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Saldanha Steel: The Company

Saldanha Steel is a new company founded on modern principles. Conceptualised and its viability motivated on the principles and assumptions underlying the mini-mill philosophy, the company has a flat organisation structure with highly qualified, multi-skilled and flexible people.

Saldanha Steel is a mini-integrated steel works, converting iron ore to liquid iron and direct reduced iron which is processed to liquid steel and finally to hot rolled steel. The product is destined for international markets and produced with state of the art technology. Being export focused, calls for products of exceptional quality, and this, combined with the technological complexity of production facilities and control systems, requires a calibre of workforce hence unequalled in the steel industry in South Africa.

The Saldanha Steel project was a joint business initiative by Iscor and the Industrial Development Corporation (IDC). It is one of the largest private capital projects ever to be undertaken in South Africa. During the latter half of 2001 Iscor acquired the IDC's share in Saldanha Steel. As a result Saldanha Steel formally became a business unit of Iscor Limited on 1st March 2002, with integration fully effective one year later.

Since inception Saldanha Steel was committed to the ideal that the company's staff complement should reflect the demographics of the area within which it operates and it is Saldanha Steel's philosophy to, as far as possible, provide job opportunities to people from the local community. Saldanha Steel is also proud to be a world leader in the field of environmental control and management.

Operational and cost efficiency is one of Saldanha Steel's most important marketing strategies. Using low cost raw materials and modern technology enables Saldanha Steel to be a steel plant with a production cost which is one of the lowest in the world.


During August 1997, about 50 elected and nominated Saldanha Steel employees investigated the possibility of establishing an institutionalised participatory management system. The group concluded that the collective capabilities and energy, diversity and lateral thinking of everyone concerned should be integrated to bring our vision to a successful conclusion.

The group's view was that dedicated teamwork, combined with state-of-the-art technology, would no doubt lead to a world force that had to be reckoned with. In short, a company with 'employees who act and think like owners of the company'.

The broad framework for the CONFO was thus developed as a joint effort, and a smaller working group was requested to attend to the finer details of the system. This resulted in the unanimous adoption of the Constitution of the CONFO on 10th December 1997, elections followed and the historic first meeting of the CONFO took place on 6th March 1998.

Providing for Saldanha Steel's changing circumstances the CONFO's Constitution has been updated over the years, with fifth revision formally adopted on 28th January 2003 to provide for full integration with Iscor effective 1st March 2003.

Following LNM Holdings' acquisition, matters changed once again when Ispat Iscor became known as Mittal Steel South Africa Limited on 14th March 2005. The Mittal Steel group is the world's largest and most global steel company, with 14 operations on four continents with 165 000 employees of over 45 different nationalities.

Saldanha Steel's Values

Saldanha Steel wishes to utilise the technical competencies of its people best by applying a people centered management approach, employee participation and sound communication processes. It was also realised from the outset that an adversarial relationship between management and staff would largely nullify the efforts to strive for technological excellence and global competitiveness.

The traditionally directive management style simply had to make way for a more modern and participatory approach to people management, based on jointly created values such as respect, inclusivity and transparency. Aimed at creating one team and avoiding an 'us and them' situation, the value of respect is particularly important.

Aspects taken into account when developing the CONFO

Some of the aspects taken into account when developing this institutionalised employee participation system were:

The CONFO The most senior consensus-seeking body at Saldanha Steel

The CONFO plays a central role in the management of people at Saldanha Steel by formally providing a mechanism for employee participation in issues related to the human dimension at the company. The CONFO essentially determines all local policies and practices applicable to the employees Saldanha Steel - an important role and also an important opportunity to influence managerial decision-making. In addition, following integration with Iscor, the CONFO may also achieve consensus on Iscor-wide policies for subsequent decision-making by Iscor's Executive Management.

The CONFO does not get involved in day-to-day operational issues that are dealt with by line management. The philosophy at Saldanha Steel is that there is no substitute for a healthy trust relationship between a supervisor/manager and subordinate. The CONFO therefore solely concentrates on policies, procedures and practices. Whilst linked to it and having access to it, the CONFO operates independently from the normal line management structures and is externally facilitated by Change Management Facilitation. The CONFO is not accountable to line management. It is an autonomous body and is accountable only to the various constituencies it represents. It is an approach which, for its success, depends on consensus-seeking through joint problem solving, common goals and shared values.

Representing the whole of Saldanha Steel, the CONFO strives to be as inclusive and as representative as possible. All the various categories of employees as well as the various departments in which they work are democratically represented at the CONFO.

