Developing And Enhancing Organisational

Effectiveness At Gold Fields AUSTMINE 2013

Dr. Shane Hodgson

Perth, May 22nd 2013

Certain statements in this document constitute “forward looking statements” within the meaning of Section 27A of the US Securities Act of 1933 and

Section 21E of the US Securities Exchange Act of 1934.

In particular, the forward looking statements in this document include among others those relating to the Damang Exploration Target Statement; the Far

Southeast Exploration Target Statement; commodity prices; demand for gold and other metals and minerals; interest rate expectations; exploration and

production costs; levels of expected production; Gold Fields’ growth pipeline; levels and expected benefits of current and planned capital expenditures;

future reserve, resource and other mineralisation levels; and the extent of cost efficiencies and savings to be achieved. Such forward looking statements

involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the

company to be materially different from the future results, performance or achievements expressed or implied by such forward looking statements. Such

risks, uncertainties and other important factors include among others: economic, business and political conditions in South Africa, Ghana, Australia, Peru

and elsewhere; the ability to achieve anticipated efficiencies and other cost savings in connection with past and future acquisitions, exploration and

development activities; decreases in the market price of gold and/or copper; hazards associated with underground and surface gold mining; labour

disruptions; availability terms and deployment of capital or credit; changes in government regulations, particularly taxation and environmental

regulations; and new legislation affecting mining and mineral rights; changes in exchange rates; currency devaluations; the availability and cost of raw

and finished materials; the cost of energy and water; inflation and other macro-economic factors, industrial action, temporary stoppages of mines for

safety and unplanned maintenance reasons; and the impact of the AIDS and other occupational health risks experienced by Gold Fields’ employees.

These forward looking statements speak only as of the date of this document. Gold Fields undertakes no obligation to update publicly or release any

revisions to these forward looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of

unanticipated events.

Forward looking statements

Gold Fields Limited | Presentation Name | Date

Page 2

Risks of Re-engineering for Cost Reduction

In the current challenging business environment, knee-jerk reactions to the diving gold price

can do more harm than good. Ad-hoc spending cuts can damage reputation and

infrastructure and demoralize employees. For cost conservation and reduction measures to

stick, companies must clarify the cost drivers of the business and use that knowledge to

create a culture of cost consciousness, in both bad times and good.

Rather Focus on Organisational Effectiveness

Effectiveness: the extent to which the organization achieves its goals or goal.

Efficiency: Takes into account the amount of resources used to produce the desired output.

Thus: Organizational effectiveness is the concept of how effective an organization is in

achieving the outcomes the organization intends to produce

Constituency Approach: Effectiveness is the ability to satisfy multiple strategic

constituencies both within and outside the organization.

Domain Approach: Effectiveness is the ability to excel in one or more among several

domains as selected by senior managers.

Goal Approach: Effectiveness is the ability to excel at one or more output goals.

Internal Process Approach: Effectiveness is the ability to excel at internal efficiency,

coordination, motivation, and employee satisfaction.

System Resource Approach: Effectiveness is the ability to acquire scarce and valued

resources from the environment.

Given the reality that mining needs to satisfy multiple groupings of stakeholders in order to

achieve a social license to operate as well as a regulatory license to operate – and needs to

attract talent across different generations, the “Constituency Approach” is deemed the

most appropriate one for Gold Fields.

Cameron, K (1980) from

http://webuser.bus.umich.edu/cameronk/PDFs/Organizational%20Effectiveness/Critical%20Questions.pdf

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Choosing Our OE Orientation

"When I use a word,' Humpty Dumpty said in rather a scornful tone, 'it means just

what I choose it to mean — neither more nor less."

"The question is," said Alice, "whether you can make words mean so many different things."

"The question is," said Humpty Dumpty, "which is to be master— that's all.“

“Through the Looking Glass and What Alice Found There” by Lewis Carroll (1871), from

http://en.wikiquote.org/wiki/Through_the_Looking-Glass

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Using the Lewis Carroll Approach to Defining OE…

Adopting a Model for OE in Gold Fields

As a foundation, we use the Burke-Litwin model

as a framework for assessing the factors we

believe are important in organisational

performance when seen from an HR or OD

viewpoint. This imparts a distinctly “OD” flavour

to the analysis and subsequent interventions,

and distinguishes us from the more process-

oriented approach of our Business Improvement

department.

