Number of employees
People Are the Foundation of Our Success
Our people are the foundation of our success throughout the world, and we foster a high-performance culture that develops talent and promotes teamwork.
We continue to create a work environment where:
- We attract, develop, engage, and retain a diverse workforce;
- We prepare leaders for our future growth in the community and at work;
- We drive high performance by clearly differentiating top talent for both ratings and rewards;
- We treat all people with dignity and encourage diversity and inclusion;
- Work is done in an environment where we are open in our communications and honest in our feedback;
- We take ownership for our actions and deliver on our promises; and
- The Alcoa values and employee pride inside and outside of the workplace are evident across the organization.
In 2012, Alcoa adopted a new company vision in response to employee engagement survey results, which indicated our employees desired a vision that was motivating, positions Alcoa well for the future, and has a clear link to what they do every day. Our new vision—Alcoa. Advancing each generation.—acknowledges and credits the people and innovations that make it possible and aligns all stakeholders to what we want to accomplish as a company.
“For Alcoans, these are not simply words on a page. Every one of our values actively lives in our people, processes, and passion. This is what sets our course, giving us the resilience to thrive in both good and difficult times, and ensuring that we do the right things, and we do them right.”
Alcoa Chairman and CEO
At the same time, employees across Alcoa examined and updated our values to ensure they are strong, actionable, and relevant. These values—integrity, respect, innovation, excellence, and environment, health, and safety—are at the core of our company, guiding our behavior and shaping our culture.
To achieve our vision, our human resources function is partnering with the business units to set specific actions, timetables, and metrics that provide direction and measurement against progress. There are challenges that must be overcome, including the global nature of the company, differing cultural issues and governmental regulations, and our decentralized structure.
2012 Employees by Region
Our strength as a company is based on our ability to leverage the differences and many perspectives that our people bring to the workplace. This is how we define inclusion.
The global nature of Alcoa allows people from all backgrounds to excel in their own country or internationally. No matter what language they speak, where they are from, or what they look like, employees will be welcomed and treated with respect.
Our approach is to focus on ways to build on our similarities while valuing and leveraging our differences to achieve high performance. We support an inclusive work environment where all employees are valued, encouraged to express their ideas and opinions, and challenged to reach their full potential.
All qualified individuals and contractors seeking job opportunities with us will receive consideration for employment without regard to race, color, religion, national origin, disability, sexual orientation, gender identity/expression, veteran status, genetic information, sex, or age (within statutory limits). (See Alcoa’s equal employment opportunity statement and human rights policy.)
“This is a moment of tremendous pride for Alcoa. Without question, Alcoa is a stronger, more competitive company because we make inclusion through diversity a priority. We built meaningful goals into our operations, compensation, and human resource systems to drive progress. This recognition from Catalyst further validates our efforts and motivates us to continue building an inclusive work environment."
Alcoa Chairman and CEO
In early 2013, Alcoa received the prestigious Catalyst Award, which honors innovative organizational approaches that address the recruitment, development, and advancement of women in the workplace. The initiative for which we received the award—Building Opportunities for Women in a Hard Hat Company—showcases how we broke down barriers in a male-dominated industry and achieved greater gender representation through an aggressive diversity agenda.
Diversity is a key component of Alcoa’s recognition as a talent leader. In 2012, we received the following external recognition for our diversity efforts around the world.
Great Place to Work/Employer of Choice Awards
- Achievers 50 Most Engaged Workplaces™ Award (Alcoa)
- International Innovations in Diversity Award—Profiles in Diversity Journal (Alcoa and Alcoa Foundation)
- Great Place To Work (Alcoa Wheel Products Mexico)
- Employer of Choice for Women (Alcoa of Australia)
- LGBT Best Places to Work (CEI) for fourth consecutive year—Human Rights Campaign (Alcoa)
- One of the Best Companies to Work for in Brazil—Great Place to Work® Institute (Alcoa)
- Best Company for Women in Brazil—Great Place to Work Institute (Alcoa)
- Top 30 Company in Brazil to Start a Career—Você S/A Magazine (Alcoa)
Recognition of Leaders
- Women Worth Watching®—Diversity Journal (Gena Lovett, Alcoa Chief Diversity Officer)
- Presidential Award for Distinguished Service (Michelle O’Neill, Vice President, Government Affairs)
- Female Executive of the Year EMEA—Stevie® Award for Women in Business (Janne Sigurðsson, Managing Director, Alcoa Iceland)
- Top 10 Breakaway Leaders—CIO Executive Summit (Nancy Wolk, Chief Information Officer)
- IT Executive—Information Week Brasil (Tania Nossa, Information Services Manager, Global Business Services)
Our chief executive officer and executive team hold all Alcoa leaders accountable for inclusion.
