How Companies Use Safety to Drive Operational Performance
“We have to start with safety. It’s how we earn the trust of our people. It allows us to ask them to participate in other improvement activities.” ~ Japanese Manufacturing Manager
The statement above was an eye-opener for Milliken Vice President Craig Long. Here’s how he explains the encounter at Industry Week, “I led several study missions to Japan to learn about world-class manufacturing, visiting over 40 operations, and in every case, they started with a safety briefing. At one plant, we said, ‘we are not here to learn about safety, we are here to learn about world-class manufacturing’.”
That simple exchange with a Japanese executive changed the fortunes of Milliken & Company in a big way. Milliken has been in the textile industry since 1865 and was facing an existential crisis. While most others in the industry off-shored to low-wage countries, Milliken leadership was committed to remaining competitive and manufacture in the United States.
Long assessed Milliken’s safety program, “We were working hard on safety, but in a silo. We saw no connection between safety and operations. We were in survival mode.”
World Class Safety Programs
Milliken executives charted a new course for the company by adopting safety as one of the main drivers of operational performance. Long relates, “What we learned in Japan really connected the dots. Milliken reached the conclusion that world-class safety was not obtainable unless everyone in the organization was engaged. Easy to say, but hard to do. This level of change required significant training and restructuring of roles and responsibilities.”
Milliken today has:
- more than doubled the S&P 500’s rate of earnings growth.
- met world-class safety rates for more than 25 years.
- become the first U.S. corporation to be recognized twice as one of the safest companies.
Milliken isn’t an aberration. There are several companies that have put safety at the forefront of their operational strategy.
Former Alcoa CEO, Paul O’Neill was another believer in the importance of world-class safety. O’Neill addressed Wall Street Analysts with this opening statement, “I want to talk to you about worker safety.” When he faced objections from analysts, he followed up with, “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.”
Alcoa’s Results:
“Within a year, Alcoa’s profits hit a record high. Upon Mr. O’Neill’s retirement in 2000 to become the treasury secretary, his leadership helped the company’s annual net income surge more than five-fold. Market capitalization was at $27 billion, and Alcoa had become one of the world’s safest companies.” (Industry Week)
Fast Facts about Safety (Milliken)
- Every lost-time injury costs roughly $37,500
- Fortune 500 companies could save $50 million in annual workers compensation costs by improving its safety and health rate from national to world-class levels.
- It takes $800 million in sales revenue to earn $50 million in profit for the average Fortune 500 company.
- Nationally, companies spend more than $50 billion annually in direct workers’ compensation claims.
Milliken’s success led to the development of Performance Solutions by Milliken, a world-class consulting firm dedicated to operational excellence.
For these companies, safety was used to drive operational performance. It holds that if companies’ get safety right, it sets the tone for the whole organization to achieve its goals. In a global economy, every company has to compete at world-class levels. And for many successful companies, world-class safety is a main cornerstone.
Author Bio
Russell Richer has 15 years of experience as a B2B copywriter and 17 years as a corporate accountant. I specialize in promoting B2B products, software, SaaS, and services related to sustainable manufacturing, industrial contracting, supply chain, environmental health & safety, and business process automation. Contact Russ @ richer-communications.com or LinkedIn.
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