Conflict management in extractive industries in Indonesia: Leaders-followers dynamic to achieve perceived social justice in communities

In Indonesia, the usage of natural resources is one of the three main conflict issues (Directorate General of Politics and Public Administration, Ministry of Home Affairs, 2016; Habibie Center, 2013). Forty-Seven percent of the conflicts are between communities and the extractive companies (Agrarian Reform Consortium, 2014). Many of these extractive companies choose to implement a short-term conflict management approach, which include charitable programs or the usage of security, as a way to interact with the locals. However, they do tend to ignore the local wisdom of the community in resolving the issues, or even apply a different parameter to acknowledge the developmental progress in the community. Due to their short-term, unsustainable approach, the communities' trust in these extractive companies is very low, perceiving that the companies are treating them unfairly. To cultivate trust in the community, an integrative stakeholder engagement process must be implemented by the extractive company through concrete actions for the community. These actions should involve the active participation of the communities from time to time, not only in times of crisis. This chapter argues that to be able to handle external conflicts, the extractive company must first resolve its internal conflicts by adjusting its perspective, orientation, and mindset between its leaders and followers. Another important aspect is that the companies need to develop an understanding regarding the cultural diversity and customs in Indonesia. The extractive company should implement an integrated stakeholder engagement approach which provides a platform for followers and leaders in the company to be able to work together in managing the conflict in the community. This chapter proposes the principles underlying the dynamics of the relationship between the management and staff in the field during the stakeholder engagement process to achieve perceived social justice in society.