Our inclusion initiatives are integrated into the overall business strategy, and the results are tied to incentive compensation. Each business unit also has developed specific plans and initiatives aligned with the corporate inclusion strategy.
As part of our annual cash incentive compensation plan, we have a diversity goal that represents 10% of the total payment opportunity. It is tied to increasing global female employment and U.S. minority employment in the professional and executive ranks.
We updated the strategic sustainability target for these two employee groups in 2011 to achieve the following representation at Alcoa’s management level by 2013:
- Global women: 19%
- U.S. minority: 16%
We met both goals at the end of 2012. Women comprised 19% of our global leadership, and 16% of U.S. minorities held leadership positions. We further raised these goals to the following for 2013:
- Global women: Professionals, 26.0%; senior manager, 19.5%.
- U.S. minority: Professionals, 17.6%; senior manager, 16.5%.
Global Women in Professional and Senior Manager Positions
U.S. Minorities in Professional and Senior Manager Positions
Domestic Partner Benefits
We provide coverage for domestic partners of either gender and their children under the U.S. health and welfare plans. We also provide domestic partners with pension benefits in the non-bargained defined benefit pension plans and retiree medical plans.
Corporate-Wide Employee Networks
Alcoa Women’s Network
Since its founding in 2003, Alcoa Women’s Network (AWN) has worked to improve the recruitment, retention, and promotion of women leaders within Alcoa. At the end of 2012, there were 35 local networks globally with more than 1,300 members.
In 2012, AWN strengthened its chapters and partnered with internal business leaders and resource groups to execute on six key principles:
- Actively support Alcoa’s recruiting process;
- Lift visibility and contribute to the overall development of Alcoa women;
- Increase engagement among Alcoa women;
- Extend the influence of Alcoa women in achieving positive business results;
- Extend the influence of Alcoa women leaders to the community; and
- Raise the profile of Alcoa as a compelling place to work for women.
AWN local chapters actively supported the network’s mission by hosting location-specific symposiums, offering professional coaching, and participating in Month of Service projects.
Alcoa African Heritage Network
The mission of the Alcoa African Heritage Network (AAHN), which was established in 2004, is to improve Alcoa’s recruitment, development, and inclusion of leaders of African heritage. The group is focusing on networking, career development, retention, mentoring, and community activities.
Major AAHN activities in 2012 included the following:
- Co-hosted a National Society of Black Engineers recruiting event and social media Tweet-Up;
- Organized community service events at each location with an AAHN chapter;
- Hosted Urban League Shoes for School event in Knoxville, Tennessee (USA); and
- Hosted a diversity summit with local members of the AWN and Employees at Alcoa for Gay and Lesbian Equality in Lancaster, Pennsylvania (USA).
Employees at Alcoa for Gay and Lesbian Equality (EAGLE)
Launched in 2007, EAGLE is an active network of gay, lesbian, bisexual, and transgendered (GLBT) employees, as well as other Alcoa employees—known as EAGLE Allies—who support their concerns. The group’s goals are to create a supportive and inclusive workplace so all employees will reach their full human and career potential.
Overall EAGLE membership in 2012 was 44% male and 56% female, with members in 17 U.S. states and eight countries. Of the total membership, 82% are EAGLE Allies. In 2012, membership nearly doubled over the prior year.
EAGLE continued focusing on three key priorities in 2012: recruit, engage, and develop. Activities for the year included the following:
- Placed EAGLE members as representatives on Alcoa’s Campus Partnership Program teams to enhance the recruitment of GLBT candidates;
- Hosted the first national conference, Ostem/Out for Work, for recruiting GLBT undergraduate and graduate students;
- Sponsored a white paper and webinar in which more than 100 companies participated to discuss EAGLE’s leading-edge practice of an ally council; and
- Launched a Just Ask internal social media forum to increase GLBT awareness and to attract new EAGLE members.
In our fourth year of participation in the Human Rights Campaign Corporate Equality Index, we received another perfect score of 100 and ranked one of the best places to work for GLBT equality for the second consecutive year. We continue to lead the mining and metals industry on this index.
African American Committee (AAC), Davenport Works
The mission of the AAC is to contribute to the success of Alcoa Davenport Works by promoting intercultural competence within Alcoa DPW and creating and maintaining relationships for the development of the African American community at large.
East Asian Alcoan Association (EAAA), Alcoa Technical Center
The EAAA has been active since 1993 in the Pittsburgh area. The mission of the association is to fully utilize the members’ language abilities and deep cultural understanding to help Alcoa businesses in Asia, primarily China. The members act as company ambassadors, hosting visiting Chinese delegates and representatives of Alcoa Asia joint ventures. The network also provides mentoring, career development, and social and networking events for its members.
