Adam Friedlander is a third generation insurance professional who has made his mark in safety, workplace safety that is. His New York agency, Friedlander Group, has for years developed and managed employer safety groups that have helped businesses improve workplace safety and save money on workers’ compensation by helping them understand why and how their injuries are happening.
“I needed a competitive advantage. We created exclusive safety groups and some unique processes to help clients optimize their productivity and profits, and to keep their employees working and safe,” he told Insurance Journal of his business.
His safety groups have been appealing in terms of their discounts and for paying out an average of about 30 percent dividends since 1992. The groups are for retail, wholesale, restaurants, hotels, oil dealers, home health care, residential care facilities and other industries.
Friedlander is also an author. He published his first book, “How to Save Big on Workers’ Compensation,” in 2011. As the title suggests, it focused on the sweet spot of the costs saving benefits of safety in the workplace.
While there is nothing wrong with saving money, workers’ safety has become about much more than that for Friedlander. His business has evolved into more of a safety consultancy as he strives to have his clients care about more than savings and understand that the benefits of safety transcended savings.
Safety, he now believes, is actually a growth strategy, a way to improve both productivity and profits. That’s why he titled his latest book, “Safety and Workers’ Compensation Strategies to Unleash Productivity and Profits.”
That’s a bit about Adam Friedlander. Now, meet Paul O’Neill.
O’Neill served as Treasury secretary under President George W. Bush from 2001 to 2002. Earlier in his career, he served in the U.S. Veterans Administration and the U.S. Office of Management and Budget. In the private sector, he made his mark from 1987 to 2000 as chairman and CEO of Alcoa Corp. where during his tenure profits and market capitalization soared to record heights. The impressive financial results under O’Neil were in great measure the result of his strategy of putting one important value, in this case worker safety, at the center of everything the aluminum manufacturing company did.
O’Neill converted the belief that a company’s most valuable assets are its people into action and results at Alcoa. He worked relentlessly to raise the awareness and commitment of everyone at Alcoa until a people-and-safety first attitude permeated the entire corporation worldwide. He told managers not to budget for safety, that the company would spend whatever it took to become the safest workplace in America. He refused to accept that there would be a certain number of injuries or even deaths a year. He instituted tools for reviewing first-reported incidents so future accidents would be eliminated.
In his bestseller, “The Power of Habits,” author Charles Duhigg captured the man and his mission. He describes the day O’Neill first spoke to Alcoa investors and analysts. The company had expanded into unfamiliar businesses and its profits were declining. The stakeholders were pleased the board had turned to fresh leadership in O’Neill and they were expecting a pro-business talk filled with the usual buzzwords, complaints about taxes and regulations, and the usual promise to reduce costs and increase profits. Instead, Duhigg reported, O’Neill’s first word were:
“I want to talk to you about worker safety.”
Much to the bewilderment of his audience, Duhigg says O’Neill talked about the number of Alcoa employees injured each year laboring with 1500 degree metals and dangerous machines. He said that while Alcoa’s safety record was better than average, that wasn’t good enough.
“I intend to go for zero injuries,” he told the investors.
And zero injuries became his lodestar. While at Alcoa, a company with 140,000 employees in 36 countries, he improved the safety record from 1.86 lost workday incidents per 100 employees to 0.2. He constantly strove for it to be zero.
What are the chances this international leader and consultant on workplace safety, O’Neill, and a businessman who has devoted his professional life to workers’ compensation and safety, Friedlander, should meet someday?
While it seems like it would be inevitable, Friedlander made sure it happened.
Friedlander first heard about O’Neill and his obsession with safety while reading Duhigg’s “The Power of Habits.”
“I was somewhat shocked to find chapter four was about Paul O’Neill and how he led with safety and grew Alcoa by 900 percent,” recalls Friedlander.
“He really implemented what we had been espousing to our clients and suggesting to them for years on how to improve safety to grow their companies. When I first read that, I thought, ‘Well, how fantastic would it be to write something specific to workers’ comp about Paul O’Neill with Paul O’Neill?’ but for four or five years, it just incubated,” Friedlander told Insurance Journal.
Friedlander wanted to write a book that focused on growth, which he calls a “bigger and better outcome” than cost cutting.
He looked up O’Neill and discovered he was participating in a seminar on safety in October in Pittsburgh. O’Neill agreed to meet with him after the seminar, not to do the interview, but to explore the possibility.
Friedlander was impressed. “He’s a phenomenal, extraordinary leader, a man of deep integrity that sincerely cares about safety and about people, and sees safety as the leading indicator for growing and organizational excellence,” says the New York broker. “It’s the first step and he’s not kidding about it. He’s very sincere about it and it’s very fascinating.”
