was we bought an asset, 3.9 millionOz. Our goal was to get it up to five, build that, and then rock and roll. So we've in four and a half years, we're now up to 11.2 million. We're building our first mine, and we're about nine months into a 21 month build on that on budget and on schedule, and it goes relatively smoothly. And second half of our strategy was to find another mine on the same property and build that. And I believe we've found that. And we're now rapidly advancing engineering, and we've had to add another line to our strategy, which is basically repeat line number two. So we're now looking for the third line. And it goes smoothly, it goes well. So we've gone from I was employee number one, I say there was nothing. There was no assets. There was nothing. And we built the team, and we've had an opportunity to start with a clean sheet of paper, which so few of us ever do. So, as a little startup, we like to look at a business from the perspective of you got commercial aspects to the business, you've got technical aspects of the business, and you've got social aspects of the business. And what were we going to make as our competitive advantage? We didn't have any commercial advantages. We had good grade, which is a help, but we had no economies of scale. We had no logistics systems. We had no relationships with suppliers that were going to help us. We didn't have commercial advantages, and we didn't have any technical advantages either.
We buy our fleet of trucks off the shelf just like everybody else. Our metallurgical processes are the same as everybody else's. So if we were to distinguish ourselves and create value and competitive advantage, it was going to have to be on the social side.
It was going to have to be how we worked with our employees to be more productive than our competitors. It would have to be how we worked with our communities in order that they welcomed us in, which isn't always the case with mining companies. We tend to be a bit disruptive. So how could we work with communities so that they wanted us to be their partner? And then there's governments, regulators, NGOs, all of the other social aspects of running a mining company, really running any company. We all have those issues. That's where we chose to focus our energy. So this is a tool from systems leadership that I'm particularly fond of. I think it's an absolutely exquisite tool called a values continua. And the fundamental model here is that if you want somebody to follow your lead, whether they're an investor, an employee, government regulator, they have to see you on the left side of that values continuum.
People don't tend to follow your lead if they see you as untrustworthy or unloving or lacking in courage, they have to see you on the left. Okay, so how do you start a company and build a company so that people see you on the left of that? Okay, so in our social strategy, it's been my experience in putting in these requisite principles is that there's a 30% to 50% productivity bump that is possible.
If you can create a work experience where people willingly give the best they have, you can get 30 to 50. It's not even all that hard. I've worked mostly in large unionized environments, and 30% to 50% is not a stretch in a large unionized environment. And it doesn't take massive change. It just takes doing things smartly. But one of the things that we learned over the years is that if you want a team member to willingly give the best they have, which fundamentally means to truly engage, though I hate to use the word engage, they have to be able to answer those three questions in the affirmative with confidence. Okay, what do you want me to do? Which often enroll description and proper tasking. How am I doing? Okay, daily review of tasks. That constant feedback that we need to give. Performance review, performance assessment. Then the last one is, what is my future? And this applies to a lot more than just employees. The community. What's the future? What is this mine you're going to build, going to do to our community? What's the future for our children in terms of jobs? What's our future in terms of jobs, education, et cetera? Those three questions are pivotal in getting systems in place. To answer those three questions were pivotal to creating that work experience that we needed. And so the HR systems that we've gone on and built are designed to do that.
When it, say, implementing ro, I don't know if I understand what that means, but if we can put in systems that will let employees answer those three questions, it's quite a tangible outcome.
I had an interesting example with what's my future? And before, many years back, within valet or inco, I had come back from another operation, and I inherited a bunch of different operations. One of them was about 100 person machine shop. And when I had worked in that operation previously, running mines, I hated that shop.
If I sent equipment there, I never knew if it was going to get fixed. I never knew it was coming back. I never knew what it was going to cost. And now I own the thing.
So I went up there, and I'm trying to wander around and try and do a safety audit, and I couldn't catch anybody working, okay. And milling around in knots. And I was trying to talk to them about safety. They didn't want to talk about safety, so you listen carefully. Well, if you don't want to talk about safety, what do you want to talk about? And they were frustrated. They thought management was trying to kill this thing by athropathy and just give it over to contractors. They wanted to show me what they could do, what they could actually perform if management would set up the place to work. So I'm wandering around, and you're asking little questions. And I asked the guy fixing pumps. He worked with joe, and I said, if we could put all the parts of pumps in front of you and all of the carcasses that need fixing, how many pumps could you fix compared to what you're fixing now? And he said, well, I couldn't do two for every one, but I could easily do three for every two.