Hispanics Actively Building Levels of Opportunity (HABLO), Davenport Works
HABLO is committed to diversity and will strive for the betterment of all Alcoa employees through hiring, education, community involvement, and an inclusive workforce that gives Alcoa a competitive advantage in the global market.
New Professionals Network (NPW), Davenport Works
This network, which consists of new hires from a cross-section of Davenport’s salaried departments, was created to assist with the retention of new hires, interns, and co-op students by helping these professionals feel valued and a part of the Alcoa community.
Support & Development Association (SDA), Warrick Operations
The purpose of this organization is to assist and support minority employees in their efforts to achieve equal employment, development, promotion, and retention opportunities within the company through the sharing of professional knowledge, skills, and experiences.
Military Affinity Group, Davenport Works
The Military Affinity Group offers an opportunity for employees to network with others who desire to learn about and support the U.S. armed forces. Membership is open to anyone, but we are particularly looking for employees with past or present military service or family members of military members.
Building Opportunities for Women in a Hard Hat Company
Our compensation programs are designed to support our business strategy by rewarding behaviors that deliver results against business goals. The programs drive performance to meet the expectations of our internal and external stakeholders.
We use a total compensation approach in each of our respective global markets by incorporating base and variable pay—both annual and long-term—along with appropriate benefits. We ensure that our compensation meets or exceeds legal minimums and is in full compliance with all applicable laws in all jurisdictions in which we operate.
To attract, retain, and motivate our employees, we reward them at a level that is competitive within the relevant labor market. We target our total compensation at the median of competitive industry standards and conduct annual compensation and benefits benchmarking in each of our labor markets to ensure we remain competitive. Through strong individual, team, or company performance, employees have the opportunity to earn above-target compensation.
We face several challenges in designing and executing our compensation approach:
- We constantly monitor and make adjustments where necessary to our executive compensation arrangements to ensure alignment with our shareholders;
- Despite general high unemployment levels, the competition for leadership talent remains high and has resulted in more pressure to attract new talent and retain our existing leaders;
- New markets, such as Russia, China, and Saudi Arabia, have unique compensation environments and require a more flexible approach to attract and retain top employees; and
- Rising benefit costs have led us to explore new ways of making our benefit programs effective for our employees while limiting long-term liability for Alcoa.
We made a few significant changes to our compensation plans over the last several years to address the challenges mentioned above. Changes at our top management level included increasing the stock ownership guidelines and modifying long-term incentive awards to include a three-year performance condition relating to profit margin and revenue growth. We did not make any significant structural changes to our executive compensation arrangements in 2012.
In 2012, up to 20% of our variable compensation plan was tied to achieving significant aspects of our sustainability targets. These targets included safety, diversity representation in our workforce, and reductions in carbon dioxide (CO2) emissions due to process improvements and improved energy efficiency.
Specifically, these sustainability targets and their share of the variable compensation plan at the corporate level were:
- CO2: 5%
- Safety: 5%
- Diversity: 10%
Our 2012 achievement payouts at the corporate level were 9.1%, 2.5%, and 16.3% for CO2, safety, and diversity targets, respectively.
Billions of US dollars
We compensate executives based on the market and performance. We target each compensation element at median market rates based on an annual analysis of companies in a wide variety of industries that are of similar size and scope to Alcoa. In addition, the Compensation and Benefits Committee of our Board of Directors retains its own independent consultant to analyze market data and provide general compensation advice, particularly on CEO compensation.
Our compensation programs are designed to motivate our executives to take actions that are best for the long-term performance of the company while delivering positive annual results. We place a heavy emphasis on performance-based incentive and equity compensation. This compensation mix offers an opportunity for above-average compensation for above-average performance balanced by the risk of below-average compensation when our performance does not meet our goals.
As executives move to greater levels of responsibility, the percentage of their pay based on performance is increased. Furthermore, the percentage of total compensation paid in the form of equity also increases as executives have increasing responsibility for corporate performance, thereby more completely aligning their interests directly with those of our shareholders.
Our annual cash incentive compensation plan has two components: a formula based on company performance (at the business unit, group, and corporate levels) and a qualitative evaluation of individual performance. The business unit performance is based on a combination of financial and non-financial goals. The non-financial goals included sustainability-related parameters, such as safety, a reduction in energy intensity, and diversity goals. They also covered production-related parameters, including productivity, delivery performance, quality, and other metrics specific to a particular business.
Our equity awards are a combination of stock options and restricted stock units. In 2012, performance-based restricted stock units were awarded at the top management level. The final number of stock units will be determined based upon company performance against targets set for profit margin and revenue growth over three one-year performance periods beginning in 2012 and will vest in 2015. Our plan prohibits re-pricing stock options, and we have not granted options with a reload feature since 2003.