Work done by Martins and Coetzee (2009)

indicates that the Burke-Litwin model provides a

“… convenient and valid shorthand method of

identifying and explaining multiple key

organisational phenomena that affect the

organisation’s performance and overall

effectiveness”

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The Burke–Litwin model highlights two distinct sets of organisational dynamics. One set is

primarily associated with the transactional level of human behaviour, or the everyday

interactions and exchanges that create the climate of the organisation. The second set of

dynamics is concerned with processes of human transformation, amounting to sudden

‘leaps’ in behaviour.

According to Burke and Litwin, the external environment affects transformational factors,

which are identified as the organisational mission and strategy, leadership and culture.

The transformational factors, in turn, affect the transactional factors, which are identified

as the organisational structure, systems, management practices and climate. Both types

of factors reciprocate, and eventually impact on, individual and organisational

performance and overall effectiveness

“Applying The Burke–Litwin Model As A Diagnostic Framework For Assessing Organisational Effectiveness” Martins and Coetzee, (SA Journal of Human Resource

Management; Vol 7, No 1, 2009)

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Transactional and Transformational Dynamics

External environment: Any outside condition or situation that influences the performance

of the organisation.

Vision, mission and strategy: What employees believe to be the central purpose of the

organisation and how the organisation intends to achieve its purpose over an extended

period of time.

Leadership: Behaviour that encourages others to take necessary actions, including

perceptions of leadership style, practices and values.

Organisational culture: 'The way we do things around here.‘ Culture is the collection of

overt and covert rules, values and principles that guide organisational behaviour.

Individual and organisational performance: The measurable outcomes or results, with

their relevant indicators of effort and achievement. Such indicators might include

productivity, customer or staff satisfaction, profit and service quality, salary and benefits,

and recognition.

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Transformational factors affecting OE

“Applying The Burke–Litwin Model As A Diagnostic Framework For Assessing Organisational Effectiveness” Martins and Coetzee, (SA Journal of Human Resource

Management; Vol 7, No 1, 2009)

Structure: The deployment of functions and employees so as to implement strategy,

including levels of responsibility, decision-making authority and relationships.

Management practices: What managers do in the normal course of events in using the

human and material resources at their disposal to carry out the organisation’s strategy

Systems, policies and procedures: Standardised policies and mechanisms, such as

rewards, controls, budgets or SOP’s that facilitate work

Departmental/work unit climate: The collective current impressions, expectations and

feelings of the employees in their respective areas

Task requirements and individual skills/abilities: The behaviour, specific skills and

knowledge required for task effectiveness.

Individual needs and values: The specific psychological factors that lead to individual

actions or thoughts relating to stress, well-being, recreation and living conditions.

Motivation: The tendency to move toward goals, take needed action and persist until

satisfaction is attained.

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Transactional Factors Affecting OE

“Applying The Burke–Litwin Model As A Diagnostic Framework For Assessing Organisational Effectiveness” Martins and Coetzee, (SA Journal of Human Resource

Management; Vol 7, No 1, 2009)

Scope - Gold Fields OE Centre of Expertise

Organisational Effectiveness

Organisational Design Organisational Structures

Organisational Development Culture and Engagement

Change Management

Communication and Knowledge Sharing

Organisational Performance

People Scorecard and Resource Utilisation

HR Sustainability

Fit for Purpose Structures

Roles and Grades

Group Org. Design Methodology

Collaboration and Virtual Teaming

Coaching and Mentoring

Internal Communication

BeQ

Culture Transformation

Organisational Climate

Employer Branding and EVP

Group CM Methodology

Change Network Formation

Agility and Resilience

Change Capacity

HRIS usage

People Scorecard

Attraction and Retention

DJSI

Best Employers

Community Engagement

ALIGNMENT TO ORGANISATIONAL VALUES

Key metrics used in OE are currently aimed at assessing the climate within which

successful change can be initiated, and successful interventions can take place. This

does not supersede the standard metrics of a project such as benefits or value realised,

but rather tracks the alignment of leadership around key goals and measures; the fit-for-

purpose nature of organisational structures, roles and competencies and the use and

accuracy of balanced scorecard performance measurement.

Some major Transformational metrics are thus Employee Engagement, Net Employee

Advocacy; Net Nurture of Talent; Organisational Change Readiness and more.

It is important to note that our definition of the discipline of OE perhaps includes far more

of the domain of classical Organisational Development than is fashionable. It is not only

about an initiative-based focus on operational metrics, but also at a corporate level it is

about building a clear line of sight all the way from the individual at the stope face to the

organisational strategy.

We see that line of sight as an alignment between an individual’s KPIs, motivation and

opportunities with those of other individuals, forming groups with aligned competencies

and norms and giving rise to organisational capabilities and culture – all supporting our

strategy.

