Operating Rurally Creates Special HR Considerations

June 1, 1994
Corporate migration to rural areas may be a predominately new phenomenon, but some companies have been operating rurally for years. Take Magma Copper Company, for example. The Tucson, Arizona-based company-which was formed in the early 1900s-is the nation's fourth largest copper producer and employs approximately 4,300 people, only 50 of whom work in the corporate headquarters. The rest work in mines scattered across rural Arizona.

Magma's underground copper mine in San Manuel is the largest block caving mine in the world and employs more than 3,000 of the company's workers. However, the town, which is 45 miles outside of Tucson, has a population of only 4,009. The same is true for Magma's other Arizona operating locations: Superior's population is 3,468; Miami's is 2,018.

Recently, Magma purchased a mine that's located in Ely, Nevada. Magma's vice president of human resources, Marsh Campbell, describes Ely as "one of the most remote locations in the United States." He isn't exaggerating: The 4,800-person town is four hours north of Las Vegas, four hours east of Reno, Nevada, and four hours west of Salt Lake City. Magma doesn't plan to begin operations in Ely until 1996, but experience tells Campbell that it isn't too early to begin considering which HR issues must be addressed. Campbell says that there are implications to moving and operating in rural environments such as this one. Long-term HR issues that should be considered include:

  1. Recruitment:
    Start the recruitment process earlier than you would in urban locations. The pool of applicants may be smaller, and it may take longer than you'd expect to find suitable candidates. Marsh says that in Ely, Magma's HR department may start recruiting up to a year before the planned opening date.
  2. Retention:
    Offer competitive benefits and compensation packages. Because there's a somewhat smaller labor pool, it's especially important that companies in rural areas have low turnover rates. Because most of Magma's competition doesn't offer such incentives as gain-sharing, Campbell says it's likely that the company's compensation plan will include this type of benefit. "As we begin to get to full production, e also may add mile-post bonuses to reward people for reaching targets by certain dates," he adds.
  3. Health care:
    Consider the cost and quality of health care. Costs are often higher in rural locales because of little competition among providers. Campbell says that companies can find ways of reducing these costs. For example, he says that some businesses set up their own clinics or hospitals. Or, in some rural areas, it's possible to negotiate costs with local medical providers. Magma contracts with hospitals in Reno or Salt Lake City for scheduled operations. "It often costs less to pay for an employee's $300 round-trip ticket than put him or her in a local hospital that's going to charge 120% more per day," he says.
  4. Housing:
    Look into the availability of housing. "Housing may not be available in adequate amounts, and what's there sometimes isn't really suitable," Campbell says. If a company needs to build additional accommodation for employees, costs should be a consideration. "It's surprising in rural areas how much it costs to build houses," he says. "Land itself isn't horribly expensive, but building costs are often high." Magma is considering loan guarantees or company-built modular housing as options for employees at its Ely site.
  5. Cultural differences:
    Remember that there's frequently a different mindset among residents of rural areas. To establish a common perspective among employees (both rural natives and those who've relocated to the area), it's necessary to provide education and training for all employees. "You have to work with them to design the new operating procedures that are consistent with the type of culture you're trying to create," says Campbell. "If you involve them in the process, then they're helping to design their own future."
  6. Isolation:
    Encourage change. Because companies in rural sites often are many miles from their competition, Campbell says it's easy to forget to be innovative. Magma recently established self-directed work teams to retain its competitive edge. "I don't think any company can afford to continue what it's currently doing and think that's going to be sufficient," he says. "When you're 50 or 60 miles from nowhere, you can fail quickly if you don't continually bring new ideas into the organization."

—By Shannon Peters

Personnel Journal, June 1994, Vol. 73, No. 6, p. 118.