Issue link: https://industrialmanagement.epubxp.com/i/285723
24 Industrial Management culture and any history of conflict. Is there local conflict of the type that could make it difficult to find local people able to work in teams? Other aspects of infrastructure might include the quality of the roads and the load limits of the bridges between the plant and the port, and whether guerillas (or the military) might set up roadblocks along the way to collect informal "tolls" from vehicles, including the company's trucks. An audit combined with a local assessment also should look at the human capital available – their skills, experience in working for wages, and their understanding of health and safety. Social capital, or how people interact with each other, is important. For example, a country might have an ethnic minority that is better educated and could provide a natural group of managers and supervisors. But this might be bitterly resented by the majority if they are not also provided with advancement opportunities. In Ecuador, a mining company looking to run operations in a distant area in the Amazon decided to invest not only in identifying risks but also on finding avenues to work with local communities. A complete social audit, assessment of the capacities of local communities and community engagement led to the opportunity of collaboration. There was good understanding at the head office of social dynamics and of possible challenges in running the operation: poor infrastructure, ineffi- ciency in logistics and unskilled labor. This knowledge made it possible to open a dialogue and engagement process with local governments, indigenous leaders, the local chamber of commerce and schools to find alternatives for collaboration. The result was a local community engaged in the process of mitigating operational risk and training local labor. The mining company's headquarters worked on defining policies to ensure best practices in the hands of local management. The result was devel- opment of a social license to operate. The lessons learned from this positive experience are that it is possible to work and operate in developing countries, but a company can be successful only if it does effective risk audits, assesses the conditions of working and operating there, and carries out a professional community engagement process on the ground that leads to solutions. In many cases, risk audits done at a desk far away are a waste of time and money. Audits, assessments and engagement processes must involve both research and analysis done on the ground. Finding the right mitigation opportunities As well as measuring risk, audits and open dialogue with local communities must point out ways to manage, reduce and counterbalance the risks – how to make the company's plans happen for both the company and the communities that will be affected directly or indirectly. Local assessment and community engagement can make viable the overall strategy of working in developing countries, minimizing operational costs and expanding market opportunities. This includes probing potential opportunities, such as the existing workforce and potential supplier base. If the company can uncover ways to collaborate by creating employment and economic activity outside of the direct labor it employs, it can gain goodwill that helps build local support for the project. Some developed world companies Risk audits done at a desk far away are a waste of time and money. Developing new capacities in food preparation provides skills that the workforce can apply elsewhere. Photo courtesy OTrade IM MarApr 2014.indd 24 3/24/14 12:13 PM