ORGANIZATION BEHAVIOUR IN FREEPORT

Paper presentation by Group 2

Andrew Pasaribu; Chris Haryadi; George William; Yan Sorondanya; Yuli Thetrah

Section 1 Introduction

PT Freeport Indonesia Background

PT Freeport Indonesia (“PTFI”) was founded in 1904-1905 when a private institution from the
Netherlands Koninklijke Nederlandsche Aardrijkskundig Genootschap (KNAG), the
Geographical Institute of the Kingdom of the Netherlands, organized an expedition to Southwest
Papua whose main objective was to visit the Snow Mountains which are said to have existed. in
the Land of Papua. In 1936, Jean Jacques Dozy discovered the Ertsberg deposit or the so-called
ore mountain, then data about this rock was brought to the Netherlands.

Freeport's supreme leader at that time, Langbourne Williams, saw an opportunity to continue the
Ertsberg project. He met Julius Tahija, who at the time of President Soekarno led the Texaco
company and continued with a meeting with General Ibnu Sutowo , who at that time served as
Minister of Mines and Petroleum Indonesia. At the heart of the meeting was a request for
Freeport to continue the Ertsberg project. Finally, from the results of long meetings, Freeport
received permission from the government to continue the project in 1967. That was Freeport's
First Contract of Work (KK-I). The work contract is a promotional material brought by Julius
Tahija to introduce Indonesia abroad and its first mission is to promote the Foreign Investment
Policy to Australia.

History of work contracts

 1936 - Jacques Dozy discovers 'Ertsberg' reserves.

 1960 - Forbes Wilson Expedition to rediscover 'Ertsberg'.
  1967 - Contract of Work I (Freeport Indonesia Inc.) is valid for 30 years since starting
operations in 1973.
 1988 - Freeport discovered the Grasberg reserve. Large investment and high risk, so it
requires long-term investment guarantees.
 1991 - Contract of Work II (PT Freeport Indonesia) is valid for 30 years with the
production period ending in 2021, and a possible extension of 2x10 years (until 2041).

PT. Freeport Indonesia as one of the most advanced mining company in Indonesia is highly
aware of what distinguished between a healthy, good and success company and the one which is
not. One of the main factors is its Company Values. Having agreed shared values and been
implemented in all levels of work scope will guide the company to have a clear direction and for
sure will increase the company’s credibility in front of the client.

PTFI Vision:

To be a world-class mining company that creates excellent values and is a source of pride for all
stakeholders including employees, society and the nation.”

PTFI Mission:

Committed to creatively transform natural resources into prosperity and sustainable growth
through best practices while prioritizing the welfare and security of our employees and
community, human resources development, social and environmental responsibilities, as well as
industrial safety and health.

SINCERE as PTFI core values. It means, on running its business, all PTFI’s stakeholders
(Freeporters) should uphold these behaviors:

 SAFETY is we believe in safety first - for our coworkers, our communities and ourselves.
 INTEGRITY is we are honest, transparent and responsible.
 COMMITMENT is we are committed to contribute to the long-term sustainability of the
environment & communities where we work.
 RESPECT is we treat each other’s and our stakeholders with respect.
 EXCELLENCE is we pursue excellence in our work.
If those behaviors are broken or not well implemented, it will jeopardize the company’s
reputation. Here is the corporate culture been formed. People outside the company will see and
feel those values. Therefore, PTFI’s branding sometimes depend on the corporate culture itself.
The corporate culture that are well preserved and maintained automatically will rise
benefit to humanity, to management, employees, customer and the community even to the
country.

To adapt SINCERE values, employees cannot only read on the guidance book, but it should be
implemented in ways from these perspectives:

Safety Perspectives, Productivity Perspectives, and Cost Perspectives as the company goal
measurement. In addition, it can be implemented from Interaction Perspectives in the process of
Safety, Collaboration and Empowerment. With the right communication approach and being a
good role model in behaving, a leader will succeed in cascading those SINCERE values to the
employee on their work scopes. Therefore, engagement will automatically arise.

