Safety as an indicator of progress: O’Neill CEO Aloca mindFly

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Safety is an important ingredient for survival but is safety an indicator of corporate progress? Most corporates focus on their balance sheets and the top management has only a basic understanding of the concept of safety.

In October 1987, the new CEO of Aloca, the worlds eight largest aluminum producer gave his maiden speech to the shareholders.

I want to talk to you about worker safety.

Every year, numerous Alcoa workers are injured so badly that they miss a day of work.  Our safety record is better than the general workforce, especially considering that our employees work with metals that are 1500 degrees and we have machines that can rip a man’s arm off.  But it’s not good enough.  I intend to make Alcoa the safest company in America.  I intend to go for zero injuries”.

A shareholder asks about inventories in the aerospace division. Another asks about the company’s capital ratios.

I’m not certain you heard me.  If you want to understand how Alcoa is doing, you need to look at our workplace safety figures.  If we bring our injury rates down, it won’t be because of cheerleading or the nonsense you sometimes hear from other CEOs.  It will be because the individuals at this company have agreed to become part of something important: They’ve devoted themselves to creating a habit of excellence.  Safety will be an indicator that we’re making progress in changing our habits across the entire institution. That’s how we should be judged”.

The audience was confused. Why wasn’t O’Neill making them feel warm and fuzzy?  How were they going to make money by focusing on safety? Most CEO’s would use this opportunity to get shareholders excited that they were going to focus the company on increasing sales and reducing costs, for improved shareholder return.  But O’Neill was different.

O’Neill’s safety speech is considered as one of the best in the 20th century. He started with explaining “why”, which got the shareholder’s attention, then moved to “how” they were going to do it and finally “what”.

As quoted in his book by Charles Duhigg, The Power of Habit, O’Neill said, “you can’t order people to change. That’s not how the brain works. So I decided I was going to start by focusing on one thing. If I could start disrupting the habits around one thing, it would spread throughout the entire company”.

He chose improving safety as the key habit to bring the entire company together.  He chose a habit that would have everyone in alignment – unions and managers.  And it meant total operational transformation.

Humans can only learn and remember so much information at once.  The more information you give people – the more it can paralyze them.

But what he also did rather skillfully was to encourage group behaviour.   He encouraged Alcoa workers to consider the safety of the group rather than themselves.  He rallied the workforce to work together for a common goal.

Humans see themselves in terms of other people and groups.  Evolution has taught us that it is beneficial to live in tribes, where we can share out the work of daily survival.

O’Neill harnessed the strong human need for group identity to build a thriving organisation. The trick in using group identity when wanting staff to change behaviour or embrace a new goal is to word it so they make a decision based on what’s best for the group.  Activating peer pressure is an effective way to get a group to persuade others to act in a certain way

And you’ll notice that O’Neill never used the word “I” in his speech.  Saving lives wasn’t about him. It was about the group – it was about the Alcoa workforce.

He also cleverly used a shareholder meeting, to let his staff know, that he wasn’t there to increase shareholder returns.  He was there to improve their quality of life, to ensure that they would arrive home safely at the end of the day.  By launching his first speech to outsiders, he powerfully communicated to staff, just how committed he was to improving their workplace.  That he could be trusted.  That he was on their side.

O’Neill believed that they way to keep employees staff was to discover why injuries were occurring in the first place.

Studying what was going wrong in the manufacturing process did this.  Employees received training about quality control and how to work more efficiently.  By ensuring that employees developed the habit to do tasks right in the first place, their work became safer.

O’Neill transformed the company, within a year of O’Neill’s speech, Alcoa’s profits hit a record high. By the time O’Neill retired in 2000 to become Treasury Secretary, the company’s annual net income was five times larger than before he arrived, and its market capitalization had risen by $27 billion.

This is the power of Safety and making Safety a habit.

 

 

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