So now the management was tough. Nobody spent more than half an hour in the lunchroom.
Boom, boom, boom out there. Get out on your machine. So you twiddle your thumbs in your lunchroom. You twiddle your thumbs at your machine. I'm not sure what difference it makes, okay? You're still twiddling your thumbs. So we went about the work, of getting the work organized so that we could actually put the machines and the parts in front of them at the same time. And you used to have to line up for hours in front of the warehouse to get spare parts.
The accountant said you had to do that. So that's what was done. We changed all that and we actually made it to the point that it worked. Okay, the parts were air pumps, but it wasn't going to deliver the productivity because of that last question, okay, what is my future? So those two individuals could deliver it, but they didn't know what we were going to do to them if they did deliver it. And when you listen carefully, they didn't understand if there was enough pumps for them to be fully occupied if they increase their productivity by 50%. So if there's not enough pumps, then what's my future? Are you going to take Joe away? I like working with joe. I've worked with joe for 20 years. Are you going to give me on something else to do that I don't like doing or what's my future? Couldn't answer the question. So they won't engage.
There'll be 100 reasons why they won't, but they'll never tell you why they don't. But they don't. So what we did, we set up a little contracting business.
And we took in pumps from outside. Then they could compete against contractors. So how am I doing?
What's my future? What do you want me to do? Well, I want you to smoke these contractors. Now the other managers within inco, they climbed all over me for how you're not going to make any money doing that. You're going to get three pumps a year, maybe won't make any money on the three pumps I bring in, but I'm going to make a lot on the 50% improvement I get inside.
And they delivered the 50% with relative ease. So those three questions are more complex than they look. So getting on the left side that values continue is not easy. But systems leadership does provide a model. And it says we have three tools to work with. Fundamentally, you've got management systems, you got management behavior, and you've got symbols.
You can work with those three levels and how you're so symbols are. Well, let's start with further point is stakeholders inside and outside the company interact with all three of those.
If any stakeholder employee or supplier or government regulator comes to your mind site and there's litter all over the place, and the symbolism of that is not good.
And if they look, they want a parking lot. And in Canada, there's Tim Hortons coffee cups all along the edge of the fence. And they don't really expect you to do a very good job with environmental protection out in the field either. Those symbols got to be managed management systems. We all talk about them. They are extraordinarily difficult to build.
And we design ours. Anne does the leads the work on that. We design ours so that they land on the left side of the values continue. When you interact with that system is your experience on the left? Does this feel fair? Does this feel honest? Does this feel trustworthy?
In some cases loving. The men always hate that particular word. They want to change it to fair. But there is a difference between being caring and being loving.
And we don't whack it up on the side of the furnace usually. But there's a difference between what you do to take care of somebody that's injured in your mind and what you do if your daughter was working in that mine to make sure she didn't get hurt in the first place. That's the difference between those two, okay? And it matters. So the systems need to be developed to land and be on the left side. And then management behaviors. We just use the eight steps of team leadership, which I think is not quite the next slide. So now we bought 3.9 millionOz. We had every confidence we're going to get it to five, and then we're going to build a mining company out of this asset. And then so almost the same time we started drilling, we started building those HR systems on how we were going to run this company in the future. Because it's hard.
And this is what we've got in our systems. There are eleven of them. It starts with role description. And we designed all eleven of them simultaneously because we wanted them to work together. We wanted role description to work with performance assessment. We wanted role description to work with recruiting and selection to role. We wanted it to work with discipline. We wanted it to work with removal from role, fair treatment, succession planning, career development. So there was one common flow through your interaction between the systems and the company. It was the most intellectually difficult thing that I've ever done in my life. And I think Anne would agree. But when you design eleven simultaneously, the work was extraordinarily difficult. But the result is elegantly, simple, and simplicity is what they pay us for, is elevating complexity to simplicity without making it simplistic. And that's how the senior people add value. So we did that. And there's eleven sort of in that cascading. I don't know if you can read that from back there, but when we say we had to build management systems, that's some there's more to management systems. We still need to be getting an operator and a part and a tool and a machine in the same place at the same time. That requires some systematic approach to organizing the work as well. It's not just HR systems that make a company work, but the key thing is that no matter what we do needs to land on the left side of this values continuum. We started early.
