A role of a leader is to inspire, motivate and deliver. But when the new CEO of Alcoa, Paul O’Neill, gave his maiden speech to shareholders in 1987 they were in a panic. They sold their Alcoa stock as fast as they could, yet one year later, Alcoa’s profits hit a record high.
I found this story in the Power of Habits by Charles Duhigg, a great read on the formation and strength of habits. His maiden speech to shareholders was seen as the opportunity to get shareholders excited about increasing sales and reducing costs, But O’Neill took a different approach.
“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.”
How would they make money on safety? the story cotinunes that eventually, one of the shareholders raised a hand and asked about the aerospace divison, while another asked about the company’s captial 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.”
After his speech, the crowd rushed to sell their Alcoa stock as fast as they could. But those that held onto their stock – were rewarded.
By the time O’Neill retired in the year 200, the market capitalisation was 5 times more than it was in 1987.
this mixes two of my favourite book, the Power of habit as above and Start with Why by Simon Sinek, As quotes in The Power of habit, O’Neill says “you can’t order people to change. That’s not how the brain works.”
this is true, he chose to improve safety as the key habit to bring the entire company together, he chose a habit that would have everyone in alignment.
The Unions & Workers – They want what is best for their workers and their safety.
The Managers – more productivity and staff at work
by railing all stakeholders to ‘zero injuries’ he infact brought them together as a group, a group that would worth together for a common goal.
What else worked?
He motivated his managers and aligned them to the ‘zero injuries’ and he introduced a new policy which, whenever someone was injured, that manager had to report it to O’Neill within 24 hours and present a plan for making sure it never occurred again.
this increased their communications. Workers told their floor managers, who told their senior managers who told their directors when they saw a potential problem. a suggest box was always filled with ideas for solutions so if a plan was requested, a collection of suggestions could be submitted.
No expenses were spared on safety and he spent resources on taining about quality control and how to work more efficienly. by ensuring employees developed habits surrounding good quality and safety.
Alcoa was inspired, it became an effective open communication workplace that was the safest enviroment to work. by improving his morale, safety and efficiency it was only a matter of time before the sales also increased as a direct result.
by taking care of the “why”, he subsequently aligned his “how” and “what”.
Before you go
Thanks for reading!
My Name is Jordan Bambridge a 23 year old ambitious manager. I currently work in a UK University. I get really passionate about understanding not what people do, but why they do it. I am also interested in psychology in business and helping others succeed and reach their potential. You can catch me on Twitter or Instagram @JordanBambridge.
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