Case Study 2: Alcoa's Core Values in Practice

CASE STUDY 2 1

Case Study 2: Alcoa's Core Values in Practice

BUS250

Corporate and Social Responsibility (ABU1246A)

Instructor

Case Study: Alcoa's Core Values in Practice

Alcoa seems to live by an integrity approach. Alcoa had a very strong values-based culture. ... In 1985, Fred Fetterolf, then president, decided the company needed to document the values that all employees must live by: Integrity; Environment, Health, and Safety; Customer; Accountability; Excellence; People; and Profitability.

It’s later CEO Paul O’Neill, empathized workplace health and safety to be one of the most important principles that all employees should abide by. Alcoa also implemented a global ethics and compliance program, and closely complied with the U.S. Federal Sentencing Guidelines and Sarbanes-Oxley Act. In order to ensure that employees were adhering to the company’s integrity approach, Alcoa appointed an ethics and compliance officer who regulated the company’s a global code of conduct and continuously reported top Board on maintenance of not only its prescription with code but also on its ethics and compliance training for employees, as well as other related systems.

O’Neill played a strong and unmistakable role in reinforcing the company’s concern to health, safety, and general ethical values. He publicized Alcoa’s commitment to health and safety with other analysts and outside parties and often emphasized that his commitment originated not from obligation to fulfill government policies but out of sincere interest for his workers.

O’Neill’s demonstration of his ethical sincerity was strong to the point that he fired one of his most devoted and skilled managers even though this manager had been largely responsible for stellar increases in profit and for his popularity with clients. More so, this manager had not violated any overt principle; he had merely violated some safety principles in spirit, but O’Neill was concerned that this manager’s influence may impact other departments. For him, there had to be no crack in the construction of principles that Alcoa characterized itself by.

Training for employees and management and regular inspections of workplace were reinforced by routine reports transmitted to the Boards about the state of safety in the workplace. Accounts of accidents were also scrupulously noted, to the extent that Alcoa achieved a remarkable record: 44.2 percent of Alcoa’s 242 locations worldwide had zero recordable injuries. 76.0 percent of Alcoa’s 242 locations worldwide had zero lost workdays. 99.9 percent of Alcoa employees had zero lost workdays.

O’Neill‘s credo was that “Alcoa Aspires to Be the Best Company in the World.” and he went to all extents to prove that Alcoa was a company that practiced this. In an open letter to his employees he wrote the following:

“It is imperative that there be no misperceptions about our values. It is equally imperative that we all learn from this. Full compliance with both the letter—and spirit—of our policies is imperative. Anything less is unacceptable.”

In short, the company emphasized that their code of ethics must firstly be understood and practiced by all employees, secondly be monitored and maintained by management, and thirdly support the company’s value system as a whole. It does not matter how much money that a person generates for the company, if he/she does not follow the code of ethics of the company, he/she will no longer work for the company.

Reference:

Lawrence, A. & Weber, J. (2011), Business and Society: Stakeholders, Ethics & Public Policy:

Thirteenth ed.