Then, how about the “personal values” of each employees?. Some people considered as a
personal attitude. Is it possible to be aligned with SINCERE values? For sure, it is possible. With
a good communication and leading by example, a leader will function as balancing system
between Company’s values and personal values.

It is important as a leader to mind with their thought / mindset. As a world figure said: “Watch
your thoughts, they become your words. Watch your words, they become your actions;
watch your actions, they become your habits; Watch your habits, they become your
character; watch your character, it become your destiny” – Margaret Thatcher

Here is the importance of why a leader should mind their thought because it will
influence our company future life.

How can we implement SINCERE in our attitude? PTFI employees have to be motivated; we
should have an enthusiasm spirit. In this case there are two truthful things: Commitment and
consistency. We have to be committed on our best attitude. We have to be consistently be the
best of ourselves. Means, we have to be at once committed and consistent. Those two things
should go together. The most powerful one is not just being in theory but a leader should directly
implement it.

In summary, PTFI leaders are being responsible to make sure those SINCERE values are well
implemented and harmonically go together with the employees’ personal values. Therefore PTFI
business will grow well with prosperous employees.

The Group 2 have decided to select PT Freeport Indonesia due to the long history of the
Company since 1930 until 2021 have contribute to eastern part of Indonesia along with the
nature of cultural diversity of the people working in PT Freeport Indonesia. On the other aspect
was due to the nature of the work in this company have a complex scope of work with
underground mining technic and safety issues. The team have selected two topic or theory to
discuss in connection with this company in relation with :

- Organization culture – Iceberg Metaphor

- Managing change – Theory Lewins
Section 2 Theoretical Review

Organization culture – Theory Iceberg Metaphor

Culture, leadership, and strategy are the three fundamental pillars that define the success of any
organization. Only when the organization culture is aligned with the growth strategy will the
employees act and behave in ways to achieve the desired business outcome. And the
fundamental duty of leadership is to uphold organizational values and beliefs through their
everyday actions and decisions – which in turn aids the execution of the organizational strategy.

In 1976, Edward T. Hall developed what is called the Culture Iceberg Model. He explained
organizational culture to be mostly like an iceberg. Organizational culture, like the iceberg, has
the characteristic of being highly disproportionate in its actual visibility. While some aspects of
the culture are easily perceived from the outside, often called the “Surface Culture”, what forms
the foundation of a strong culture is often submerged deeper in the values and beliefs of the
organization, called the underlying “Deeper Culture”. While aspects like workplace ambiance,
dress code, systems, policies, processes, etc. can be visible on the surface, the aspects like shared
values and beliefs, attitudes towards authority, competition, underlying assumptions, etc. form a
deeper culture.
 Picture 1 The Company Culture Iceberg

Surface Culture

These are basically the perceptions that are formed by people based on what they see, hear, of
feel about the organizational culture and leadership. Such visible aspects of an organization’s
culture usually serve the purpose of providing clues about what the organization believes is
important, ant the organization is run.

Some aspects of surface culture:

1. Dress and Appearance

2. Benefits
3. Technology
 4. Language
5. Rewards and Recognition

Deeper Culture

1. Safety
2. Health and Wellbeing
3. Authority
4. Communication
5. Purpose and Meaning
6. Employee Engagement
7. Learning and Development
8. Collaboration and Teamwork

Leadership behavior, beliefs, and actions play a key role in influencing culture within the
organization and driving the organizational strategies. When strategy – culture-leadership are in
sync, we see organizations where.

- Employees understand how the leadership expects them to respond to a particular situation,

- Employees truly believe that the expected reponse is the right approach,

- Employees are sure they will be appreciated for demonstrating organizational values and
beliefs.