For a more thorough overview of the our executive compensation programs and practices, including a complete explanation of compensation decisions for our five most highly compensated employees, please see the Compensation Discussion and Analysis in our annual proxy statement.
Our general compensation programs are designed for simple and flexible delivery based upon the financial and operating metrics of the company and the relevant business unit.
The structure is designed to deliver median compensation within a specific labor market when median performance is achieved at the individual, business unit, or corporate level. When superior individual or team performance is achieved, compensation may be higher than the median.
We openly communicate the total compensation program to employees and link it to ongoing performance feedback.
In today’s challenging market, we take the initiative to reward and recognize employees. By providing and utilizing recognition programs, we can:
- Create a positive work environment and improve morale;
- Motivate high performance and reinforce desired behaviors; and
- Encourage loyalty, increase retention, and decrease turnover.
To give corporate-wide recognition, we showcase employees who received an award on our intranet. It is one of the intranet’s most popular features, indicating that employees want to see more recognition of their peers. Examples include the You Make a Difference Awards and the Global Impact Award Program.
Our You Make a Difference Awards provide our Executive Council and senior regional leaders a significant way to instantly recognize and reward individual employees who achieve exceptional results that go beyond normal job expectations.
The Global Impact Award Program recognizes teams of employees for exceptional business impact and creative ways to solve business problems effectively. The award categories are growth, productivity, asset management, Alcoa Advantage, community engagement, and environment, health, and safety.
Another corporate recognition program is awarding special quarterly stock grants to employees who make outstanding long-term contributions to the company. These grants are intended for professional employees who are not eligible for annual equity grants. A total of 599 employees received an award under this program in 2012.
Our benefit packages vary by country due to statutory requirements and priorities established by the workforce.
We have developed a global database that houses all statutory and non-statutory benefits by country to provide better management and to also help with the movement of employees between countries.
Key to Alcoa’s ability to advance each generation is the safety, health, and well-being of our employees. In 2012, we launched the Alcoa Global Wellness Initiative to focus on the most important issues for Alcoans: increasing physical activity, encouraging healthy nutrition, being tobacco-free, and enhancing well-being. Additional information on this initiative can be found in the Health section.
In the United States, we provide pension and health and welfare benefits (but not disability or life insurance benefits) to part-time employees, which we define as active employees who work at least 50% but less than 100% of the regular work schedule for a location. We do not provide these benefits to temporary employees, who generally do not work on a regular schedule or work less than 50% of the regular work schedule for a location. Outside of the United States, our benefit practices for these two categories of employees vary by location.
Achievement of our business strategies is contingent upon having the right people in the right jobs at the right time on a global basis.
An ongoing challenge for us is learning to manage our globalization efforts. We have had a long-standing global presence in many regions of the world. We are recognized as an employer of choice in South America and Australia, for example.
As we enter new regions of the world, we are faced with the challenge of branding for employment purposes, developing infrastructure, and demonstrating how we deploy our corporate values. We are using recent experiences in Iceland and Russia to identify what are best practices that can be transferred elsewhere. This will continue to be a challenge for us as we grow globally.
Whatever the position—from chief executive officer to supervisors to operators on the shop floor—our belief is that we are employees of Alcoa first and, for some of our workforce, members of trade and labor associations as well.
One of the primary ways we engage our workforce is through the Alcoa Business System, which has “people linchpin the system” as one of its three overarching principles.
No matter where we operate around the globe, we believe in freedom of association.
Each year, we negotiate numerous labor agreements throughout the world. In total, we have more than 80 such agreements.
The 2012 collective bargaining agreement covering 122 hourly employees at our South Korean plant is valid through April 2014, with a wage reopener in March 2013.
Covering 362 employees, the 2013 collective agreement at our Alcoa Kunshan plant in China is valid through December 31, 2013.
In Australia, 68% of our Alcoa of Australia employees are covered by enterprise bargaining agreements (EBAs.)
In 2012, negotiations commenced for the Western Australia Operations Agreement with the Australian Manufacturing Workers Union (AMWU), which covers 580 employees. This agreement expires in June 2013.
Negotiations for seven other EBA’s will be ongoing throughout 2013. Two EBAs expire in 2013, and five expire early in 2014.
Alcoa Australia Rolled Products has two EBAs. One covers the Yennora rolling mill and recycling plant, and the other is for the Point Henry rolling mill. The Point Henry agreement expired in 2012 and is being renegotiated in 2013.
All EBAs are certified by Fair Work Australia.
Around 90% of our hourly workforce in Europe is covered by a collective bargaining agreement. In 2012, we successfully negotiated standalone labor agreements in Hungary and Norway.
