Addressing Critical Issues

Unlocking triple-line business benefits

A challenging economic backdrop, with high input costs and legislative change, will continue to affect the quarrying industry this year. For Terry Last, CEO of Tarmac, leading a business through 2012 requires a proactive, forward-thinking approach that is underpinned by a renewed commitment to the triple bottom line of people, planet and profit.

I was recently asked to present to a group of business school students on running a business in difficult economic times. A challenging event, I am sure you will agree, but it was a rewarding experience. It was a chance for me to reflect upon the current and future issues affecting our industry, and also to share my own thoughts on what businesses can do to unlock opportunities.

With the sovereign debt crisis continuing in the Eurozone and recent market forecasts predicting that the entire UK construction sector will be at best flat until at least 2013, the economic outlook this year undoubtedly means challenging trading conditions for all businesses.

Legislative challenges

The economy aside, our industry must also continue to contend with the impact of a raft of proposed new legislation – from additional carbon taxes through to planning reform.

Turning to carbon taxes first, the introduction of new measures, such as the Carbon Price Floor, means that additional financial burdens will be passed on to UK manufacturers, and they will hit energy-intensive industries like cement and lime the hardest. The Carbon Price Floor sets a minimum price for carbon and will be applied to electricity from 2013. It could contribute to driving business overseas to less-regulated and more lightly taxed countries as manufacturing in the UK becomes more expensive. This syndrome is often known as carbon leakage.

At Tarmac, we welcomed the Chancellor’s recent acknowledgement of the challenges faced by the construction sector and were happy to hear news that the ‘stick’ is going to be somewhat alleviated by some ‘carrot’. The proposal to increase the Climate Change Levy rebate on electricity to 90% for energy-intensive industries that enter voluntary Climate Change Agreements from April 2013 is a small step in the right direction. However, it is a long way from compensating for the full effects of the Carbon Price Floor.

Evolving planning reform

Moving on to the Government’s proposed planning reforms and the localism agenda, in the national press a lot of negative stories have already been written about the proposed National Planning Policy Framework (NPPF) and how a presumption in favour of sustainable development will mean that the ‘countryside will be concreted over’.

This is simply not true and the reality is that the UK will continue to operate with a plan-led system with statutory protection designated for noteworthy places and landscapes.

However, the real issue for our industry is that minerals are not properly set out for protection within the NPPF. According to the Mineral Products Association, less than 25% of local authorities have designated mineral plans which are sound and this lack of clarity brings uncertainty to the marketplace and developers. For aggregates, retention of the Managed Aggregate Supply System (MASS) will be key if the construction and manufacturing industries are to continue to receive a steady and adequate supply of aggregates during the recovery.

Crucially, we urgently need government to deliver a firm planning policy which provides a strategic perspective for minerals, to inform local planning decisions, while ensuring that national needs are met in the short-, medium- and long-term.

A triple-line approach to business

While businesses cannot by themselves alter the state of the economy or indeed overhaul government policy, I strongly believe that they can look closely at their own business models, invest in people development and deliver environmental and financial sustainability. In other words, they can aim to become triple-line supporters of sustainable business that focuses on people, planet and profit.

The recruitment, retention and development of high-quality people is key in any market and particularly vital when times are tough. At Tarmac, we have three central tenets to our philosophy: performance management, talent management and leadership development.

Performance management is essentially about helping people. It is not just about improving systems or processes. Effectively managing performance delivers business success by ensuring that managers and their teams have a clear understanding of what has to be delivered, in other words – explanation, clarification and agreement of performance expectations.

It is also about clearly linking business expectations into your employees’ performance objectives and development plans. This gives a clear connection between where the business is going and how each employee can play a role in this, while also developing their own career.

Nurturing talent

Talent management is also essential. It means attracting, identifying, developing and managing people who are of value to the organization – now and in the future. It is about nurturing talent to ensure we have the right managers, innovators and technical experts to ensure our business remains a market leader.

Essentially, this means getting the most out of employees by building a high-performance workplace, retaining and motivating talented individuals and encouraging learning within the organization. All businesses must work hard to become more attractive employers so that people want to work for them, and so that they can attract higher-quality prospective employees.

The final piece in this ‘people jigsaw’ is leadership development. This is fundamental to any business.

Developing the leaders of the future is about identifying, recruiting and retaining the right talent. But all companies must also provide them with ongoing training and opportunities to get them to those top positions, equipped with the skills to take their business forward in the right direction.

Creating a clear and achievable career pathway allows leaders to break down the large steps from career move to career move. A clear career path motivates people – they can see where they are going and how it fits into a business strategy. Their success feeds long-term business results success, and people can see how they fit into the jigsaw.

Mitigating environmental impacts

Moving on to sustainability, I strongly believe that for any business to deliver a competitive advantage in challenging economic times, and against an ever-tightening environmental policy landscape, sustainability must be at the heart of its strategy.

This is certainly the case at Tarmac, where sustainability is absolutely central to our business and its development. Over the last few years, we have developed a robust sustainability framework which informs our corporate objectives and allows us to transparently report our progress against targets. Our framework focuses on four key areas: sustainable products; climate change; natural resources and the environment; and people and communities.

Securing a corporate license to operate

Delivering against all of these framework areas is fundamental to our business and key to securing our ongoing corporate license to operate. By managing mineral resources carefully, running safe operations, protecting the environment, developing our people, innovating sustainable products, and contributing positively to the communities in which we work, we are creating a framework around which our business can thrive and prosper into the future.

Challenging market conditions mean that the search to cut costs and deliver value across our industry will continue. Against this economic backdrop, we all need to be prepared to adapt to tighter environmental legislation. This means that competitive businesses can no longer fail to embed social, environmental and financial sustainability within their strategies. Unlocking triple-line business benefits through a major commitment to people, planet and profit has never been so important.