Managing change – Kurt Lewin’s Change Model

Kurt Lewin was a German-American psychologist, known as one of the modern pioneers of
social, organizational, and applied psychology in the United States. His contributions within
three lenses of analysis: applied research, action research, and group communication were his
major offerings to the field of communication. He introduced the concept of hodological space
or the simplest route achieved through the resolution of different field of forces, oppositions, and
tensions according to their goals.
Force field analysis provides a framework for looking at the factors that influence a situation,
originally social situations. It looks at forces that are either driving movement toward a goal
(helping forces) or blocking movement toward a goal (hindering forces). Key to this approach
was Lewin's interest in gestaltism, understanding the totality and assessing a situation as a whole
and not focusing only on individual aspects. Further, the totality for an individual (their life
space) derives from their perception of their reality, not an objective viewpoint. The approach,
developed by Kurt Lewin, is a significant contribution to the fields of social science, psychology,
social psychology, organizational development, process management, and change management.

An early model of change developed by Lewin described change as a three-stage process. The
first stage he called "unfreezing". It involved overcoming inertia and dismantling the existing
"mind set". It must be part of surviving. Defense mechanisms have to be bypassed. In the second
stage “moving” the change occurs. This is typically a period of confusion and transition. We are
aware that the old ways are being challenged but we do not have a clear picture as to what we are
replacing them with yet. The third and final stage he called "freezing". The new mindset is
crystallizing and one's comfort level is returning to previous levels. Lewin's three-step process is
regarded as a foundational model for making change in organizations.

Based on Force Field analysis that person’s behavior is the product of two opposing forces:

1. Pushes toward preserving the status quo.

2. Pushes for change.

Lewin’s three stages change model:

1) Unfreezing
The first step in Lewin’s change model, in which individuals are encouraged to discard
old behaviors by shaking up the equilibrium state that maintains the status quo.
2) Moving
 The second step in Lewin’s change model, in which new attitudes, values, and
behaviors are substituted for old ones.
3) Refreezing/Freezing
The final step in Lewin’s change model, in which new attitudes, values, and behaviors
are established as the new status quo.

There are two basic form of change in the organization; planned change such as change from a
traditional company to proactive and up to date with the change have been effectively managed
and unplanned change that were done due to unprecedent situation and circumstances such as
due to pandemic, the company operative must be changes to adopt work from home. There are
two forces to cause change from external factors (globalization, workforce diversity, managing
ethical behavior) and internal factors (pressure from organization, declining productivity). There
are also changes that cannot be avoidable: incremental change, strategic change, and
transformational change.

Negative reaction that occurs when individuals feel that their personal freedom is threatened
Some of the major reasons for resisting change follow:

- Fear of the Unknown

- Fear of Loss
- Fear of failure
- Cultural assumptions and values
- Disruption of Interpersonal relationships
- Personality individuals with an internal locus of control
- Politics

Reaction to change in the organization are varied, people show four basic, identifiable reactions
to change:

- Disengagement: is psychological withdrawal from change. The employee may appear to

lose initiative and interest in the job.
 - Disidentification: Individuals reacting in this way feel that their identity has been
threatened by the change, and they feel very vulnerable. Many times, they cling to a past
procedure.
- Disenchantment: It is usually expressed as negativity or anger. Disenchanted employees
realize that the past is gone, and they are mad about it.
- Disorientation: Disoriented employees are lost and confused, and often unsure of their
feelings. They waste energy trying to figure out what to do instead of how to do things.

One key to managing resistance is to plan for it and to be ready with a variety of strategies for
using the resistance as feedback and helping employees negotiate the transition. Three key
strategies for managing resistance to change are communication, participation, and empathy
and support.

How to show support and empathy: Educating employees on new work procedures is often
helpful. In addition, mentors and mentees both derive benefits from going through the process of
organizational change together. Employees must be engaged and involved in order for change to
work as evidenced by the notion “That which we create, we support. Another strategy for
managing resistance is providing empathy and support to employees who have trouble dealing
with the change. Active listening is an excellent tool for identifying the reasons behind
resistance and for uncovering fears.
Section 3 Comprehensive Analysis

The team have selected this topic due to safety is number one focus for mining Company and the
team considers Freeport with long history of working with complex mining operation in
Indonesia have brought a unique perspective for this review. Freeport conduct their mining
operation with underground operation which consider challenging operation, the team identified
several challenges in the operation in connection with safety measures:

- Underground operation
- Confined space
- Working time limit
- Mountain working area (high altitude)
- Multilanguage worker (English and Indonesia)
- Logistics
Based on the interview and observation to the Company perspective the team identified there
were strong relationship between Company culture to support management changes in the
subject of working safety environment. The Company have a zero tolerance for safety measures
and have significant impact / penalty for any violation.