In the United States, approximately 56% of the hourly workforce is covered by a collective bargaining agreement, including a master labor agreement with the United Steelworkers (USW) that covers 6,200 employees at 10 locations. In addition, we have 17 standalone labor agreements covering 3,400 U.S. employees.
In 2012, we successfully negotiated four new labor agreements with the USW, United Autoworkers, and the Machinists labor unions. There were no work stoppages in the facilities covered by these U.S. agreements.
In Canada, approximately 2,200 of our 3,250 hourly employees at nine plants are covered by nine standalone collective agreements. Global Primary Products Canada employees are represented by the Canadian steelworkers union Metallos and the Confederation of National Syndicates. Building and Construction Systems (BCS) employees are represented by the Canadian Auto Workers; United Food and Commercial Workers; and Structural, Ornamental, and Reinforcing Iron Workers.
The Becancour Rod Plant agreement was renewed for a three-year period in February 2011, while the Baie-Comeau agreement was renewed for an eight-year period in May 2011. All three Aluminerie de Bécancour Inc. agreements expired on November 22, 2012, and a new five-year agreement was reached in February 2013.
BCS-Kawneer in Lethbridge negotiated a new 3.5-year labor agreement in 2011.
In Brazil, all employees are represented by a local labor union. Collective agreements are established usually once a year, and there are eight standalone labor agreements.
The growing labor market in Brazil, represented by a declining unemployment rate of less than 5%, brought pressure for higher salary increases from the union and productivity concerns from the company during the 2012 negotiations. Despite lengthy negotiations, our eight locations in Brazil signed agreements without strikes or loss of production.
At our Jamalco operations in Jamaica, negotiations were concluded in May 2012 with the Union of Technical, Administrative and Supervisory Personnel (UTASP), representing salaried employees. The agreement is for calendar years 2011 to 2013. Negotiations have since commenced for a new labor agreement for hourly employees.
In Suriname, 61% of our Suralco workforce is unionized. There are two unions, with one representing about 5% of the unionized employees who work at a remote mine location. Labor agreements currently in place with both unions are set to expire at the end of 2013.
Alcoa’s commitment to recruit, retain, and develop the most talented employees available in the job market is best described by the Alcoa Talent Advantage, which ensures we leverage the full potential of our people across our businesses. This is realized by using common processes and tools to:
- Source talent to ensure a high-performing diverse workforce;
- Engage and align all employees in contributing to their full potential;
- Develop high-performing employees to drive competitive advantage; and
- Advance talented employees to strengthen our succession pipeline.
“Competitive dynamics have changed. The only sustainable competitive advantage truly is the type of people you have and the way they work together.”
Alcoa Chairman and CEO
Research and our experience tell us that employers like Alcoa face the following major issues in the global labor market:
- Lack of qualified, experienced workers in the highly skilled labor market to fill operational positions;
- Intense competition for top talent makes retention, engagement, and employment branding top priorities;
- Despite continued high unemployment in many developed countries, we face a shortage of critical technical and leadership skills;
- Emerging markets (e.g., Brazil and China) are rapidly growing into mature markets with higher levels of skills, driving a focus on hiring and developing local talent;
- Technology has provided a world of knowledge to job seekers, creating an open environment for benchmarking, networking, and gaining knowledge of companies—all combined with low candidate loyalty; and
- Economic and political volatility issues may generate new issues in the workplace.
Our processes to source talent ensure a high-performing diverse workforce by identifying and recruiting employees at all levels in their career. We have established a broad approach that includes campus, military, and diversity recruiting efforts. We also operate internship programs, selectively recruit key experienced hires, and partner with technical institutions. Additionally, we post most of our open positions up to a senior leadership level on the Alcoa intranet so employees can apply for positions directly.
One of the many ways Alcoa contributes to the sustainability of the communities in which we operate is by providing local job opportunities at competitive wages. Many Alcoa leaders began their careers in operational roles at one of our manufacturing facilities.
With plants often located in remote areas, we recognize the importance of employing local talent and strive to do so whenever possible. We advertise our job opportunities to the local community in a variety of ways, including bulletin boards, career websites, state employment agencies, and local newspapers. We also attend career fairs that support the local community.
At our Juruti Mine, located in the heart of the Brazilian Amazon, we implemented a multi-pronged approach to develop local employees from a labor pool with minimal industrial skills and high illiteracy rates. Today, around 80% of the workforce is from the Brazilian state in which the mine is located.
Alcoa Campus Partnership Program
Started in 1997, the Alcoa Campus Partnership Program in the United States supports the company’s commitment to build a workforce that exemplifies the qualities of leadership, excellence, and inclusion. This program relies upon a cooperative and coordinated effort by our business and resource units to recruit new talent from a group of 19 partner universities.
