CASE IN POINT: NUCOR ALIGNS COMPANY GOALS WITH EMPLOYEE GOALS
1. How do goals and objectives at Nucor relate to the planning facet of the P-O-L-C
framework?
Nucor’s goals: align company goals with employee goals and give employees real
power to make things happen.
Nucor’s employees behave like owners of the company. Specifically, they are
encouraged to fix the things they see as wrong and have real power in their jobs.
Management listens to lower level employees and routinely implements their new
ideas.
Nucor did not lay off any workers or reduce their benefits when it suffered a loss in
2009. Employees do not have to work overtime, they volunteer for it.
The reward system of Nucor is used to encourage employees to work harder. It also
used to evaluate workers’ performance.
(The principle of management, n.d.).
2. What negative consequences might arise at Nucor as a result of tying pay to
company performance?
Paying employees based on company performance might arise some negative effects on
the company. Employees have opportunity to earn more money if the company is doing
well, there is no upward limit to how much they can make. It would not be fair between a
good and a bad employee. Employees’ salaries should be paid basing on their own
performances not just based on company performance. However, they will do much
worse than their counterparts in other mills if the company does poorly. Employees must
align their personal goals with the company goals.
(The principle of management, n.d.).
3. What effects do penalizing low performers have on Nucor employees?
The reward system at Nucor is unique and its employees may be the highest-paid
steelworkers in the world. Employees’ earnings are based on performance. The same
incentive system exists at all levels of the company. This system penalizes low
performers while increasing commitment to the company as well as to high performance.
If employees have low performance such as they are late to work, they will lose their
bonus for the day or they miss a day of work, they lose their bonus for the entire week. If
employees do their job well today, they should have a job tomorrow. Nucor haven’t laid
off employees in 28 years.
(Smith, P. G., n.d.)
4. In addition to monetary incentives, what other ways can a company motivate
employees to increase productivity?
In addition to monetary incentives, a company can have other ways to motivate
employees to increase productivity:
Treatment: fairly with respect and dignity.
Commitment: company does not lay off the employees or reduce their benefits.
Listening: Managers listen to lower level employees and routinely implements
their new ideas.
Empowering: employees have real power in their jobs
(The principle of management, n.d.).
5. How might the different reward systems at Nucor, individual empowerment and
economic incentives, motivate people differently? Or do they have the same effect?
At Nucor, employees are motivated differently by reward systems, individual
empowerment and economic incentives.
Firstly, the reward system at Nucor is unique and its employees may be the highest-paid
steelworkers in the world. In 2005, the average Nucor employee earned $79,000,
followed by a $2,000 bonus a decided by the company’s annual earning and $18,000 in
the form of profit sharing. Furthermore, employees can attain more money by the
prosperous company operation.
Secondly, Nucor focuses on individual empowerment. Employees are treated with dignity
and respect and the company shows its commitment to employees at every turn.
Management listens to lower level employees and routinely implements their new ideas.
Moreover, employees are expected to act like owners of the company. Specifically, they
are encouraged to fix the things they see as wrong and have real power in their jobs.
Obviously, Nucor is famous for its decentralized structure and for pushing authority and
responsibility down to lower levels in the hierarchy.
Finally, one very special thing in Nucor is economic incentives. The same incentive
system exists at all levels of the company. CEO pay is clearly tied to three-year corporate
performance metrics, including return on equity and relative revenue growth. In addition,
the incentive system penalizes low performers.
These three factors have the same effects. Its purpose is to empower employees and for
the success of company. Nucor’s formula for success: align company goals with
employee goals and give employees real power to make things happen.
(The principle of management, n.d.).
6. How would unionization at Nucor impact the organization’s dynamic?
Unionization at Nucor has significant impact to the organization’s dynamic. By
protecting workers’ rights and benefits, Nucor had achieved not only profits but also
employees’ loyalty. The company has one of the lowest employee turnover rates in the
industry and remains one of the few remaining nonunionized environments in
manufacturing.
(The principle of management, n.d.).
Preference
The principle of management. (n.d.). Nucor aligns company goals with employee goals.
Smith, P. G. (n.d.). How Nucor steel rewards performance and productivity. Retrieved from
http://www.businessknowhow.com/manage/nucor.htm