Culture Safety
Some aspects of surface culture:

1. Dress (Safety Personnel Equipment)

Dress code (Uniform) are very important for safety operation at mining location. Specific
for freeport there were several different types of dress code that were used:
o Uniform for safety officer
o Uniform for mining worker
o Uniform for Office worker
o Uniform for Contractor
o Uniform for employee during off work
o
2. Technology
Freeport used latest technology in mining operations with the latest machine mingem
(Minegem) this machine use high technology where the operator are working 20km from
the actual mining location. This is to make sure the safety concern of the worker operator.
Blasting activity using wireless explosive that use explosive hole that can be used for
several months.
3. Language
At Freeport there were several employee culture and background working at Freeport
which come from Australia, America, United Kingdom, Canada, Indonesia, Malaysia,
India. This have put a multilanguage have used in this location. But the ultimate
language used on day to day and formal working condition was English.

Some aspects of Deeper Culture

1. Safety Culture
Safety culture have been embedded in the company day to day operation this have show
with the Company commitment and slogan to support that process such as “ Safety
number one, Production will follow”, “ 5 Steps to Safety”, and “Zero safety tolerance”.
High penalty also will be imposed for any employee that violate any safety measure.
There are several examples of violations:
o Operated equipment without license resulted with suspend of employee.
o Working under influence resulted with suspend of employee.

2. Health and Environment

 Freeport commitment to support health and environment have been shown with the
company serious to managed this work by having a specific team consists of 600 Number
of people that have day to day coordination with government.
Company process in processing waste, water treatment, Industrial Hygiene, Dust Control
and others.
3. Collaboration and Teamwork
Safety induction for new employee, Safety refresher employee every year .
Thematic safety campaign, example
Morning meeting (FRM)
Evaluation and lesson after complete work

Management Change of Safety Culture

In PTFI, Safety has been developed as the Core Value of the Company. Safety performance has
been evaluated and has big impact to get the optimal and sustainable result of the Company. So
from early 2000, to early 2020, it has developed rigorously by implementing in the Company
Operation and Project. Personnel of PTFI is 30 000.

History of Safety Standard begin with

1. NOSA
NOSA is South Africa’s leading occupational health, safety and environmental training
provider, offering more than 100 safety-related training courses, skills programmes and
qualifications which hold various local and international accreditations.

2. OHSAS

The OHSAS Standards covering OH&S management are intended to provide

organizations with elements of an effective OH&S management system that can be
integrated with other management requirements and help organization achieve OH&S
and economic objectives.
OH&S Management System Model for OHSAS Standard
3. FRESH MS
PT. Freeport Indonesia Safety and Health Standard, know by its acronym as FRESH MS
is a PT.Freeport Indonesia Mining Safety management system that designed as
framework to allow PTFI to consistently identify and control its Mining Safety risks,
reduce or even eliminate potential incidents and ensure conformance with requirement of
Government of Indonesia (GOI) Mining Safety legislation, Freeport McMoRan (FCX)
Mining Safety polities and regulations, relevant international standards.
Change Management means a process for managing and controlling any changes that can affect
and impact work hazards and risks. Change management involves organizational tools that can
be utilized to help individuals make successful personal transitions in adopting and realizing the
change.

However, in PTFI, Change management is overviewed, documented and designed to have

standard and procedure. Meanwhile, management has leant the risk assessment for evaluating
risks from hazard by taking into account the adequacy existing controls and determining whether
or not the risks are acceptable.

In Change Management, PTFI has two Standard of Procedure, ie.

