By Jade Garratt, Bea Poyton and Tom Geraghty 

In our leadership workshops, we often talk about failures of psychological safety – what happens when, in an absence of psychological safety, concerns are not raised, questions remain unasked, mistakes are hidden and no one shares their improvement ideas. Unsurprisingly, the consequences can be catastrophic – think The Tenerife Airport Disaster and Chernobyl for starters. But we also like to share psychological safety success stories – what happens when leaders prioritise psychological safety, and how can it transform their organisations? Paul O’Neill at Alcoa was one such example. Let’s see why…

O’Neill’s Early Life and Career

Paul O’Neill was born on December 4, 1935, in St. Louis, Missouri. He studied for a Bachelor of Arts in Economics, followed by a Masters Degree in Public Administration. These gave him a grounding in economic principles and public sector management, shaping his approach to leadership and organisational efficacy. His early career included various roles in the government, where he became known for an analytical approach and dedication to improving systems and processes. 

This background in government bureaucracy and the public sector also made him a somewhat unlikely choice for CEO of one of the world’s biggest producers of aluminium. And yet, in 1987, that’s what he became.

What about Alcoa?

Founded in 1888, nearly 100 years before Paul O’Neill was appointed CEO, the Aluminium Company of America (Alcoa) was the first company to mass produce aluminium and it had initially dominated the industry. During the First World War, Alcoa increased production by 40% and it became an essential supplier of aluminium in World War II.

However, by 1987 when O’Neill took over, the business was in a slightly tighter position financially. Alcoa was facing tougher competition from overseas, tighter regulations and a more saturated market, and had seen its stock price fall. Plus, they’d made some mistakes, launching new lines which had turned out unprofitable and caused significant losses. The leadership, and the shareholders of Alcoa, were anxious, and were looking to their new CEO to turn things around and make the company profitable again. 

Paul O’Neill’s Unconventional Start

Paul O’Neill’s inaugural speech as CEO of Alcoa set the tone for his tenure. He began with a line that would become famous:

“I want to talk to you about worker safety.”

Now this might not seem so strange, but remember, everyone was expecting O’Neill to focus on the financials: reducing overheads and maximising price-to-earnings ratios, making efficiency savings, and improving the bottom line. Instead, he was talking to a room full of investors and analysts about worker safety. And even more surprising, Alcoa’s worker safety wasn’t considered that bad. In fact it was the best in the industry, although admittedly, the bar was pretty low. Aluminium production has always been a dangerous industry, leading to many considering a certain risk to workers to be normal, or even acceptable. 

O’Neill disagreed. He told his audience:

“Every year, numerous Alcoa workers are injured so badly that they miss a day of work. I intend to make Alcoa the safest company in America. I intend to go for zero injuries.”

This was baffling to the investors and reporters present, as was O’Neill’s refusal to be swayed to talk about financial matters. He doubled down, with absolute conviction that despite popular belief, any injury in industrial manufacturing was unacceptable and avoidable:

“I’m not certain you heard me. If you want to understand how Alcoa is doing, you need to look at our workplace safety figures.”

His audience remained decidedly unimpressed, with one of them calling their client later, advising them to sell their shares in Alcoa immediately, and reporting:

“The board put a crazy hippie in charge and he’s going to kill the company.”

O’Neill’s Rationale

Far from the ravings of a “crazy hippie”, O’Neill’s approach was both ethical and made good business sense. What O’Neill understood, that the audience in that first briefing missed, was that focusing on safety sent out a clear message to employees of the company that they mattered. Not only that, but it was a strategy that won them over, something they could get behind. Workers at the sharp end are rarely motivated by increasing the share price of the company they work for, but they do care about not getting injured or killed at work. O’Neill also knew that in order to improve safety, they’d need to understand exactly what was going wrong in the process – every unnecessary risk, every missed opportunity for improvement, and eradicate it. They needed to close the gap between work as imagined, and work as done. And he was steadfast in his belief that a deep focus on safety would drive improvements across the business.