The universities are selected based on the quality and breadth of their academic programs, the diversity of their student populations, and their historical relationship with Alcoa. We strive for a consistent, year-round presence on campus by meeting regularly with faculty, offering information sessions for students, attending career fairs, providing guest speakers in the classroom, and conducting interviews.
We invest more than US$800,000 annually in this program through grant monies awarded to the partner universities. The grants support educational initiatives that focus on promoting inclusion, gender equity, and global perspectives in the fields of business, science, engineering, and technology.
Each year in the United States, we hire approximately 200 interns and an additional 100 recent college graduates. The most highly sought graduates are those with degrees in engineering, business administration, accounting/finance, human resources, procurement/supply chain, and environment, health, and safety. We rely on the Campus Partnership Program to help uncover top talent in these areas.
To further increase our brand as a preferred employer among campus students, we maintain a Facebook page. The page had more than 25,000 followers at the beginning of 2013.
Engage and Align
Our processes to engage and align all employees in contributing to their full potential ensures that there is alignment between our people and our business needs. We use a performance management process and a people review process to ensure that we are driving the appropriate employee development actions for the company’s long-term sustainability and establishing a match between Alcoa’s needs and employee aspirations and talents.
Our annual Global Voices Survey measures the engagement of our employees and helps us identify favorable areas, as well as priority areas to address.
Each year, the entire Alcoa workforce is invited to participate in our Global Voices Survey. This web-based tool is produced in 15 languages and contains 48 questions that measure 10 dimensions of the employee experience. In addition to employee engagement, the survey gauges supervisor effectiveness, leadership/vision, community commitment, diversity/inclusion, environment, health, and safety commitment, valued employee, quality, and survey follow-up.
From 2010 to 2012, our employee engagement score increased from 60% to 72% despite downward trends in manufacturing’s best-in-class companies. We have seen year-over-year incremental improvement since starting the survey in 2006. The overall response rate in 2012 was 94%, which has been consistent over the last three years and is higher than most external benchmarks we follow.
Our score improvements have been driven by targeted action planning in the businesses based on leveraging statistical analysis of key engagement drivers. In addition to the traditional correlation analysis that most companies perform, we started conducting partitioning analysis on the employee engagement survey data in 2011.
Partitioning analysis provides the answer to a critical question: From all of the explanatory factors, is there a particular factor that most differentiates the highly engaged employees from those with the lowest engagement? Partitioning can be applied repeatedly on groups and subgroups, so it also finds combinations of factors and thresholds that optimally separate the high- and low-engaged employees. We have used this analysis to identify the most important engagement drivers for all of our locations to help each find the right focus areas for its action plan.
We deployed plant-level partitioning analysis to provide every plant with its top drivers of engagement to bring focus to its action planning. We also continued to maintain emphasis on The Road to Engagement Program, where top locations share best practices in engaging employees. This provides an opportunity for plants that still have room for improvement to learn from the best and seek additional help and advice.
We continue to identify action items based on survey feedback, and we will work to improve the year-over-year results. Increasing employee engagement will result in improvement in critical performance areas, such as retention, absenteeism, productivity, and overall business results.
Performance Management Process
Our performance management process is the foundation of our talent assessment. It is based on the following principles:
- Individual roles and objectives directly support organizational business objectives;
- Evaluations are based on achievement of results and competencies that support achieving those results;
- Employees are accountable for their performance, while managers provide support;
- Employees receive rounded feedback on their performance;
- Rewards are based on demonstrated results;
- There are linkages with employee development and succession planning; and
- The process supports continuing performance improvement.
Performance management is designed to focus on achievement of goals, improvement, and continuous elevation of standards for both individual and organizational performance. It is linked with our overall people development and succession planning processes and completely integrated with our compensation system. The overall performance rating is the main driver for an employee’s total compensation. In 2012, we had 97% of salaried employees participating in the performance management process.
This process considers employees the owners of their performance plan, with supervisors and colleagues contributing to their performance and development process. Employees regularly receive constructive and appreciative feedback from colleagues, supervisors, and internal customers, and evaluations are based on the achievement of individual and team results in a manner consistent with our values.
The process also consists of a formal development plan, whereby a manager and an employee establish career goals and a formal individualized plan to achieve those goals. This plan may be a combination of e-learning, formalized courses, books, mentoring, and on-the-job experiences.
The performance management process is a continuous loop of planning, monitoring, executing, coaching performance, and assessing results. This is supported by a foundation of continuous feedback, growth, and development. Positive efforts should result in rewards, both in the form of compensation and career advancement.