- Standard of Accountability

- Standard of Performance

Section 4 Conclusion and Recommendation

Based on the above analysis the team have concluded that PT Freeport have a very strong safety
culture this have been supported by the Company working culture that have shown in the surface
or deeper culture which have been developed for more than xx years working in this location.
The Company continues improvement have resulted in a lot of changes for safety standard that
the company used in several years in this mining operation from NOSA to FRESH, due to the
strong and mature culture of the Company resulted with employee resilient to managed or adjust
to this changes of safety standard have resulted to Freeport to achieve:

- Safety Performance Underground Mine Division with 6033 employees and 91 Safety
Officer.
 SAFETY PERFORMANCE BOARD
UNDERGROUND MINE DIVISION

MONTH : MARCH INJURY EXPERIENCE

YEAR : 2021 THIS MONTH YEAR-TO-DATE
NUMBER RATE NUMBER RATE CEILING 2021
FATALITY 0 0.00 0 0.00 0.00
LT & RD 0 0.00 4 0.28 0.15
RECORDABLE INJURY 0 0.00 8 0.56 0.50
FATALITY & LT SEVERITY 0.21
LIGHT VEHICLE INCIDENT 1 0.21 5 0.35 0.74
MOBILE EQUIPMENT INCIDENT 5 1.06 22 1.53 2.97

SINCE LAST FATAL / LT / RD YEAR-TO-DATE

CUMULATIVE
MANHOURS WORKED 1,450,909 2,567,932
.
OVER CEILING Updated as per March 21, 2021

- NOSA Grade 5 for Corporate Safety Implementations.

Reference & Appendixes

https://nosa.co.za/

https://ptfi.co.id/id

PT Freeport Indonesia – Fresh Standard – Change Management Standard

PT Freeport Indonesia – Fresh Standard – Mining Safety Risk Management Standard

PT Freeport Indonesia – Fresh Standard – Safety and Health Management System FRESH

PT Freeport Indonesia – Fresh Standard – Mining Safety Policy

PT Freeport Indonesia – Pernyataan Kebijakan Manajemen tentang keselamatan pertambangan

- Management Policy Statement on Mining Safety.
 Pernyataan Kebijakan Manajemen Tentang Keselamatan Pertambangan

PT Freeport Indonesia (PTFI) adalah perusahaan pertambangan mineral di Indonesia dengan

komitmen terhadap produksi yang selamat dan tidak ada insiden fatal di tempat kerja. Kami
mendorong karyawan, kontraktor, dan pihak berkepentingan lainnya untuk menetapkan
keselamatan pertambangan sebagai prioritas utama. Kami percaya bahwa dengan
memprioritaskan keselamatan, produksi yang selamat pasti akan mengikuti, mengarahkan visi
perusahaan untuk menjadi produsen tembaga dan emas yang paling efisien, teraman, dan tersehat
di industri.

Kami berkomitmen untuk menerapkan kebijakan Keselamatan Pertambangan ini secara

konsisten yang mencakup keselamatan kerja, kesehatan kerja, dan lingkungan kerja secara
menyeluruh. Managemen system keselamatan dan kesehatan kerja, peningkatan berkelanjutan
dari kinerja kesehatan dan keselamatan kerja dalam upaya untuk mencegah cidera, sakit, dan
penyakit akibat kerja akan membentuk operasi PTFI secara integral. Evaluasi risiko dan
manajemen operasi PTFI secara integral. Evaluasi risiko dan manajemen perubahan akan
menjadi bagian dari konstruksi, pemeliharaan, kelayakan fasilitas, infrastruktur, instalasi.
Menyediakan kompetensi teknis bagi personel yang melibatkan pengujian, pengukuran, dan
penilaian; evaluasi hasil kajian teknis pertambangan sebelum kegiatan baru dimulai.