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Key Organisational Metrics in OE

We know that providing strategic clarity to all our employees will fulfil a very

fundamental and important need for them. We all want to know what we’re supposed to

be doing; how it contributes to the overall success of the company and where we as an

organisation are heading. That same clarity is also important for our shareholders and for

the communities in which we operate. Combining this with a strong focus on our

organisation’s values means we can be depended on to do what we say we will do, and

we know exactly why we’re doing it.

Another critically important theme is sustainability – and in this context we can talk about

how sustainable our HR practices are. Work by John Boudreau shows that increasingly

HR practitioners need to ensure that we can achieve success today without

compromising the future – and in South Africa I think we need a fairly fundamental

reinvention of the way we think about HR

Our newly reduced size will oblige us to work far more collaboratively across functions

that has previously been the case. We will also need to adopt a much more robust

approach to the creation, capture, sharing and management of knowledge. Knowledge

Management practices have been found to mediate the effects of structure, strategy and

culture on OE.

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Major OE Themes for Gold Fields

“Linking organizational culture, structure, strategy, and organizational effectiveness: Mediating role of knowledge

management” Wei, Baiyin and Maclean Journal of Business Research Volume 63, Issue 7, July 2010, Pages 763–771

We believe that it is critically important to build change management competency within the

company; not only in transactional change management but in transformational change

management. This requires the establishment of change management as a strategic

discipline, and the adoption of a single point of view (and point of triage) for all business

change initiatives requiring organisational change management. This is supported by the

work of Dean Anderson and Linda Ackerman Anderson on Organisational Transformation.

They say:

“We have identified five key strategies so far to creating change as a strategic discipline:

(1) identifying and managing an enterprise change agenda;

(2) having one common change process methodology;

(3) establishing a change infrastructures;

(4) building a strategic change center of excellence for all change practitioners; and

(5) creating a strategic change office” (Anderson and Anderson)

Anderson and Anderson, from http://changeleadersnetwork.com/transformational-change-authors

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Taking an Enterprise View of Change

Another component of organisational effectiveness is a regular review of the

organisational structures, seeing if they are fit-for-purpose. In a multi-country, largely

decentralised operation such as ours, the degree of fit between organisational structures

and the business and strategic drivers of structure needs to be tested every year or two.

Key components of this are:

Ensuring that the company structure happens by design and not by accident

Ensuring the structures are fit for purpose – e.g. the structure for a feasibility study is different for a

full scale project

Striking the right balance between Standardisation and Customisation

Getting accurate data from your regions/ operations on structures (Nell, A. 2013)

Given that organisational structures are a framework through which strategy can be

articulated; processes expressed; resources allocated and people deployed, we need to

strike a fine balance between flexibility and rigidity; between standardisation and

localisation and between the “… two rival organisational structures

of cooperation and competition that coexist in any organisation in different intensities and

mixtures. Finding a desirable mix of the above two structures is currently a challenging

task and no explicit method exists for determining such an ideal mix”

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Conducting Organisation Structure Reviews

A conceptual model for managing incompatible impacts of organisational structures on awareness levels

Shahla Ghobadi and Farhad Daneshga, Knowledge Management Research & Practice (2010) 8, 256–264

There is no one perfect right answer – but there is a “best fit” design at a moment in time

The true relationship between Structure and Strategy is not that Structure follows

Strategy, but that there is a dialectic between them. The structure is a way to articulate

the strategy through resource deployment, but it is also an information filter that limits

what we can see and thus constrains our strategy.

Given our strengths and weaknesses, the design should not be rigid, but should allow for

flexibility and compromises in structure, thus probably ending up as a hybrid model

(Geographic plus augmented Centre, or similar)

We need to be able to manage the trade-offs in the model by using the levers of

processes, people, leadership and culture.

We need to spend as much or more time on integration as on differentiation. That means

equal importance for linking groups and functions as for the initial grouping.

Matrix organisations are notoriously difficult to manage – rather choose a good Grouping

and then support that with linkages.

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Principles of Effective Organisation Design

The discipline of Organisational Effectiveness is a relatively new one both within Gold Fields

and in South Africa as a whole. The imminent formation of a virtual community of practice

(CoP) in this discipline will bring together practitioners from different industrial sectors, using

a local Enterprise 2.0 collaboration suite called Firestring http://www.firestring.com/

We look forward to refining the definition of OE and integrating it more deeply with the

disciplines of Sustainability and Human Capital Management. To that end your comments

and suggestions are welcome and can be addressed to me on

shane.hodgson@goldfields.co.za

Thank You.

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In Summary…