The key components to the performance management process include:
- A tight link between organization and individual goal setting by establishing individual goals alongside company goals;
- A competency framework to establish the behaviors and skills important to goal achievement and to serve as the foundation for development planning and other human resources systems;
- Automation of the entire process to enable effectiveness of the process and allow for calibration and use of metrics to ensure quality and consistency. These data will also help us understand competency gaps that can be resolved through workforce development; and
- Greater differentiation to help ensure that we appropriately recognize and reward our top talent and help those who are performing below expectations to improve or adjust their career expectations.
2012 U.S. Employee Voluntary Turnover Rate
Our processes to develop high-performing employees drive our competitive advantage.
We have created a variety of initiatives to help our employees develop throughout the various stages of their careers with us.
Our leadership development programs ensure that our leaders have the capabilities needed to drive high performance on an ongoing basis and accelerate change. In addition, an internal/external job posting process helps employees identify potential career moves.
We have a comprehensive leadership framework that addresses the needs of leaders at all levels within the company and focuses on four central themes:
- Alcoa identity and challenges;
- Alcoa organization and advantages;
- The Alcoa business management framework; and
- Alcoa’s leadership competencies of edge, energy, energize, execute, and passion (4Es and a P).
The content for each program is designed to address the needs of the leaders at that level. There are four centrally designed and managed programs: Advancing Supervisory Excellence (ASE), Leadership Fundamentals Program (LFP), Advanced Leadership Program (ALP), and Executive Development Program (EDP).
The ASE program is delivered at more than 100 operating locations and focuses on the development of our almost 6,000 front-line operations leaders. The leadership skills of these employees are critical to our ability to successfully motivate and engage our workforce and execute our aggressive business programs.
The first phase of the ASE training is a 50-week program that includes pre-assessment surveys, implementation of best practice processes, multiple skills training courses, continuous manager coaching, and peer and situational mentoring. The second phase continues to reinforce the learning from phase one and develops communication, change, and diversity leadership skills, as well as financial acumen.
The EDP, ALP and LFP programs are global resident programs for our leaders at the department, function, and business levels. During these multi-day programs, participants are immersed in learning within the leadership framework themes and are provided with both group and one-on-one coaching. Ongoing coaching and follow-up on learning outcomes continue after the program for each participant.
Participants in these programs must be identified as top talent in at least one of the last three years, must be nominated by their business leaders, and must be approved by our executive leadership. Women and U.S. minority nominees who meet selection criteria are prioritized for the programs to support the development of a more diverse leadership pipeline.
Our CEO and his leadership team continued their monthly virtual sessions with the company’s top global leaders in 2012, expanding participation to include the top leadership of every location and business. Called Leadership Dialogue On-Line, these sessions foster increased understanding of the business, its priorities, and key topics in leadership. There is also an open forum for questions and answers, and participants are responsible for cascading the information from the session further into the organization.
Our technical group conducts an annual program that caters specifically to developing leaderships skills in emerging leaders in technical functions. Three weeks of training are spread across 12 months, culminating with an action learning project using the tools and knowledge learned.
Our leadership development programs are a valuable retention tool. Investment in talented people, coupled with recruiting loyal teams, helps drive and build dynamic businesses for the future.
Alcoa Mentoring Program
We launched the Alcoa Mentoring Program in 2009 as a development tool for top talent in our senior manager ranks. The program maximizes potential and leverages the Alcoa Talent Advantage through:
- Promoting knowledge and expertise sharing;
- Bridging skill and knowledge gaps; and
- Encouraging growth through professional relationships.
We define mentoring as a professional relationship designed to share business and professional knowledge, skills, behaviors, and values. We believe a strong mentoring culture offers benefits that positively impact both our people and our business.
Benefits of a Mentoring Culture
- Increase employee engagement.
- Connect employees across
businesses, functions, and geographies.
- Foster Alcoa values.
- Provide development opportunities.
- Attract and retain employees.
- Bridge employee skill and knowledge gaps.
- Provide access to, and retention of, knowledge and expertise.
- Strengthen our leadership succession plans.
- Offer a low-cost, effective development tool.
The mentoring steering committee facilitates pairings based on input from the mentees regarding their mentoring needs and preferences, as well as input from managers and mentors. A mentoring website provides access to a mentoring library and references to support the relationships.
We reached a milestone in 2012, with 100% of our top senior managers having a mentor assigned. There were 463 mentoring relationships being supported by 208 mentors, an 89% increase since 2011.
Alcoa Senior Manager Mentoring Relationships
We are expanding mentoring as a development tool to a broader audience of employees at all levels. Participants in the Alcoa Supervisory Excellence program, for example, are exploring peer mentoring to support the formal leadership development experiences conducted at locations. Mentoring is also being incorporated into Alcoa: Our Story, our orientation program for new employees.
