Paul O’Neill, former CEO of Alcoa, Placed Emphasis on Worker Safety over Company Profits
How his Shareholders Reacted and What Happened to Company Growth Might Surprise You
In 1987, Paul O’Neill assumed the position of CEO at the Aluminum Company of America, more succinctly referred to as Alcoa. At the first board meeting, he announced his primary goal: getting worker safety down to zero, and thousands of shareholders nearly had a heart attack. Many investors and board members pleaded with him to revise the new company objective because at the time, Alcoa was already amongst the safest manufacturing companies in America.
The year O’Neill became the comany’s new CEO, five out of 100 American workers were forced to miss at least one day a year due to a work-related injury. At Alcoa, it was 1.86 out of 100, which already placed it in the top third for worker safety when compared to other American industries. Despite the outcry from top executives, he stayed firm to his mission statement.
O’Neill believed that if you prioritized workers above all else, then company productivity and profits would follow in accordance. Alcoa employs thousands of workers and has factories located in four continents, but each had a different method of operations. O’Neill visited them all, stressing worker safety to all the supervisors at every manufacturing plant. He then provided his home phone number to all the factory workers, and said if the supervisors didn’t alert him of every worker safety issue, he wanted the aluminum workers to call him personally.
Ultimately, a decade later, the work-related injuries were a tenth what they were when he first stepped in as CEO, and like he theorized: the profits would follow, and as a result, they reached all-time highs. Alcoa’s market cap increased a tenfold during his 12 year tenure, and the net income increased from $200 million to nearly $1.5 billion a year. Every top executive, board member, and shareholder said he would fail, but Alcoa flourished.
So, how did he do this? Paul O’Neill operated the business under three principles: one, treat every employee with dignity and respect no matter their race, gender, education, or company ranking; two, give them the proper tools and training so they find meaning in their job; and three, make sure they are being recognized for what they do. He believed that if you make the factory workers feel essential and give them a voice, then they would, in turn, feel more motivated and unified in their work. O’Neill always had an open door policy during his tenure at Alcoa because he believed that no idea was too insignificant, no matter who it was coming from. Giving aluminum workers a voice made work-related injuries plummet and profits skyrocket.
Company leaders that collaborate with and take suggestions from the middle entry and low level workers run a more smooth, optimized, and successful business. Emphasis on corporate hierarchy erodes public trust, internal company relations, and stagnates growth. The person at the top of the corporate ladder seldom has all the answers, and is typically just the face of a larger network of people. Paul O’Neill believed that every worker deserves recognition, and proved that a company can thrive when every employee’s input is considered, regardless of corporate ranking.