O’Neill famously sent a companywide memo urging employees to raise any safety concerns or suggestions with their managers, and if they weren’t listened to, to contact him directly. He even shared his home phone number with everyone, making it clear that they had permission to call him with concerns. The message was clear: accidents and safety risks were unacceptable, and here was explicit permission – or even expectation – to speak up with ideas, questions, concerns and mistakes. This was setting the stage for psychological safety across the organisation.

Turning Points

A pivotal moment in O’Neill’s fight for safety came about six months after this first company address, when a tragic accident occurred at an Alcoa plant in Arizona. A young employee, who had joined the company for its healthcare benefits, died while attempting to reach in and fix a jammed six-foot arm on a machine. As he released the jam, the machine’s arm swung out and struck his head, killing him instantly. O’Neill responded by assembling a meeting with the plant executives, where he declared, “We killed this man. It’s my failure of leadership. I caused his death. And it’s the failure of all of you in the chain of command.” He took full responsibility, making it clear that the accident was a failure of leadership and management.

But it didn’t stop there. During this meeting, they examined every failure that led to the accident, identifying shortcomings in management practice, technical environment, instructions and training. 

As a result, they implemented new policies and practices, including installing a more visible safety barrier. 

Another serious incident occurred at a plant in Mexico, where a carbon monoxide leak poisoned 150 people, who required emergency treatment at a local convent. The senior executive in charge installed ventilators to prevent future leaks but failed to report the incident, because he was fearful of breaking O’Neill’s “Zero Injuries” edict.

O’Neill later learned about it from a Benedictine Nun, who had heard about the cover-up, as well as other management issues at the Mexico plant, and wanted to make sure that O’Neill knew about it. To make sure they were heard, they purchased shares in Alcoa, specifically to allow them to attend a shareholders’ meeting and raise the issue with O’Neill. Horrified, he dispatched a team to investigate and discovered that the incident had been intentionally covered up. The manager responsible was promptly fired, with O’Neill explaining, “It might have been hard at another company to fire someone who had been there so long. It wasn’t hard for me. It was clear what our values dictated. He got fired because he didn’t report the incident, and so no one else had the opportunity to learn from it. Not sharing an opportunity to learn is a cardinal sin.”

O’Neill also raised wages at the plant, and got rid of a number of draconian management practices, which were damaging morale and making it less likely that workers felt safe to speak up to management about concerns or ideas.

Alcoa’s Psychological Safety Transformation

These incidents demonstrate O’Neill’s approach to leadership: safety was non-negotiable, and transparency was essential. It took time, but his emphasis on safety gradually transformed Alcoa’s culture and systems. Improvements in safety protocols led to more efficient production processes, and communication across the organisation improved via increased psychological safety. By prioritising worker safety, O’Neill fostered an environment of greater trust and cooperation towards a shared goal, which translated into better overall performance. People working for Alcoa saw that they could speak up not just about health and safety, but about other concerns and ideas too, resulting in improvements across the board, from quality to efficiency. Paul O’Neill had fostered greater psychological safety within teams across the organisation.

Under O’Neill’s leadership from 1987-1999, Alcoa’s market value increased from $3 billion to $27 billion, fundamentally due to the broad positive culture change that he catalysed at the company. Alcoa’s annual net income had quintupled, and the company had become significantly safer at the same time. Reflecting on his strategy, O’Neill said, “I knew I had to transform Alcoa, but you can’t order people to change. So I decided I was going to start by focusing on one thing. If I could start disrupting the habits around one thing, it would spread throughout the entire company.”

As a leader, O’Neill’s thrived on setting ambitious goals and challenging conventional wisdom. He once remarked, “It’s particularly a phenomenon in the United States, I think, that people have a mindset of, ‘We don’t want to set goals that we’re not sure we can attain.’ So if you set goals that are referenced against some national level of performance, in effect you’ve set yourself a barrier that’s not too difficult to get over, and then can declare yourself superior.” Going against the grain, O’Neill was unwavering in his commitment to worker safety, operational efficiency, and ethical business practices.