Role description lands at the center of these systems because of that first question, what do you want me to do? Okay, how does my work tie to the strategy what do you want me to do? And you can't put it all in role description. Obviously we try and make it a one page document that we do. Make it 17 by eleven. We cheat a little bit, but we may get to a plotter page soon. But its task assignment is independent of these systems, but at a high level, that's what we do. Now, management behavior, there's a great deal of work and there's 1000 theories. We use this to say these eight behaviors are what a leader does. Now somebody may add to that, but I would say if you get these done, you got our 80% knocked.
And if you look at those, there's not a slogan in there anywhere, okay? Those are all observable behaviors. We can see leaders doing that. I can see a leader setting context and purpose for their team member. I can watch them do it.
Critical issues are those things that will cause us to fail if we don't deal with it.
So there's a bunch of stuff we know how to do, but how do we there are how to's and what ifs, okay? We know we have to get from here to there. We don't know how to do it, but we know we have to get there. And then there's a what ifs. Those are the things. We don't know what's going to happen, but if it does, we better be ready.
So the leader identifies it. They encourage contributions from their team members in identifying and solving somebody said it this morning. It's not a democracy. Make a decision, okay? Assign tasks using context, purpose, quantity, quality, resources, and time.
That's the risk of the what do you want me to do? You monitor progress. You accept and give coaching, and you provide review at the end of the job. And the end of the job, it's not just what did you do wrong, it's what could I have done to help make that go better next time as well as the leader?
So there's lots of other things that leader can do, but when it comes to behaviors, if all of my leaders do this, then we're in good shape and I don't have to focus on more Esoteric stuff than this. This is plenty. If you get that pinned, life is pretty good. And you can get that. The HR systems help with that by creating that sense. Now it says there most of our employees don't expect much from us, okay? They're used to such poor management that you can when you start making little changes, they really notice, okay, we make lots of mistakes as we go along, and not everybody's perfect and it doesn't roll out perfectly, et cetera, et cetera. But as it's getting better and better and better, they'll notice, okay? And they'll give you a lot of latitude once they see positive change. Now, symbols are more abstract, a bit harder to explain to lots of folks, but they matter. Even with our own teams, it's a struggle to get them. I focus very significantly on two of them.
And Housekeeping is one of them. So when I was running that machine shop I was telling you earlier about, I refused. Like, I'm a Housekeeping fanatic. I want that place spotless. I want a place for everything. I want it there. But I refused to let them clean it up when VIPs were coming.
Policy, you are not allowed to clean it up because my point is the most important people come here every day. We clean it for them. We don't clean it for some VIP that comes once in a blue moon. I don't care if it's CEO, okay? We keep it clean for you because you're the ones don't want getting hurt. The last one is another one that we focus particularly on is we only differentiate between people if we can justify it in the work of the role.
So when I was president of the operation up in Sudbury, had 5000 people, I did not have a parking spot.
Because there's nothing about my work that required me to have a parking spot. I drove to work in the morning like everybody else. I left at the end of the day like everybody else.
So there's nothing in my work that said you should have a parking spot. But the shift electrician that was getting in and out of her truck ten times a day with a heavy tool bag, she should have a parking spot right by the door.
We can justify a differentiation in a parking spot in the work of the role. So I push hard executives that want to have better benefits than the workers.
I think, A, welder should have better eye care than I have.
Their eyes are more at risk than mine.
We differentiate in the work. There's a symbolism to that, and executives hate it.
But such is life. It takes years before leaders get up to running. Now it works. We don't have any money. It's going to take $725,000,000 to build this mine and Mill. And it's not like we had any money. We were a startup and bought the assets. So somebody has to give us money. And their willingness to do that in a declining gold market and junior gold markets not been pretty. So you might call it it says NAV here. This is the percentage in your share price, the percentage of your future cash flows that your investors give you credit for.
So depending on how they view the team and the asset they might give you at the lower end, they're going to get this blue line. I don't know if you can see it. It's kind of a range between here and here.
