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Safety and profitability

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Safety and profitability The best businesses care about safety because they care about their workers

The best businesses care about safety because they care about their workers.

This premise is most often used to justify safety investments across large organisations in hazardous industries. But what if a safety investment didn’t just protect workers, what if it improved profitability?

The case of Alcoa, a large American producer of Aluminum, is striking. When, in 1987, Paul O’Neill kicked off his tenure as CEO, he shocked a room full of shareholders by saying, “If you want to understand how Alcoa is doing, you need to look at our workplace safety figures.” He proceeded to make sweeping changes to Alcoa, altering the way hazards were identified, investments were made, and incidents reported. He even gave his personal phone number to all 13,000 employees and told them to call with any and all safety issues.

 

 

Workers responded, and incident rates fell drastically. But not long after, front line workers started calling about things other than safety. They had improvement ideas. And some of these ideas were transformational. In one plant, profits doubled when a front line worker suggested reconfiguring painting machinery to reduce switching costs. He had been telling coworkers for years, but the idea had never made its way up to management until the communication channels were unclogged.

 

 

What resulted from safety improvement was continuous improvement. And as more ideas were suggested, the company got leaner and more profitable. Over Paul O’Neill’s tenure as CEO, Alcoa’s total shareholder return averaged more than 15% p.a.!

This is not to say the safety investments are always profitable. But many of the sustaining disciplines that drive profitability (open communication, prioritisation, and ‘closing the loop’) are the same disciplines that form the foundation of a strong safety culture. Safety isn’t just part of a caring organisation, it’s a core component of a well-functioning and, as a result, profitable business.

Think Safe, Stay Safe

About the authors

Aoife Murphy