(First published on LinkedIn)

Nothing renders “tone-from-the-top” worthless faster than seeing an act of non-compliance go unpunished because it was committed by someone deemed too important to discipline.

It doesn’t matter whether that someone is a high-performing sales representative or a senior executive. Once the perception sets in that certain people are exempt from ethics and compliance, no number of CEO videos or messages touting company values would make employees believe in them.

For those looking to strengthen the “tone,” Paul O’Neill, the CEO of Alcoa from 1987-1999, is probably the best example we can all learn from.

As soon as he took over the helm, he announced that worker safety would be his number one priority. At the time, Alcoa was an aging giant in the aluminum manufacturing industry suffering from quality and efficiency issues, not to mention a decreasing stock price. This announcement confounded investors who expected him to talk about inventory, costs and revenue. One investor immediately called his largest clients to dump the stock, thinking that a “crazy hippie” was in charge and is going to ruin the company.

To show that he meant business, O’Neill demanded that every injury be reported to him within 24 hours. Every single one. When he discovered that the president of Alcoa’s strongest division had failed to report an incident that exposed 150 workers to carbon monoxide fumes, O’Neill fired him. There were no “ifs” or “buts” about it.

To further set the tone, he threatened to fire any financial staff who tried to calculate how much money they were saving by being safe.

“From now on, we’re not going to budget for safety. As soon as anyone identifies anything that could get someone hurt, I want you to fix it and I will figure out how to pay for it,” he said during a visit to a large manufacturing plant in Tennessee.

He was prepared to put whatever resources were necessary to reach his goal, and didn’t want employees to think that worker safety was a priority only because it would save the company money.

He also gave out his home phone number to union leaders to call him if safety issues persisted. Late one night, he got a call from a production worker about a broken conveyer belt that had not been fixed in several days. O’Neill called the plant manager to get the problem fixed and report back when the job was completed. He got the call at 5am that morning.

To help employees quickly report injuries up the management chain, O’Neill invested in a communication network that was a precursor to today’s company-wide email system. For a company of 140,000 employees that operated in 36 countries before the Internet era, that was no small feat. Employees around the world used the communication network to suggest solutions to prevent future incidents, and even started to use it to make recommendations for improving business operations.

What he ended up with was an injury rate that dropped from 1.86 per 100 employees to 0.2. Along the way, the organization was transformed into one that was much more efficient and quality-driven.

The investor who thought O’Neill was a “crazy hippie” eventually realized his mistake, as the company’s market value rose from $3 billion to $27 billion and net income rose from $200 million to $1,84 billion by the time O’Neill retired 13 years later.

The takeaways from Alcoa are intuitive, yet not universally followed:

1. Tone-from-the-top has to be backed up by actions;
2. A stated priority is only truly a priority if there are adequate resources behind it;
3. A core value that everyone rallies behind can be the transformative force in leading the whole business to success.

While Alcoa focused on worker safety as the core value to rally around, what if a company focused its efforts on an ethical culture, with a goal of zero transgressions?

Personally, I think the results would be just as spectacular.

For those curious to learn more, I got my information from the following sources:

11/4/2002 – Harvard Business School Working Knowledge article by Martha Lagace

5/13/2012 – Pittsburg Post-Gazette article by Mark Roth

4/9/2014 – Business Insider article by Drake Baer

The Power of Habit: Why We Do What We Do in Life and Business by Charles Duhigg

(First published on LinkedIn)

Recently I wrote about How to Do “Tone-from-the-Top” and Really Mean It and highlighted the legendary leadership of Paul O’Neill while at Alcoa.

But for most companies, it takes more than one leader – no matter how exemplary – for tone-from-the-top to actually mean anything.

In my experience working with client organizations, the “tone” quickly dissipates as you move down the organization. In one project, we asked the sponsoring executives to send a rousing email to employees impacted by the project and to explain why it is important. Then we asked the next level of management to cascade the message down through each level, until all employees receive the message from their managers. When we checked to see whether the employees got the message, we found that barely any communication took place below the executive level.

This goes to show that a true tone-from-the-top takes a lot of work, especially for companies that operate in multiple countries. It’s not merely enough for an executive to make a statement, no matter of how powerful that statement is.

The graphic below shows all the work that needs to be done to achieve true tone-from-the-top.

None of these steps is difficult, but it does takes time and resources. If a company is serious about establishing tone-from-the-top, it needs to recognize the work required and commit the time and resources to get it done right.

Otherwise, it’s just wishful thinking.

(First published on LinkedIn)

When we talk about tone-from-the-top, we usually mean a positive one. But what if it goes completely the opposite way?

That’s what Fox News showed us when Gretchen Carson sued Roger Ailes for sexual harassment and retaliation. Ailes was ousted just two weeks into an internal investigation about the allegations. Since then, over 25 women (and counting) have come forward to relay stories of being propositioned for sex in exchange for career advancement, and their fear of retaliation if they spoke up. Some have shared that in interviews with Ailes, they were asked to stand up and twirl around so he could see their legs.

I wonder which part of “We treat each other fairly and with respect, establishing a high trust environment where people can do their best work” Ailes thought he was modeling from the company’s Standards of Business Conduct.

According to an excellent interview on NPR’s Fresh Air program, other high-paying executives have been let go as a result of his ouster. They were discovered to be receiving high salaries with few responsibilities, other than to stay loyal to Ailes and to keep mum about his transgressions.

Even with Ailes’ departure, the broader issue is the culture of harassment and the fear of retaliation that permeates throughout the organization. Ailes was not the only one who treated women as a buffet for their sexual appetites, and plenty of employees are still defending that camp.

I know how it feels to work in an environment where women were not respected as equals. I once worked on a team that organized an annual informal outing for men only. One year, it was promoted via company email with a photo of a half-naked, big-bosomed woman and the warning “no women allowed.” The women on the team, many of whom have worked on the same team for many years, merely shook their heads.

Shortly after I left, a former colleague told me about a corporate retreat in which drunkenness was encouraged. A couple of the men tried to kiss the women and unhooked their bras. My friend was dismayed, but no one thought to file a complaint because there’s the unspoken culture of “Oh, that’s just Joey. He’s harmless.”

If a good tone-from-the-top exists, the leader would discipline the perpetrators and warn others to never do something like this again or else, and mean it.

If the tone-from-the-top is weak, as in my experience, the faulty leader simply ignored or accepted the incidents as the way things were. The offended could speak up and risk their careers and alienating their colleagues, or suffer in silence and hope it doesn’t happen again.

But if the tone is decidedly bad, as in the case of Fox News, Ailes was not only saying laud and clear that such behavior was condoned, but that he was showing how it was done!

Incidents like these weave into the company’s unspoken culture, to be recounted to old and new employees alike. That’s how they learn “how things are done around here.”

I applaud Ms. Carlson for bringing the case forward and cracking open the seemingly impenetrable toxic culture at the network. I hope this leads to a permanent improvement in the culture at Fox News.

For other companies that have been getting away with such behavior, I hope this serves as a wakeup call for them to take their ethics and compliance program more seriously, starting from the top.