O’Neill’s long-term commitment to safety led to a cultural shift at Alcoa, embedding safety as a core company value. This created an environment where employees felt psychologically safe to report issues, suggest improvements, and take risks, contributing to a secure and innovative workplace.

O’Neill’s Later Career

In 2001, Paul O’Neill was appointed Secretary of the Treasury under President George W. Bush. His time in the role was marked by his candour and a willingness to take controversial stances. O’Neill was outspoken on issues such as tax cuts and climate change, often finding himself at odds with other members of the administration. His straightforward approach and principled stance eventually led to his resignation in 2002. We spoke to people who worked with Paul in the US Treasury, who described how he tried to apply the same thinking from his time at Alcoa to the US Treasury, but the environment was more “Psychological Danger” than “psychological safety”, and even if he had not asked so many questions of those in power, it’s doubtful he would have made it through a 4-year appointment there.

After leaving his government post, O’Neill became a prominent advocate for healthcare reform and government efficiency. He was involved in various organisations focused on public health and policy, continuing to apply his expertise in organisational leadership to broader societal issues.

Paul O’Neill and Psychological Safety

During his time at Alcoa, Paul O’Neill didn’t use the term ‘psychological safety’ because it wasn’t well known or defined in industry until much later. But undoubtedly, his work had psychological safety at its heart, in the following ways:

1. Commitment to Safety. From the outset, O’Neill made it clear that worker safety was his top priority. In focusing solely on safety in that first speech, he set a tone of care and responsibility from the highest level of leadership – he made it clear that everyone mattered. O’Neill’s zero-injury ambition underscored his commitment to creating a safe work environment, with no compromises on safety standards.
2. Accountability and Transparency. O’Neill’s openly took responsibility for failures, as demonstrated in the Arizona incident where he declared, “It’s my failure of leadership. I caused his death.” Employees, particularly leaders, were encouraged to take responsibility without fear of repercussions, and leaders who abdicated their responsibility were sacked. Where accidents happened, detailed investigations were carried out, aimed at addressing causes and finding solutions rather than placing blame.
3. Open Communication. O’Neill fostered open communication by encouraging employees to contact him directly with safety suggestions, flattening the power gradient and reducing hierarchical barriers to speaking up. His companywide messages emphasised that every employee’s input was valuable and critical to the company’s success.
4. Consistent and Fair Enforcement of Values By firing a senior executive for not reporting a safety incident (as opposed to causing it), O’Neill demonstrated that safety standards were paramount, regardless of an individual’s status, and showed how important it was to learn from incidents.
5. Empowerment and Motivation. Focusing on safety as a motivator rather than shareholder wealth built trust and loyalty among employees. Safety improvements demonstrated tangibly to the workers that they mattered.

The story of Paul O’Neill at Alcoa is an excellent example of a psychological safety success story.

Paul O’Neill’s Legacy

Paul O’Neill’s leadership at Alcoa is an inspiring example, because it stands as a testament to the power of prioritising worker safety and ethical practices in achieving business success. His leadership philosophy transformed Alcoa into one of the safest and most financially successful companies in the world. O’Neill’s strategies at Alcoa have since been studied extensively in business schools and across many organisations as a model for responsible and effective leadership.

Paul O’Neill passed away on April 18, 2020, leaving behind a legacy of transformative leadership and demonstrating that valuing people and their welfare is not only morally right but also a catalyst for business performance.

Sources

• https://guides.libraries.indiana.edu/oneill
• https://www.rrp.com.au/blog-safety-leadership-lessons-from-paul-oneill-former-ceo-of-alcoa/
• https://davidburkus.com/2020/04/how-paul-oneill-fought-for-safety-at-alcoa/
• https://www.leanblog.org/2010/08/interview-with-paul-oneill/
• https://strategicdiscipline.positioningsystems.com/bid/104961/Would-You-Fire-Someone-for-Violating-Your-Core-Values
• http://news.bbc.co.uk/1/hi/business/7390018.stm
• https://static1.squarespace.com/static/5d12affb6c48770001d49960/t/5e8f7bb572793575cd328033/1586461628405/The+Power+of+Safety.pdf
• https://en.wikipedia.org/wiki/Paul_H._O%27Neill
• https://www.youtube.com/watch?v=BCEDbCH0HK0
• https://www.youtube.com/watch?v=tC2ucDs_XJY
• https://www.youtube.com/watch?v=0gvOrYuPBEA

Psychological Safety in Education

As well as Delivering Effective Feedback and our core workshops focussed on psychological safety, we have a new pair of online workshops on psychological safety in education to available to book now!