Alcoa: Our Story
We offer Alcoa: Our Story (AOS) to new employees through an interactive virtual session format. This program enables these employees to experience what it means to be an Alcoan and to understand our vision, values, key strategic initiatives, and business strategy directly from our business leaders. It is about transforming employees into Alcoans.
AOS is a year-long series of monthly, one-hour webinars. Although it is targeted for new employees, all employees are welcome to participate regardless of their duration with the company.
We use our internal Yammer social network to post questions for each month’s AOS speaker. This orients employees to Yammer, which is designed for collaboration, file sharing, and knowledge exchange within Alcoa.
AlcoaLearn, our corporate-sponsored learning management system, enables employees to find resources that will help them learn on demand and in their own style. It also assists in maintaining their training records by tracking both online training and instructor-led offerings globally.
AlcoaLearn supports key company initiatives, such as business continuity planning, data privacy, and environment, health, and safety. It also offers a wide variety of business and soft-skills training that is available to all employees.
In 2012, AlcoaLearn housed 4,775 online courses and supported the administration of 6,264 instructor-led courses. The latter represents 443,810 global training hours during the year, a 35% increase from 2011.
Available in 22 languages, AlcoaLearn allows employees to see upcoming and completed training. Managers are also able to view the status of the critical, assigned training of their direct reports.
Because AlcoaLearn is web-based, it can be accessed quickly from work, home, or anywhere an employee has an Internet connection, making it easier for employees to find time for learning and development in their busy schedules.
Because AlcoaLearn offers so many courses, we launched a new, user-friendly course catalog in 2012 to increase usage of our online offerings and provide employees with a quick way to access training when they need it.
From intranet sites to workshops, classes, and instructor-led training sessions targeted to specific functions, we use a variety of methods to educate our employees on sustainability.
We developed and deployed sustainability training to employees of our global commercial function beginning in 2010 to ensure they could interact effectively with our customers on our sustainability advantages and challenges. We expanded the training during 2011 and 2012 to deepen their knowledge and understanding and further ensure they could link up effectively with our customers to align sustainability strategies across the value chain.
In Brazil, we have implemented online sustainability training called ABC da Sustentabilidade (Sustainability ABC) that is available to all employees. Its goal is to have all employees understand sustainability and put it into practice on a daily basis.
We also sponsor the Sustainable Enterprise Academy, which conducts sustainability training. Each year, various employees—including functional managers and plant managers—participate in the academy’s twice-a-year courses. Our employees also attend other sustainability-oriented programs and courses conducted by independent organizations, such as the University of Cambridge.
Our internal sustainability website provides employees with additional insight on how they can integrate sustainability into not only their business practices but also their daily lives.
We are also working to educate our employees on how they can personally reduce greenhouse gases. In Australia and the United States, the Make an Impact program includes a greenhouse gas footprint reduction kit and associated education program for Alcoa employees and their communities.
Workforce Development Projects Bring Employment Opportunities to Juruti
Focused Training Advances Supervisory Excellence
Mentoring Program Builds Management Strength in Russia
Unique Alcoa Retraining Center Helps Former Employees Gain Employment
Our process to advance talented employees focuses on strengthening our succession pipeline. We define succession planning targets for key positions to ensure business continuity and smooth transitions as talent moves within or out of the organization.
Talent Review Process
Our business groups and resource units conduct an annual talent review to determine successors for each key position. This process rolls up from our locations across the globe to the CEO and his lead team.
Successors are classified as ready now, ready in one to three years, or ready in three to six years. The CEO then reviews the successors for each key position with the group presidents and resource unit heads. They also discuss opportunities for cross-business unit transfers, accelerated development, and external targeted hires to fill vacant ready-now slots. In November of each year, succession plans for key positions and top talent are discussed by the Executive Council to ensure succession plans are robust, gaps are filled, and development opportunities are identified for top talent.
The disciplined execution of this process enabled identification of successors ready now and/or ready in one to three years for 95% of our 300 most critical roles. The process also provides visibility and opens developmental opportunities for emerging talent across the company.
In 2012, we emphasized cross-business succession planning and continued to focus on reaching deeper into the organization to identify our future leaders. Our activities included confirming these leaders have a robust development plan and that they are considered for new assignments regardless of their business unit or function.
The talent review process ensures there are highly qualified individuals in key positions today and into the future. We reviewed more than 1,000 leaders in 2012 to inventory and assess the depth of our talent, as well as to plan development opportunities to meet the needs of the individual and organization. We also focused on individuals who could be shared across business units to drive development of broader competencies and expanded career opportunities.
In 2013, we will be transitioning from our custom Leadership Evaluation and Development (LEAD) software database to a talent database that is integrated with the company’s enterprise resource planning software.