Mitchell J. Krebs lost a lot of sleep over the changes he had to make at Coeur Mining Inc., which may be surprising when you consider the circumstances upon which he became president and CEO in 2011.
At the time, the mining company was based in Idaho and had just topped $1 billion in annual revenue, up from a mere $129 million in 2008. To the casual observer, Coeur Mining was the picture of health, especially when you consider what was happening at other U.S. companies between 2008 and 2011.
“The extent of the company’s growth from 2008 to 2011 was enormous,” Krebs says.
“But when we embarked on all that growth, no one stopped to ask the question of how this organization would support, manage and sustain all the growth we had been experiencing. We came out of that huge growth spurt and were left with the same organizational structure that we had before, only now, it was being asked to run what had become a very substantial company.”
Krebs, who has been with Coeur Mining since 1995, doesn’t try to deflect his own role in the 2,000-employee company’s struggle to keep pace with rapid growth. The company is the largest U.S.-based primary silver producer and a growing gold producer.
“We needed to do things differently going forward not only to manage what we had become, but to think ahead and think about what kind of scalable organization we needed to put in place to support future growth,” Krebs says.
It wasn’t going to be easy, and Krebs faced a lot of resistance to the changes he put on the table for his company. The company was about to leave behind its roots in Idaho for a fresh start in Chicago and Krebs knew many of his employees would not be coming along for the ride.
“I never lost the conviction around what was needed, but the level of pain that I knew was being caused in peoples’ personal lives was a heavy burden,” Krebs says. “If I hadn’t had those trusted team members and a supportive board, it would have been very difficult to get to the other side of the tunnel.”
Identifying the flaws
There were two flaws that best illustrate the problems Coeur Mining faced in 2011. The first centered on the vast amount of operating and planning that goes into being a strong company in the mining industry.
“It takes a lot of technical expertise and time to drill an ore body that sits down in the ground to a point where you can estimate what that ore body looks like underground — and then develop a plan to extract it in a way that is safe, efficient and earns a certain rate of return,” Krebs says.
“And all that is based on something you don’t actually see. That whole aspect of the business, we just didn’t have it. Our mining was being done based on a lot of estimates that sometimes proved correct and too often, proved to be incorrect.”
The other problem made itself known shortly after Krebs became CEO.
“In the past, things like maintaining our mining rights were left to the individual sites in our company to be managed,” Krebs says. “If you were leasing land or had property payments, all that stuff was assumed to be handled by people at the various locations. About three months after I became CEO, I got a call that the site in Nevada had failed to make annual payments to the Bureau of Land Management. All the claims on which we conduct our operations were invalid. A competitor had come in and picked them all up.”
Litigation ensued and the situation was settled, but it exposed a critical problem in the way the company managed its operations.
“That all wouldn’t have happened if we had the proper organization in place at the time,” Krebs says. “Fast forward to today and all those payments are automated and centralized. We have a land group that does nothing but manage our mining rights globally.”
Krebs wanted to build a stronger organization that would not let such things slip through the cracks. With the support of his board, he set out to build a trusted group of direct reports in key roles that could help him implement his plan.
“I focused first on our general counsel and on our head of human resources,” Krebs says. “I thought getting two individuals into those roles to be part of the brain trust with me would give me the necessary levers to pull to start the ball rolling on this process of making over the entire company.”
Krebs put together a team of about seven people who were all new to the company.
“There was no institutional memory and no connection to any of these past ways of doing things,” Krebs says. “The fresh sets of eyes that I brought in could very easily see what it was that I was trying to do. After communicating the plan to them, they could carry that out in their areas and into their groups and direct reports and start to amplify the communication and direction and the need and rationale for change.”
A fresh set of eyes is often what’s needed to accomplish major change, but it doesn’t always play well with the remaining people who are being asked to adapt.
“There’s just no way around the fact that when you start the ball rolling down the path of change, there is going to be a lot of resistance,” Krebs says. “There were people who bought in and people who were very resistant. But we needed to move to a more centralized, standardized and system-based organizational structure.”
As he brought in outsiders to help, Krebs’ focus was to find people comfortable with what they were being asked to do.
“You need to be as open and direct as you can when talking to them to be able to gauge their reaction and response to the picture you are painting,” Krebs says. “There are some people who you can see their eyes light up and others cringe at the challenge. It’s not for everybody. It’s just thinking a lot about those individual roles and what you need to find and thinking about how they fit together.”
Momentum is a critical part to any change initiative. When change is being proposed and then implemented, it needs to be clear that the plan is moving forward if you want to maintain confidence in your leadership.
“You have to find people who aren’t afraid to stand up and be accountable and who aren’t afraid of being held accountable,” Krebs says. “People who were in experiences where there was a net under the tightrope; that just doesn’t fly in an environment like the one we created. We needed to find people who were not afraid to jump in and start rowing.”
The other big part of the transformation at Coeur Mining was the move from Idaho to Chicago in 2013.
“I saw a fork in the road where we could either incrementally chip away at some of this organizational change, and we probably would get there over a period of five to 10 years,” Krebs says. “The other fork was to start with a clean sheet of paper and redesign an organization the way we thought it needed to be structured to accomplish our business goals.”
The move was driven in large part by the fact that the company had sold its last asset in Idaho a few years earlier. So the only piece of the company left in the state was the corporate headquarters.
“We wanted an HQ city that reflected our commitment to doings things a different way,” Krebs says. “So we picked a city where there is nobody in terms of precious metal mining. If we mean what we say, our decisions and actions need to support that.”
When that decision was made, Krebs worked hard to make the transition as seamless as possible for everyone. That included the people who would try to make the move to Chicago and those who would be parting ways with the company. Krebs wanted every decision to be made with a deep sense of respect.
“We went to great lengths to protect the company so we could hire people and have somebody train a new person in their position, but do it in a way that kept the existing people in place through incentives that were helpful to them,” Krebs says.
“It was critical to maintain some of that organizational knowledge to ensure we could still run the business day to day.”
As Coeur Mining settles in to its new home in Chicago, Krebs knows more challenges will arise. But he also feels good about his team’s readiness to deal with those challenges.
“We’ve built up this horsepower of talent and now we need to focus and apply it to execute on the operational side to improve our overall pipeline of assets, reduce our costs and really build a sustainable mining company,” Krebs says. “Now we can do the kinds of things that move the needle for our shareholders.”
- See beyond what your numbers are telling you.
- Build on your momentum.
- Treat people with respect at every turn.
The Krebs File
NAME: Mitchell J. Krebs
TITLE: president and CEO
COMPANY: Coeur Mining Inc.
Born: Storm Lake, Iowa
Education: Bachelor of science degree in economics, Wharton School at the University of Pennsylvania; a master’s degree in business administration, Harvard University.
What was your first job? With both sides of my family being farmers, the work on family farms was where I got a little bit of pocket change. A place like that is full of interesting jobs.
Who has been the biggest influence on your life? My mother instilled in me a very strong work ethic, as well as the value of a dollar, the value of an education and of staying humble and letting your results or your work speak for itself. She’s very much a tough woman, and I grew up wanting to impress her and a lot of those attributes rubbed off on me.
If you could speak with anyone from the present or past, with whom would you want to speak with? Winston Churchill. Talk about a leader in tough times and the ability, in his case, to rally a country. But if I could go to dinner with a living president, I would choose President Bill Clinton.
That guy is passionate about politics. He loves it. It doesn’t necessarily align with my own political views, but he is a master. His communication skills are so impressive to me. That’s one thing that I feel is a shortcoming of mine, the ability to capture a room. He can do that in a way that is very rare and very special.