Enhancing Strategic Decision Making
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at Nucor plants everyone wears green hard-hats except maintenance personnel who wear
yellow so that they can be easily spotted.
This approach appears transferable and the motivational effects contagious. Iverson recalls
when Nucor purchased a plant and immediately sold the limousine and eliminated executive
parking spaces in favor of a first-come, first-serve system. Iverson greeted employees on their
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Nucor Corp. and the U.S. Steel Industry / 18
way into the plant and recalls one employee who parked in what was the bosss reserved spot and
commented that the simple changes in the parking system made him feel much better about the
company he worked for.
Compensation & Bonus System Leadership by example can only induce so much behavior;
one of the more visible aspects of Nucors culture is its compensation system, particularly the
prominent bonus system. “Gonna make some money today?” is a common greeting on the plant
floor, and discussion of company financials is as common in the lunchroom as basketball scores.
The bonus system is highly structured, consisting of no special or discretionary bonuses. The
company is divided based on the production teams of 25-50 individuals who are responsible for a
complete task (such as a cold rolled steel fabrication line, for example). The group includes
everyone on that line from scrap handlers, furnace operators, mold and roller operators, even
finish packagers. Managers get together and, based on the equipment being used, set a standard
for production. This standard is known to everyone in advance and doesnt change unless the
company makes a significant investment in capital equipment. With the standard in mind,
employees make whatever changes they see fit to increase production. A bonus is paid for all
production over the standard and there is no limit as to how much bonus can be paid. The only
qualifier is that the production must be good – that is of sufficient quality for sale. No bonus is
paid for bad production. At the end of the week, all the employees on a particular line get the
same production bonus which is issued along with their weekly checks.
With bonuses, Nucor employees typically earn as much as their unionized counterparts in the
integrated plants. Weekly bonuses have, in recent years, averaged 100 to 200 percent of base
wages. Typical production workers earn $8 or $9 in base pay plus an additional $16 per hour in
production bonuses and averaged $60,000 in 1996 making them the highest paid employees in
the industry. Since Nucor locates their plants in rural locations, employee salaries are well above
the norm for any specific area, making Nucor jobs highly desirable.
Nucor also offers several other benefits to help motivate and retain employees. In the 1980s,
they shifted to a work week of four-12 hour days. Workers then take four days off, and then
resume another intensive shift – a practice borrowed from the oil industry. While this practice
results in a lot of expensive overtime – Crawfordsville alone paid out an extra half million
dollars in 1995 due to the compressed work week – management feel that the ensuing morale and
productivity gains pay for themselves. The company has also disbursed special $500 bonuses
(four times in the last 20 years) in exceptionally good years. They also provide four years worth
of college tuition support (up to $2,000/year) for each child of each employee – excluding only
the children of corporate officers.
Job Security
Listening to Nucor managers, it is difficult to determine which fact they
are most proud of – 30 years of uninterrupted quarterly profits, or 20 years since they have last
had to lay off an employee. Nucor locates in rural areas and there are often few other
employment opportunities, let alone other jobs at similar pay scales, so Nucor feels a strong
responsibility to keeping workers employed, even during economic downturns.
Popular impressions aside, Iverson is clear to note that Nucor does not have a no-layoff
policy. He cautions that Nucor will layoff employees as a last resort if the survival of the
company is at stake.
But during prior downturns, the company has chosen to ride out
slowdowns with their “Share the Pain” program involving reduced workweeks and plant
slowdowns instead of layoffs. What is most unusual with the program is the brunt of poor
performance is felt most heavily at upper parts of the organization, particularly as long-term
compensation is an integral part of the executive pay system. During a period of reduced demand
for steel, the plants reduce their operations. For line personnel and

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