Needless to say, O’Neill soon agreed to do the interview, which is the centerpiece of Friedlander’s new book, “Safety and Workers’ Compensation Strategies to Unleash Productivity and Profits,” in which he also interviews other workers’ compensation and safety experts.
At that same Pittsburgh conference, Friedlander also met Bill O’Rourke, who implemented O’Neill’s safety-first strategy at Alcoa Russia while he was president there, and Stephen Newell, partner with consultant ORCHSE who worked for OSHA and wrote the Blue Book on OSHA guidelines on injury and illness reporting requirements. He interviewed these two men along with the late Dave DePaolo (WorkCompCental.com founder), Brian Conner (attorney with the law firm of Weiss, Wexner and Wornow), Peggy Cook (claims vice president at the Federation of Jewish Philanthropies Service Corp.) and Jeffrey Fenster (AmTrust Financial executive and former head of the New York State Workers’ Compensation Board) for his book.
So what did Friedlander learn from his highly-anticipated interview with O’Neill? In a recent interview Insurance Journal’s Andy Simpson, he answered that question and others and provided additional insights into O’Neill and his own views on workplace safety.
Q&A with Adam Friedlander
Insurance Journal: What did you learn from Paul O’Neill? He has argued, and some say he’s demonstrated this along with Bill O’Rourke and the Alcoa Russia operation that you talk about, that focusing on safety can in fact lead to growth and higher profits. It sounds like you’ve seen this in your own work. It’s been practiced over the years, but that maybe O’Neill gave a different language to it? What was it about Paul O’Neill’s way of talking about it that you found captivating and of interest to you?
Friedlander: That’s a great question. Paul O’Neill has a few thoughts that were powerful to me. One was just that safety’s a leading indicator of all performance at a company. That he placed human life and valued it above production. That and financial reward is not an objective. It’s a consequence of safety excellence.
We’re in a world where we’re dealing with distracted leaders who have pressures from just trying to compete and survive where they perceive safety to be an expense and a distraction and something without benefit.
Paul O’Neill put a twist on it and instead of putting production over human life, he reversed it and grew Alcoa by 900 percent. I had never seen a case history that proved that. His switching around the priorities of production and human life values were fascinating to me.
Also his emphasis that putting financial objectives, seeing them as a consequence of safety…in fact he never wanted to tarnish safety or the pursuit of safety with any kind of financial objectives. He didn’t want it to be about the money. He wanted to have safety because it was important and the right thing to do on a value‑based kind of leadership, rather than have a monetary objective.
…[T]he other part that I find fascinating is his whole concept of zero injuries. Because safety is such a nebulous topic. When are you safe? How do you measure safety? Are you close to it? I find it too nebulous.
Zero injuries, I get. It’s a definition that I understand. Even though it can be unlikely, what he would say is that if you’re budgeting for three injuries per 100 people and if in December you’re at one injury, no one’s going to volunteer to be the other two injuries.
That’s a bit tongue‑in‑cheek but the point is that zero has to be what you shoot for. I find it very compelling and it’s modified our approach. We always showed the benefit of having zero injuries in terms of experience modification, savings, and other benefits, but we didn’t actually aim for it. Now it’s part of our discussion and our target.
Another point he made was that you have to change your language ‑‑ that there’s no such thing…you can’t use the word “accident.” Because that has the sound of inevitability, and that it’s an act of God. He changed it to “incident,” which can be curable, that you can take responsibility and you can do something about it and engage your mind to fix it.
These little nuances, which are somewhat subtle for someone like me who’s doing this all the time…it was very thrilling and eye‑opening.”
Insurance Journal: One of the other things it seems he demonstrated is that the culture starts at the top ‑‑ that if you believe in safety, it must be reinforced regularly at the top. Do you agree with that?
Friedlander: Absolutely. What was interesting was that all of the thought leaders in the book all agreed with this. They all came to the same conclusions from differing disciplines within the workers’ comp industry. Some were defense attorneys, some were leaders, employers, regulators, but they all agreed with this.
Not just that it starts at the top but the culture has to be reinforced and led by the leader and that you have to walk the talk. That’s why my conclusion chapter was saying that the leader has to act as the chief caring officer. Because without the leader as the chief caring officer, it’s just going to fall flat. The program will not thrive.
Insurance Journal: Another thing that comes through in many, if not all, of the interviews in your book is, on the topic of fraud, not that they dismiss this, but it’s probably not as prevalent as generally perceived. It’s not necessarily where they spend a lot of their time. Do you find that the case?
Friedlander: I do, but I think the reason why it captures the imagination of so many employers may be because they just don’t want to own the fact that people get hurt and it could be for something they could have controlled.
They might want to blame it on fraud and blame it on the employee, rather than their culture or their leadership or something within their organization that could have avoided that claim. I think it’s just a path of least resistance.