The various shifts and sections are democratically represented and provision has been made in addition for interest groups as may be applicable and specifically includes trainee experts as prospective employees. It is also possible for the Steering Committee to invite other participants as and when it may be required, and in accordance with the agenda proposed. Provision is made for representation by the General Manager of Saldanha Steel, members of the senior management team as well as both recognised trade unions (NUMSA and Solidarity).

The CONFO is intended to represent the views and interests of all staff members of Saldanha Steel and its composition was conceived as reflected in the diagram reflected below. Most CONFO participants have undergone extensive training - including a certificate programme in workplace relations at a tertiary educational institution.

Meeting on a monthly basis, the CONFO serves as an opportunity for Saldanha Steel to integrate its collective people resources, for internal stakeholders to participate in policy decision-formulation processes and to equip all with the competencies required to jointly determine the human future of Saldanha Steel. Consensus is sought on all relevant policy issues that may affect staff through extensive consultation, disclosure of information and constructive dialogue that endeavours to promote common understanding. Business information features prominently on the CONFO's agenda.

The CONFO represents a win-win approach with a broad span of involvement, mature interaction and a thorough understanding of the business imperatives faced by all Saldanha Steel stakeholders.

The Steering Committee Driver of progress

A representative Steering Committee, appointed from its ranks by the CONFO, receives issues for discussion and draws up the agenda for the CONFO's meetings. It serves as a co-ordinating working group for the larger body and in general enhances efficiency of discussion at the CONFO.

Managed by the Steering Committee, preparatory work is mostly done by representative Task Groups, accountable to the CONFO. Any employee of Saldanha Steel may forward any appropriate issue for discussion to the Steering Committee and/or CONFO - either directly to the Steering Committee or alternatively via his/her CONFO representative.

The Steering Committee also fulfils a general climate monitoring role, develops proposals for the continuous improvement of the CONFO and its functioning, would refer matters to appropriate channels as may be appropriate under the circumstances and convenes normal and extraordinary meetings of the CONFO. The Steering Committee renders assistance during all CONFO-related election processes.

Task Groups Ensuring Informed Discussions at the CONFO

Task Groups are appointed by the CONFO (or where necessary by the Steering Committee) to attend to the collection of information and the formulation of proposals for eventual submission to the CONFO. Any employee of Saldanha Steel may be appointed as a Task Group member, and sometimes external experts or facilitators may also be approached for assistance. Depending on the nature of the matter under consideration, Task Groups may sometimes be required to follow an extensive work-shopping and consultative approach before submission of its proposals to the CONFO. The draft documents submitted to the CONFO by Task Groups should reflect the scope and depth of their information gathering process with a view to promote informed and meaningful discussions at the CONFO. This is the key to the facilitation of consensus at the CONFO.

How does the CONFO decide on issues? Does senior management have a 'special' say at the CONFO?

Externally facilitated, the CONFO makes its decisions (or recommendations to Executive Management) on a basis of consensus, which means that all participants would agree on a single proposal as the optimal solution that can be arrived at after thorough investigation of all the relevant alternatives to the matter. Consensus does not necessarily mean that everyone is 100% satisfied, but that everyone acknowledges the reasonableness of the proposal and is prepared to accept it. Management does not have a 'special' say at the CONFO. In fact, each participant has an equal say at the CONFO.

Does the CONFO negotiate better conditions of employment for employees?

'Yes' and 'No'. A definite 'yes' in the sense that the CONFO has achieved consensus on all the conditions of employment for all Saldanha Steel employees to date - with the most recent amendments taking place in September 2002 to successfully effect complete alignment of all conditions of employment with those of Iscor.

In addition, the CONFO may also recommend further amendments and/or improvements to the conditions of employment of Saldanha Steel employees as may be appropriate under the circumstances.

But a definite 'no' in the sense that the route that the CONFO would follow would not be a typical traditionally adversarial (positional) negotiations process. The CONFO operates on a basis of information-sharing, consensus-seeking, constructive dialogue, problem-solving and consultation. Its activities are characterised by the agreed value of mutual respect and a mature, constructive approach to distributive matters is favoured.

Prior to integration with Iscor, the CONFO also dealt with (and consistenly achieved full consensus on) all traditional 'collective bargaining' matters. The consistent achievement of consensus in respect of annual salary increases in particular is possibly one of the CONFO's most remarkable and unique achievements (and perhaps an international precedent?) as these were also consensually determined at the CONFO - every year since the inception of the CONFO in March 1998 up to integration with Iscor in March 2003.

