The story of Paul O’Neill is the stuff of legend.
Alcoa was a struggling giant. It was old, large and successful. Like so many organisations, it was on shaky ground. It was vulnerable to agile competitors. Threats to the business model sprouted like weeds.
In 1987, Paul O’Neill took over as the chair and CEO. Other CEOs focused on revenue, profits or sales. He took a different approach. He focused on employee safety. Safety was Priority Number One. Profitability and the rest were a distant second.
Now, Alcoa was already a pretty safe place to work. They had accidents, sure, but keep in mind they dealt with molten metals. Given that, their safety record was impressive. So it’s not like their safety programs were bad. But they weren’t perfect. Paul O’Neill wanted to do better.
Safety became the focus of the organisation. All employees were encouraged to report safety issues to their bosses… or to O’Neill directly. Rewards and accolades were given for improvements to safety over improvements to productivity. O’Neill instituted a policy that required managers to report every incident, no matter how small. These reports included the cause of the incident and proposed solutions. They had to arrive on O’Neill’s desk within a day.
This approach seems bizarre and counterproductive. Yes, safety is important. So is income. These things need to be balanced… right?
O’Neill stood down in 1999. During his time, Alcoa’s net income rose from US$200 million to nearly US$1.5 billion. Focusing on safety, rather than income, caused income to soar.
How did this happen? Managers engaged with front-line employees, looking for innovative safety ideas. In order to submit incidents on time, communications were streamlined. Alcoa embraced the internet early because it was the best way for a global company to submit safety reports. Safety ideas from one area spread across the organisation.
Communication in all directions were streamlined. Employees of all kinds and levels contributed ideas… that were acted on. Is it any mystery as to how this lead to greater profits?
Other organisations also place one value above all others. Netflix’s strategy is to increase the talent density of their organisation. Valve tells its employees that hiring is everything – if you are involved in the hiring process then all other work is a waste of time. Everything they do – literally, everything – is in service of one core value. Their obsessive myopia has paid off for them.
Many organisations are like Alcoa. They are old, large and successful. Their products are excellent but they are trapped by policies, traditions and even their successes. The threats are many. They have power but lack agility.
Paul O’Neill chose safety as Alcoa’s keystone habit – the one habit that enables all others. What should your organisation’s keystone habit be? There are many valid answers. One is the training and development of your staff.
Imagine that your organisation embraced employee skills as Priority Number One. What would the organisation look like?
- Every team would define the skills they have and the skills that they need. This simple exercise is often neglected. When done en masse, it provides valuable insights into the health of the organisation.
- Managers would prioritise knowledge sharing. Performance evaluations would focus on this key achievement. Is the employee teaching courses? Mentoring staff? Sharing analytical techniques? If so, how effectively?
- Training would be the core duty of subject matter experts (SMEs). Currently, SMEs are hired to perform valuable tasks for the organisation. That would continue. But any SME that is not developing other employees is being wasted by the organisation.
- The organisation would release staff to give and receive training. In too many organisations, staff are expected to do their jobs during course breaks or participants drop out at the last minute. This will always occur; stuff happens. But each time it does, it robs the organisation of a chance for training. In the spirit of Alcoa, a manager that pulls an employee off training would submit a report to the CEO explaining what happened and how to address the situation.
- Each team or section would have dedicated skills coordinators. Skills coordinators would identify skills gaps, recommend solutions and work with the training team.
- Speaking of, the organisation would invest in the training team. This team would work closely with the skills coordinators and engage with their customers. Employees would rotate through this team to contribute to courses and learning materials. They would use the best technology and educational theory to achieve outcomes.
- Hiring and promotions would value training above all else.
This hypothetical organisation doesn’t seem so far-fetched. It does sound incredibly successful. Valuing skills over everything else is a powerful, long-term strategy.
Paul O’Neill faced opposition from his Board of Directors. They wanted to focus on the traditional business. If they had, the traditional business could have fallen away. He strengthened the organisation – every aspect of it – by focusing on safety. Anyone can do the same by focusing on skills, even when there is pressure to focus on tasks.
The link between safety and profits isn’t obvious. The link between skills and success is. If you make training a keystone habit, people will resist. But, in the end, you will succeed. Organisations that don’t focus on a core value are like the hunter that chases two rabbits and loses both.
This article was inspired by Charles Duhigg’s The Power of Habit. It was cross-posted on LinkedIn.