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Paul O'Neill: Values into Action

Every company parrots the same phrase: "Our most important asset is our people." Real leaders know how to prove it, said U.S. Secretary of the Treasury Paul H. O'Neill, who spoke to students at HBS recently.

If you want to know whether you are part of an organization that has the potential for greatness, ask yourself three questions, advised Paul H. O'Neill, the U.S. Secretary of the Treasury, in a talk at Harvard Business School.

1. Am I treated every day with dignity and respect by everyone I encounter? O'Neill further clarified the question: "Not 'some people' or 'not by the people who work for me' but by everyone I encounter."
2. Am I given the knowledge, tools, and support that I need in order to make a contribution to my organization—"and this is the important part," he said—that gives meaning to my life?
3. Did somebody notice I did it?

"This is not a guarantee of greatness, but I believe that an organization with potential to greatness has in it people who can say every day, without reservation, 'yes' to three important questions," he said. "In every organization—public, private, nonprofits—their written statements all say the same thing: 'Our most important asset is our people.' ...There's damn little evidence that it's true in most organizations. It's just a syrupy sentiment everybody feels compelled to make."

In unscripted remarks on leadership and values, O'Neill imparted life lessons from a forty-year career in both the public and private sectors. He spoke to HBS MBA and John F. Kennedy School of Government students on October 17.

Paul H. O'Neill
Paul H. O'Neill

O'Neill's talk offered a challenge to students to articulate their values and then prove them through concrete actions in their careers.

I was prepared to accept the consequences of spending whatever it took to become the safest company in the world.
— Paul H. O'Neill

Before his appointment to the George W. Bush administration, O'Neill was chairman and CEO of Alcoa for 12 years, and chairman for one year. At Alcoa, a company with 140,000 employees in 36 countries, he improved the safety record from 1.86 lost workday incidents (or, accidents per 100 employees that led to days lost from work) to 0.2. It is now .05. He maintained that the goal should be zero.

Educated as an economist, he served in the U.S. Veterans Administration early in his career, and later in the U.S. Office of Management and Budget, where he became deputy director. He left in 1977 for the private sector.

At HBS, he urged students to put their educations to use by helping the world's poor. It is a "cop-out" to blame the meager job market in the current economy for a dearth of opportunities, O'Neill charged. "The world is desperate for the application of what you're learning. You have an obligation."

Safety first and always
At Alcoa, O'Neill said he was determined to demonstrate that a truly great organization could be based on values without reservations or excuses. Proof of his belief that people in the organization were important, he said, needed to be made tangible in a way that would connect people with a goal that was not open to debate.

Health and safety, like other values, were essential for employees, be they in the so-called first world or third world, he said. That was even more true for organizations like his dealing in environments with metal heated to 2,000 degrees, moving equipment, and "all the hazards one can imagine."

One of the biggest Alcoa plants was in Tennessee. On his first visit, he announced to management and employees that the goal was no first-aid cases. "From now on, don't budget for safety," he told the assembled. It was the start of an effort to systematically work with everyone, "not cheerlead or bludgeon them" into zero lost workdays, but to prove there should never be a tradeoff between values and economics. Alcoa also instituted computer technology tools worldwide so that every first-aid incident would be monitored and other employees and management would learn how to prevent future injuries.

If you're really clear about what your values are, people will get out of your way.
— Paul H. O'Neill

"I told the financial staff that if anyone ever calculated how much money we were saving by being safe, they were fired," O'Neill said. "I didn't lay down rules like that very often, but I'll tell you why I did it: because I didn't want [employees] to think they were being asked to do something because management was trying to think how to save money. I didn't care, and I was prepared to accept the consequences of spending whatever it took to become the safest company in the world."

Alcoa's best division president found this out the hard way, O'Neill added. In Mexico, one hundred fifty people on the division president's watch succumbed to carbon monoxide fumes and had to be treated at an emergency clinic. The incident was never reported, so others at Alcoa were not informed nor able to learn from the accident.

"Even though no one was permanently hurt, there was no question about what should happen to this person," said O'Neill.

Public and private merge
Contrasting his experience in both the public and private sectors, O'Neill said that most distinctions between the two are illusory. Principles, if they are worthwhile, can apply anywhere. His own early years on the public side had given him the mistaken impression that business "had it all figured out; that great corporations had all the facts," he said. As a new arrival in a private company after fifteen years in government, O'Neill was surprised to learn that his immediate colleagues were more worried about competition with each other than with other companies in their industry.

The lesson he learned from both worlds is that leaders don't need to compromise if they believe in their goals. "If you're really clear about what your values are, people will get out of your way. You may have a tussle, but people will not resist you about things that are right."

This is not to say that moral force and firm conviction will always win, he cautioned students. Sometimes you will lose for bad reasons. If the experience is not to be in vain, this should generate self-reflection rather than finger pointing.

"When I've known I was right and I was not able to win, I looked at myself to try to figure out how I could have made a more persuasive case. ... It is a much more rewarding thing to try to figure out how you can improve your own persuasiveness and assembly of facts than to blame other people for making stupid decisions," he said.

Asked by a student if he considered his Treasury Department predecessors responsible for the current recession, O'Neill diplomatically refused to take the bait. "I am not in competition with seventy-one predecessors," he said. For himself, he added, his own measure of success will rely on ethics that endure when he's no longer there.