They did a good job through the years. They were always a leader in the manufacturing area on their safety incident rates. But in the last 25 years, from 1987, the company has gotten an awful lot better. In 1987, Paul O'Neill was hired.
at Alcoa. Paul's the CEO and those of you who know him know that he made his number one priority safety. Clearly his number one priority.
Every time he talked his first words out of his mouth were about safety. Every meeting the first agenda item was safety even at any time. annual shareholders meeting. The first words out of his mouth are, in the unlikely event of an incident, we're going to proceed in an orderly fashion this way.
This is from the CEO. He had the first agenda item at the shareholders meeting, but also at the board of directors meeting. At every board meeting, they get reports ahead of time. Included in that report to the board is a health and safety report. At every quarterly review that a business unit president would have, and at that time we had 28 businesses, and they would come in quarterly for a review with the CEO.
The first item they were expected to cover. was safety. It wasn't finances, it was safety.
Now of course they covered their finances and they covered market share and they covered everything else, but the first item was always safety which was pretty good. So maybe a place to begin is to explain a little bit about how I got interested in safety and to put it in context because for me safety is an element of a broader set of philosophical ideas about human beings. When I got recruited it was actually in April of 1987 and I agreed to go to work on the 50th anniversary of the American Revolution. 15th of June, so I had three months to think about what is it I'm going to do when I go and I'm supposed to be the leader for this huge worldwide organization. It was really a privilege to have an opportunity to consolidate ideas and say to yourself, you know, what is it that you're going to do and what is it you want to be remembered for when you leave?
And at the top of my list was safety. Now, You might wonder why would I put safety in it and it needs some explanation. I think in a great organization, and this is out of 40 years worth of experience, in an organization, let me say this correctly, that has the potential for greatness, It's possible every day for every human being in that enterprise to say yes to three questions without any reservations. So here are the three questions.
Are you treated with dignity and respect every day by everyone you encounter? Sounds fairly simple, maybe some of you say absolutely. You know, most organizations, I have to tell you, it's hard for people to get by the first question because there are still elements that you can see in behavioral patterns, the way people interact with each other that...
I cause people not to be treated with the same uniform level of dignity and respect because of their race or their gender or their nationality or their relatively higher or lower level of education. educational attainment or most importantly maybe their rank in the organization. So I believe in an organization with a potential for true greatness, none of those characteristics have anything to do with the dignity and respect that every individual is accorded. A second question is are you given the things you need tools, equipment, training, encouragement? So that you can make a contribution, this is the most important part of number two, that gives meaning to your life.
It's not about making this a more famous, financially successful place, it's about does every individual... Find themselves in a position they can say every day without any reservation, the work I do here gives meaning to my life. I don't have to find it in fishing or golf or painting or some other outside thing.
I get meaning in my life from what I spend most of my waking hours doing. That's a hard task, too. But I believe it's the right test for an organization with the potential for greatness.
The third question is short and simple, and that is, do you get recognized for what you do? You know, around the world, in all the... Countries I've worked in, no matter what level of educational attainment people have, may not even be able to say back to you what I just did in characterizing this landscape of human interaction.
People want those things, not, you know, it's the human lifeblood that is the most important asset. Now, how did I get to safety at the top of my list in April of 1987? By observing that most organizations say our human beings are our most important asset, but in most places there's no proof it's really true, it's just something you say.
So I'll tell you the numbers. In June the 15th of 1987, the lost workday rate across Alcoa's operations in 43 countries or so was 1.86. The rate in 1987 is staggering.
It was 5. Five out of every 100 workers in the American workforce had an injury at work that caused them to miss at least one day of work. Alcoa is 1.86, and the safety director was obviously really proud of how great Alcoa was. And so after I ended up praising Charlie Demacia, who was the safety director, then I said to him, you know, Charlie, I believe our goal, and I'm going to begin saying this all over Alcoa, so you should know, I'm going to begin saying That it's Alcoa's objective that people who work for Alcoa will never be hurt at work. So our goal is going to be zero. Even the safety director was startled by the idea that zero would be our goal.
And it was interesting. I found this about lots of different things, that there's kind of a litany of reasons why not, right? So the first reason why not is we can't afford it.
You know, in order to really get to zero, we're going to have to wrap every employee in some kind of a cocoon and they won't be able to move their arms to do the work. So we can't afford it. Here's one that's really an awful one, and it has a lot of traveling power. Human beings are not...
capable of being perfect and that means we're going to have human error no matter how much you don't like it. And so we can't get to zero because people will do stupid things. You know, those are the two most potent reasons why not. So I said, you know, I don't know how good the informal communication system is in Alcoa, but I hope you all have already heard that I believe We should achieve an incident-free workplace at Alcoa.
And I want you to know I'm really serious about this. And so I turned to the supervisory crowd and I said to them, you know, here's what I mean by this. As soon as we identify anything in our work environment that could lead to an Alcoa employee being hurt at work, I want to fix it right now. I don't want to budget it. From now on we are not going to budget safety.
We're going to follow our recognition of things that could harm people and we're going to fix it. Oftentimes the things that move organizations are unfortunately not happy stories. But after I've been there, you know, about three months I guess, there was an incident at an extrusion plant outside of... Phoenix, Arizona.
And the circumstances, this is a night shift. There's an 18-year-old kid who had worked for the company for about three weeks, and he jumped over a protective barrier that was almost as high as this. It wasn't solid, but it was a high barrier between his observation space and the machine that was producing extrusions.
And this particular machine had a boom on it, and so with every cycle, the boom would... Cycle, cycle, cycle, and the machine was subject to jamming. The aluminum material would get jammed on the machine, it would be hung up. And this kid jumped over the barrier and pulled the scrap material out of the action part of the machine, and it released the boom, it came around, hit him in the head, killed him instantly.
He had a wife who was six months pregnant. Two supervisors who'd been there 15 or 20 years watched him do it. Actually, they must have taught him how to do it, because I don't think he made it up on his own.
They'd jump over the barrier and pull the material out of the machine. And so I got the whole executive crowd together, all the way down to the plant supervisor level, and we reviewed the diagrams and the machine process and all of that, and when we were done with that technical part. I stood up and said to the assembled crowd, we killed him. Yeah, the supervisors were there, but we killed him. I killed him.
Because I didn't do a good job of communicating the dedication of the principle that people will never be hurt at work, and obviously, Our recruiting process didn't do a very good job, or our measurement process didn't do a very good job of assuring that people who are in this chain believe that safety was the single most important thing, actually not a priority. You know, this is my counsel to you. Safety should never be a priority.
It should be a precondition. Before you can get up and walk around, you have to breathe. Safety should be like breathing. It should be a precondition for organizational behavior.
I tell you what, the people in the organization were stunned by the idea that they should accept personal responsibility for this death. You know, they all regret it. I tell you, there was never a more caring organization in my experience. In a traditional sense in Alcoa, every person that was injured or killed, they mourned, believe me, they really mourned and they regretted it and all of that, but they didn't understand.
They were responsible for it. Yesterday morning the loss workday rate at Alcoa around the world was.126, which is pretty good, but I wish it were zero. When Paul O'Neill left Alcoa, people asked Paul, were you a success? Well, he was a resounding success in every area, in the financial area, shareholder value, and safety.
But his answer was pretty interesting. He said, if the lost workday rate and total recordable rate continue to fall, long after I'm gone, I will have been a success. So I'd say, if you look at that graph, he was a pretty good success. And that's a sustainability answer.
It's the kind of answer that you really want in an organization. So he's very, very proud of that.