Operations Strategy

Alcoa
Concern towards worker safety

Tathagat Arya
Introduction

Alcoa, formerly known as the Aluminum Company of America, is a global

leader in lightweight metals engineering and manufacturing. Founded in
1888 in Pittsburgh, Pennsylvania, it played a pivotal role in the aluminum
industry's development.

Throughout its history, Alcoa has expanded its operations worldwide,

establishing a presence in over 40 countries and conducts its operations
in more than 10 companies. It operates across the entire aluminum
value chain, from bauxite mining and refining to smelting and recycling.
This integrated approach allows Alcoa to maintain control over the
quality and cost efficiency of its products.

In 1987, Paul O’Neill took over as CEO and chairman of the board. In his
inaugural address, he outlined his vision for the company centred around
one issue, worker safety. For him, worker safety took precedence over
profits.

The initial reaction from investors, the market and even workers was
bewilderment due to the unique approach which went against
conventions at the time especially because Alcoa’s performance in
worker safety was already above average, hence, this was not seen as a
pressing issue.

“part of leadership is to create a crisis”

The idea behind this strategy was the correlation between worker
productivity and worker safety. Every safety incident led to the worker
having to take time off for days or even weeks and also contributed to a
skills and labor gap. The other motivation for this initiative was to act as
a disruptor and show his employees that he was there to work for them
and not only the shareholders which would allow O’Neill to change the
habits of his employees. By creating this crisis, O’Neill wanted to unite
the company to fight this “crisis” and leverage the bond to work even
harder for the future of the company.
Literature Review

The research study delves into the critical aspects of worker productivity,
occupational health, and safety issues within selected industries, with a
specific focus on the challenges faced in developing countries. The
study emphasizes the detrimental impact of ergonomic deficiencies on
workplace health hazards, safety levels, and overall worker productivity.
While ergonomics has gained recognition in developed countries, its
application remains largely unrecognized in developing nations like
Oman, prompting the need for exploration in this area.

The study also sheds light on the environmental and organizational

factors that impact worker productivity and OHS. Managers reported
challenges such as hot environmental conditions, noise, and inadequate
resources, all of which can have adverse effects on worker well-being
and performance. Additionally, the research underscores the importance
of addressing ergonomic deficiencies in workplace design, job
structuring, and human-machine system interactions to mitigate health
hazards and enhance overall productivity.

Furthermore, the study reveals a significant correlation between

productivity indicators and health and organizational attributes,
emphasizing the need for improved ergonomics practices and training
initiatives. The lack of skills in ergonomics, communication, and
resources within the surveyed companies underscores the urgent need
for interventions to address these deficiencies and promote a safer and
more productive work environment.
In conclusion, the study highlights the critical role of ergonomics in
improving worker productivity and occupational health and safety in
industries. By addressing ergonomic deficiencies, implementing proper
training programs, and enhancing management practices, companies
can create a conducive work environment that not only boosts
productivity but also safeguards the well-being of their workforce. This
research serves as a valuable resource for policymakers, industry
stakeholders, and researchers seeking to enhance workplace
ergonomics and promote a culture of safety and productivity in industrial
settings.
Initiatives
Instead of specified initiatives, Paul O’Neill made a holistic plan of
improving worker safety. Alcoa already had a worker safety plan in
place, the aim was to implement it properly and improve it in whatever
way possible.
● Every accident was to be followed by a team meeting to discuss
what went wrong and how can such a scenario be averted in the
future.
● Every guideline was to be followed, however small.
● Open communication channels through which any worker could
communicate directly with the CEO to suggest improvements or
report any incident
Impact

● On a company-wide level, these initiatives gave O’Neill the support

of the employees which further boosted productivity
● By the end of his reign as CEO in 1999, he proved his non-
consensus hypothesis increasing Alcoa's market value from $3
billion to $27.53 billion, while net income increased from $200
million to $1.484 billion.

● Alcoa dropped from 1.86 lost workdays to injury per 100 workers to
0.2 lost workdays to injury per 100 workers.

Paul O’Neill’s unique approach managed to create a win-win situation in

which Alcoa employees got a bigger say in the working of the company
which led to better worker safety which led to a huge boost in the
revenue and value of the company surpassing the expectations of the
shareholders.

References
1. Shikdar, A. A., & Sawaqed, N. M. (2003). Worker productivity, and
occupational health and safety issues in selected industries.
Computers & Industrial Engineering, 45, 563-572.
https://doi.org/10.1016/S0360-8352(03)00074-3
2. https://www.workclout.com/blog/how-alcoa-quintupled-their-
revenue-by-focusing-on-worker-safety#:~:text=They%20hired
%20a%20new%20CEO,to%20you%20about%20worker
%20safety.%22
3. https://davidburkus.com/2020/04/how-paul-oneill-fought-for-safety-
at-alcoa/
4.