Psychological safety is fundamental in creating healthy, inclusive and successful learning environments for students, teachers, educators and leaders alike. In these workshops, we delve into the practices and activities that foster psychological safety in the classroom and staffroom. Full of practical tools, strategies and approaches, you’ll leave with lots of ideas about what to try next to establish and build psychological safety in your educational spaces. 

You can attend only the workshop that is most relevant to your context, or book both. Each is designed to be accessible as a standalone workshop, but they do complement and build on each other. By booking both workshops, you will receive a 10% discount. 

These Psychological Safety in Education workshops are relevant to those working with students of all ages and stages, from pre-school to Higher Education, work and training. Find out more at psychsafety.com

All attendees receive a Credly Badge, a certificate of completion to confirm attendance, further reading, materials and resources used in the session, a copy of the Psychological Safety Action Pack and a licence to use it in your organisation, access to a private alumni group, and some swag! Book here!

Psychological Safety in Practice

Skills Training Links Psychological Safety to Revenue Growth

This article is practically an advert for the management training we provide at psychsafety.com! The investment bank at Skandinaviska Enskilda Banken (SEB), a 168-year-old Nordic finance firm, introduced members of the senior management team to psychologcal safety through a 2-hour training session. This session was credited as the turning point for the organisation to pool their knowledge and expertise, and overcome transformation roadblocks. As a result, they were able to achieve revenues 25% above target.

Thanks to Diana Stepner for sharing this in the psychological safety community. Also, sorry – it’s behind a paywall, but I felt it was too good not to share.

We all knew this, but now we have proof 😀

As a very general rule, the people who want to be the boss are often not the people who are best at the job of leadership. Randomly assigned managers in this study did better than those who had an expressed desire to be in charge…

Previously unreleased Grace Hopper lectures

I’m a massive Grace Hopper fan, and often use her famous quote “You manage things, you lead people” quote in talks. I even have a Grace Hopper anticlockwise clock in my office 🙂

On August 26, 2024, the National Security Agency (NSA) released a digital copy of a 1982 lecture by Grace Hopper, “Future Possibilities: Data, Hardware, Software, and People”. It had previously been considered too difficult to convert the footage from the storage format, but the NSA deemed the footage to be of significant public interest and requested assistance from the National Archives and Records Administration (NARA) to retrieve it. You can watch the excellent lectures here. (Note, she begins the lecture in characteristic Grace style, and also describes the infamous story of finding the first computer bug!)

Social media alternatives to Twitter 

Like so many others, we’re moving away, or have already moved away, from Twitter due to the increased hate, misinformation and abuse on the platform. If you’re looking for alternatives, here are are a few, along with our handles if you’d like to follow us!

Bluesky:
Tom: https://bsky.app/profile/tomgeraghty.bsky.social
Jade: https://bsky.app/profile/jadegarratt.bsky.social

Mastodon:
Tom: https://mastodon.online/@tom_geraghty

Linkedin:
Tom: https://www.linkedin.com/in/geraghtytom/
Jade: https://www.linkedin.com/in/jade-garratt/
Psych Safety: https://www.linkedin.com/company/psychsafety/

And of course you’ll always find us at the Psychological Safety Community! 

This week’s poem:

Tell all the truth but tell it slant —, by Emily Dickinson

Tell all the Truth but tell it slant –
Success in Circuit lies
Too bright for our infirm Delight
The Truth’s superb surprise

As Lightning to the Children eased
With explanation kind
The Truth must dazzle gradually
Or every man be blind –