In 1987, as aluminum giant Alcoa's new CEO, Paul O'Neill knew he needed to change company culture from the ground up. The place was rife with labor disputes and was losing money. In his 2012 book, The Power of Habit, New York Times journalist Charles Duhigg explains how O'Neill addressed these issues and steered the company to success by honing in on one seemingly isolated aspect of Alcoa's operations: safety culture.
As it turned out, employee safety wasn't isolated at all. By setting an ambitious goal of 'zero accidents', O'Neill declared safety culture to be Alcoa's number one priority and at the same time changed the habits of the entire organization. By focusing on safety at work, O'Neill had found what Duhigg calls a 'keystone habit'.
As Duhigg explains, 'keystone habits start a process that, over time, transforms everything.' As a result, O'Neill not only lowered Alcoa's workplace injury rate to one-twentieth of the American average, he raised the company's annual net income by a factor of five, because the very habits that ensured reduced workplace accidents paved the way for profitable innovations.
Of course, none of this happened by accident. O'Neill understood the power of keystone habits and chose safety culture as his top priority for a reason. As Duhigg explains, 'He needed a focus that would bring people together, that would give him the leverage to change how people worked and communicated.' Safety at work, O'Neill reasoned, was one thing that everyone--including labor unions and top executives--could agree on. No one wanted to get hurt and safe work practices would inevitably lead to cost savings.
How O'Neill Improved Safety Culture
In order to reach a goal of zero injuries, Alcoa needed to understand why accidents happened in the first place. In order to understand why, workers needed to reexamine long-held production practices. Which machines were most likely to cause accidents? Did that equipment need repair, replacement or redesign?
O'Neill instituted a new iron-clad rule. Every time a worker got injured, the unit head had to present an analysis of what went wrong and a plan for preventing it in the future directly to O'Neill. And this had to happen within 24 hours of the injury. When an Alcoa worker was killed attempting an unsafe emergency repair, O'Neill held a meeting of all the plant's executives within 14 hours of the incident to learn from what had happened. Alcoa adopted new safe work practices and reinforced existing workplace safety rules immediately.
The Ripple Effect
The effect of the changes was immediately apparent in Alcoa's workplace safety measures. But the new focus on safety culture came with unforeseen results. As Duhigg explains, 'O'Neill never promised that his focus on worker safety would increase Alcoa's profits. However, as his new routines moved through the organization, costs came down, quality went up, and productivity skyrocketed.'
O'Neill's hunch had been correct. By uniting the company under a single cause--workplace health and safety--he transformed how people worked. Communication channels had to improve in order for unit heads to learn about every accident and report it with an accompanying safety plan within 24 hours. O'Neill even gave workers his personal number to ensure that every accident was reported.
Once these communication channels opened, workers felt comfortable with offering suggestions outside of safety improvement. Innovative ideas bubbled up from the floor to management faster and the entire manufacturing process got more efficient.
The Alcoa example shows how a keystone habit can alter the internal structures and procedures of a company. Employee safety culture works in just such a way because it's a cause that people want to support. When everyone understands they're working towards the greater goal of a noble cause such as safety at work, they are willing to change their habits in pursuit of that goal. A single changed habit is like a stone dropped into a pond; the ripples that follow eventually touch everything a company does and inevitably change everything for the better.
Alcoa's profits hit a record high the first year after O'Neill took the helm. By 2000, its market capitalization had risen by $27 billion. Some Alcoa facilities have gone years without accidents. So the next time someone doesn't see the connection between workplace safety culture and profitability, tell them the story of Paul O'Neill.