As a result of integration with Iscor, collective bargaining now takes place at Iscor's Central Negotiations Forum.

And if the CONFO cannot agree on something? What would then happen?

Should any member of the CONFO be of the view that he/she (or their constituencies) cannot live with what is being tabled at the CONFO, such a single person is able to prevent the CONFO from achieving consensus.

A whole series of conflict resolution actions may then be embarked upon prior to finalising a decision or recommendation, all of them effectively aimed at promoting consensus. Some of these include reconsideration by the Task Group and/or a special CONFO meeting. Some measures are somewhat more technical and legalistic and even extends to a process of advisory arbitration by external experts with due regard to managerial accountability.

Suffice to say that it is very important to the CONFO that consensus must be achieved and there has been absolutely no exception on any issue whatsoever since its inception to date.

What information is made available? Does the CONFO function transparently?

The CONFO most certainly also has to do with complete transparency and legitimacy of corporate governance. The CONFO is aimed at, amongst others, enrichment of the policy decision-making process with as much relevant information as possible. Proposals and draft, recommended policies are tested from all the different perspectives as the CONFO strives to accommodate all the different needs and interests in an inclusive fashion. It is therefore expected of all role players to disclose all relevant information during the discussion process in a highly transparent manner.

However, due regard was given to the Constitution of South Africa, sound international information disclosure practices and norms (e.g. ACAS) as well as legal considerations during the development of the CONFO's Constitution. Individual privacy is maintained and legally privileged information may not be disclosed. In cases where the disclosure of information could be detrimental to the company's competitiveness, confidentiality would also be maintained to protect the business of Iscor and the Mittal Steel Company.

How do the activities of the CONFO impact on the employees of Saldanha Steel?

The matters dealt with at the CONFO impact on each and every employee of Saldanha Steel in a very important way. Examples of matters discussed (and full consensus reached) to date include the following:-

In addition to the above, information related to the company's performance in terms of its production processes, its product as well as its export markets is shared on a monthly basis. Financial forecasts, anticipated profits/losses and so forth all form part of the CONFO's standard agenda. The philosophy underpinning this approach is one of empowering employees to 'think and act like the owners of the company'.

How do employees get feedback from what is going on at the CONFO?

Several mechanisms exist to assist with the flow of information related to the CONFO's discussions. The first and most important mechanism is face-to-face feedback by a group of employees' manager or superior as well as their CONFO representative. This is the most fundamental avenue of communication and should be arranged after each and every CONFO meeting. This avenue cannot be replaced by any other.

A whole range of supplementary mechanisms is also in place. The senior management team of Saldanha Steel meets one day after every CONFO meeting to give effect to and implement consensual decisions made by the CONFO. A briefing group system is in place at Saldanha Steel and important decisions may also be cascaded via this system from time to time.

The minutes of the CONFO are made available on the Intranet within two days after each meeting and (paper) copies of minutes are placed on all notice boards by the secretariat of the CONFO. The Human Resources Department may also be approached to get a copy of the minutes or in cases where more information is required. The most salient elements of matters discussed at the CONFO are reflected in the internal newsletter The Saldanha Steel Express from time to time. And of course, nothing prevents anyone from asking another employee or CONFO member if something is not too clear!

The Result?

Recent research indicates that there appears to be no international precedent to the consensual decision-making approach to distributive matters followed at Saldanha Steel. Replaced by the notion of 'one team at Saldanha Steel', the antiquated 'us-and-them' view of management and employees was successfully eradicated at Saldanha Steel. This is also, to the best of the researchers' knowledge, the world's first example of a three dimensional model of employee participation.

Looking back over many years of sometimes dealing with very complex policies and decisions, Saldanha Steel may indeed be described as a value-based, modern company with employees who 'think and act like owners' - a model for strategic human resources and people management internationally and South Africa.

Kobus Opperman facilitated the conceptualisation and development of the CONFO and the associated consensual decision-making process at Saldanha Steel since its inception in 1997 until early 2005. This case study, based on Saldanha Steel's circumstances by early 2005, was developed for purposes of lecturing, communication and discussion, and is not intended as a critique of the circumstances at Saldanha Steel.
Copyright 2014 Change Management Facilitation (Pty) Ltd & Conflict Dynamics cc. The authors assert all moral and intellectual rights. No part of this publication may be reproduced in any format - electronic, photocopied, or otherwise.

+27 (0) 82 880 5600 skype kobus.opperman www.facilitation.co.za cmt@iafrica.com