So at the bottom end, investors might say this management team and this asset will give them 25% of their future cash flows.
At the top end, you can see and torx has consistently defined the top end of what investors are willing to give junior gold companies in their share price for the asset. We have, like, we've defined the top. You can see right here, always the top. So right here that we dipped down, it would dipped up above, and we needed another $300 million from the banks. And there was a little bit of worry that we weren't going to be able to get it because the market was depressed and nobody was getting financed. And as soon as we got financed that a few weeks ago, we bounced right back up to the top. So we haven't even built the mine yet, and they're giving in our share price, 80% of the value of our future cash flows.
It's because using the principles, we do what we say we're going to do. We've solved all of the community issues. Like when we bought this asset, there was a blockade on it. The community had a blockade on it for two years. Okay, get on the left side. The values continue to stay there. You listen carefully. Most human conflict is one of those six values. Has been offended, maybe two. They won't tell you which one it is, but if you listen carefully, you can hear it. And in this case was fairness.
Took four meetings to figure it out, solve it, and move on. And investors have appreciated that. Now, we started with nothing. Now we're building this mind. There's nobody else building a mind in our space. It's just pounding forward. So in terms of a question so you all have implemented these things, and I know there's lots of training programs that we do. If anybody's ever read the book productive workplaces, this is a beautiful model from there. And it says, in life, on any given issue, people are in one of these four boxes. You're either content how things are going, you're in denial that you're the problem, okay? You're confused about what to do, or else you're starting to make changes in your life, and you're in renewal, and you're pumped up, and you're changing lots of things. And then you go back to content, and life never gets better. You just go round, around, round circles.
And the example I usually talk to minors about this. Never quite as many women in a room, but the example I say is your marriage. You're working 50 hours a week, and all of a sudden your job changes, and you're working 80 hours a week, and you're not home for hockey, and you're not home for baseball. You're not home for all those things, and you're not doing the chores you used to do. And your significant other is getting a bit upset. Life was good, but now she should understand, because you got to put food in the table right? She should understand. So we might say it's denial, okay? It's not my problem. It's her problem. She should understand. Six months later, she walks out, okay, thinking, this is not good.
You know, well, forget it. So now there's a chance you move it over into that confused box, okay? And you don't really know what to do. You've got 80 hours of work to be done, and you've got these other things, and then you start to work on it, and you start to solve the problems, and then she moves back in. And then she said, well, there's other things you've been doing that pissed me off too, okay? And you start to solve those, and then everything is good. You're back to content. And then six months later, you start squeezing the toothpaste in the middle, and it's the same stuff all over again, right? So the beauty of that model is it's a powerful model as you do your training, and it doesn't work, right? Because it usually doesn't work. And the beauty of that model is that people only ever change their behavior when they're on the right side. People that are content or denial, they don't change anything, okay? They think you should change, okay? So when you're trying to implement requisite principles, get people to change their behaviors, and they're perfectly content about.
How it's going, they like it. They're in denial or they're content. You can train them till the cows come home and nothing's going to change, okay? So therein lies the problem.
It's really easy to move people from content to denial, okay? I've got a five year engineering degree. I know with enough force, you can move almost anything, okay? So you can move them into denial, and you can drive them so deep in denial, they got a shovel, okay? But it turns out it's way harder to drive with force to drive them from denial to confused. You just drive them deeper and deeper and deeper in denial. So if you actually want them to change their behavior, how do you get them across that line so that they're willing to do it? Because more training is generally not effective, okay? So there has to be a come to Jesus moment, and how do you make that happen? Because we can't move out on lots of them. So willingness to consider personal change only starts when you're here. And over the years, I actually only ever coach people that are there. If they're over here, I don't even try, okay? I got better things to do than waste my energy on somebody that's sitting over there, okay? When they're over here, boom, you can pound them full. But over here is the question, and that's my question for the collective wisdom in your experience, is there a way to get people over there? I don't worry about the workforce. They're easy, okay? If management behaves halfways decently, they'll happily line up behind the management. It's the management that they're always in the way. And if some of them change, some of them don't. But you kind of need them all if it's going to actually be an organization. So you can get rid of some of them, but you try and save them first, and generally that means move them across that line. Anyway, I've made it go away.
That would be the end of my presentation. It opened to questions.