Insurance Journal: If you have this safety culture and people see you doing the right thing by workers, it’s almost as if there’s less motivation for people to try to jig the system because they know they’re going to be treated OK. They’re not focused on that.
Friedlander: Right. Peggy Crook from FOJP [Service Corp.], which runs a lot of the claims for a lot of the hospitals, gave an example of a hospital where the management treated their employees as if they were gaming the system and they as a result had terrible claims experience. She had another hospital that treated their employees wonderfully and thought they were great and they had excellent claims experience. As Bill O’Rourke said, when you stress safety, you communicate that you care and as he says, “What’s better than that?”
It really does come down to that simple division. Do you care or don’t you care, and do you walk the talk or do you just make insincere comments? If you make insincere comments, it’s really going to undermine your success.
Insurance Journal: Do you yourself see safety as a matter of ethics?
Friedlander: I do see it that way. I have to say that, since I’ve had conversations and more exposure to Bill O’Rourke and Mr. O’Neill, I see it more so that way. I have to sometimes curtail it. When we deal with clients we have to strike a balance. For Mr. O’Neill, he doesn’t want to tarnish safety with financial objectives. Our clients, if we don’t discuss the financial advantages of safety, we’re not going to get their attention.
Insurance Journal: That’s the line that they understand.
Friedlander: That’s right. We do a blend because they all know it’s the right thing to do deep down. What they need is encouragement. They need a little education in terms of the upside of safety. They don’t really know or recognize that it’s the path to productivity and profit.
Insurance Journal: Some of your interviews, Alcoa being one, Hilton Hotels being another— concern sizable organizations. How important are these ideas for small or medium businesses? Do you talk to your smaller clients of medium‑sized businesses the same way? Are they just as likely to see the rewards of the safety culture as larger corporations?
Friedlander: I think no. I think the answer is no.
The reason is I find the cutoff point…Look, first of all, if they care about others, you could do that at any size company. Where I find them more receptive to the things we talk about, and our processes is when their premium is north of a half a million dollars. At that point, they have a lot more open claims. They recognize they have a problem. They’re uncomfortable with the regulations, and whether they’re adhering to them. They see that their HR people are scared and overwhelmed by all the claims they have.
They recognize they have to retrain and rehire. They see that it’s a big problem. The smaller firm, where they pay a premium, and they want the claims to go away, and they say, ‘Hey, look, I’ll pay you $10,000, but I’m not dealing with the claims.’
They’re just not as ripe an opportunity for understanding and appreciating the costs and implications of a lack of safety. They just insure it away. They transfer the risk, and they’re done. The bigger employers, I find the bigger the company we work with, the more they appreciate what we do, and the more they need what we do.
Insurance Journal: Are there some best practices that come out of this book or your own experience, things that maybe get overlooked?
Friedlander: Just in general, there’s not enough time spent in our industry coming up with reports that isolate patterns of injuries, especially informed by the impact on the experience mod. We do that, and I haven’t seen it elsewhere.
I think that Paul O’Neill’s process of best practices is pretty state of the art. First, he establishes a philosophy that safety’s a leading indicator of all performance at a company, that leaders value human life above production, and that financial reward is not an objective, which I mentioned earlier.
Then he goes into, “The first step is that the leader articulates the vision of an injury‑free workplace,” meaning zero injuries. That is the starting point. It comes from the leader to establish the agenda for the organization, and set the tone for the culture.
Then he changes the language to be, “Incidents,” not, “Accidents.” Then his core was that requires a root cause analysis of exactly what happened within 24 hours, and with penalties if it’s not done for the upper management.
When he got to work in the morning, Bill O’Rourke talked about how he would look at their data system from the day before to see if anyone was hurt, and want to know instantly what was done to make it never happen again.
Bill O’Rourke would get there early to make sure he could preempt it, so that he’d have the answers for them, because he knew it was a problem. Then he’d establish safety committees. Then he would communicate it company‑wide, which is very important, so that each part of the company learns from what happened, so they don’t have to make the same mistakes. Have continuous organizational learning.
Another philosophy was there was no budget for safety, that you invest the resources in training systems and procedures, because people’s well‑being is more important than cost.
Finally, he hired outside expertise for guidance, and to keep leaders focused. He had a plan. We essentially adhere to that plan.
Insurance Journal: It’s not just a matter of learning from an actual incident or injury. There are events that can be learned from that maybe stop short of, fortunately, an injury.
Friedlander: They refer to that as a near miss. The goal there is whether it happens or not is not that material. It’s just that the circumstances and environmental problems that led up to that near miss have to be eradicated so that it can never happen again. The whole idea of going to zero injuries is so powerful.
Editor’s Note: Friedlander’s book of interviews, “Safety and Workers’ Compensation Strategies to Unleash Productivity and Profits,” is available on Amazon.com.
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