Partisipasi karyawan akan didorong dalam mengembangkan strategi pencegahan insiden

menuju nihil kecelakaan. Setiap orang bertanggung jawab bukan hanya untuk keselamatan
mereka sendiri tetapi juga keselamatan orang lain atau rekan sekerjanya. Perusahaan Jasa
Pertambangan yang bekerja di area PTFI agar memenuhi ketentuan dalam Sistem
Manajemen FRESH dan disyaratkan untuk mempertahankan standar yang sama seperti PTFI.
Akuntabilitas terhadap tujuan dan sasaran Keselamatan Pertambangan akan dikembangkan
di semua tingkatan pengawasan dan diukur secara berkala untuk menentukan hasil
pencapaiannya. Sumber daya yang memadai akan diberikan untuk melatih karyawan tentang
standar Keselamatan Pertambangan yang ditentukan Staff profesional Keselamatan
Pertambangan bertanggung gugat untuk membantu jajaran manajemen lini dalam mencapai
dan mengukur tujuan dan sasaran Keselamatan Pertambangan. Mereka akan membantu
manajemen dalam menganalisa insiden, mengembangkan dan menerapkan program
Keselamatan Pertambangan yang efektif, mengidenti¬kasi kegagalan yang berpotensi
menyebabkan cedera, sakit, kerusakan properti dan / atau interupsi terhadap produksi.

PTFI berkomitmen untuk selalu patuh terhadap ketentuan legal Pemerintah Indonesia dan
persyaratan lainnya. PTFI berusaha untuk menyediakan tempat kerja yang sehat dan selamat,
program pelatihan dan sumber daya yang memadai, untuk mencapai kepemimpinan yang
diakui. Kami beranggapan bahwa program-program Keselamatan Pertambangan, di dalam dan
di luar tempat kerja, merupakan investasi untuk sumber daya kami yang paling berharga -
karyawan kami.

PT FREEPORT INDONESIA merupakan perusahaan tambang mineral afiliasi dari

Freeport-McMoRan (FCX) dan Mining Industry Indonesia ( MIND ID ). PTFI menambang dan
memproses bijih menghasilkan konsentrat yang mengandung tembaga, emas dan perak. PTFI
memasarkan konsentrat ke seluruh penjuru dunia dan terutama ke smelter tembaga dalam negeri,
PT Smelting. PTFI beroperasi di dataran tinggi terpencil di Pengunungan Sudirman, Kabupaten
Mimika, Provinsi Papua, Indonesia.

Freeport-McMoRan (FCX) merupakan suatu perusahaan tambang internasional terkemuka

dengan kantor pusat di Phoenix, Arizona, Amerika Serikat. FCX mengoperasikan aset yang
besar, berumur panjang yang tersebar secara geografis, dengan cadangan tembaga, emas dan
molybdenum yang signifikan. Portofolio aset FCX meliputi kawasan mineral Grasberg di Papua,
Indonesia, hingga gurun-gurun di Barat Daya Amerika Serikat,dan operasi penambangan yang
signifikan di Amerika Utara dan Amerika Selatan, termasuk kawasan mineral Morenci yang
berskala besar di Arizona dan operasi Cerro Verde di Peru. FCX merupakan perusahaan publik
penghasil tembaga terbesar di dunia. Saham FCX diperdagangkan di New York Stock Exchange
dengan symbol “FCX”.

Merupakan Holding Industri Pertambangan Indonesia, dengan PT Indonesia Asahan Aluminium

(Persero) (Inalum), PT ANTAM Tbk, PT Bukit Asam Tbk, PT Timah Tbk, dan PT Freeport
Indonesia sebagai anggota holding.

Kami kelompok dua tertarik untuk menganalisis mengenai organizational culture, managing
change dan managing conflict dari PTFI ini karena berbagai alasan yang mendasar yaitu pertama
Freeport-McMoRan (FCX) merupakan suatu perusahaan tambang internasional terkemuka. Ini
menarik untuk kita bahas dimana perusahaan tambang sebesar FCX tertarik untuk mendirikan
tambang di Papua. Yang kedua lokasi tambang PTFI diindonesia adalah di kawasan mineral
Grassberg, Papua - Indonesia yang merupakan salah satu deposit tembaga dan emas terbesar di
dunia. PTFI merupakan perusahaan tambang mineral afiliasi dari Freeport-McMoRan (FCX) dan
Mining Industry Indonesia ( MIND ID ). Dari topik tersebut tentunya akan ada masalah masalah
yang terjadi pada saat berjalannya perusahaan, kemudian solusi dan inovasi dalam penanganan
masalah tersebut.