Nucor Corporation
A Case Study
Presented by
Lisa Gislason and David Holmes
How does Nucor create value?
• Managers are given autonomy at each plant
• Decisions are made quickly without the need to
wait for decisions from headquarters
• Plants can source there inputs from other Nucor
plants or from the outside market.
• Nucor is constantly innovating
• Use modern equipment
– produce high quality products
– competitive prices.
• Promote good customer service.
What is their competitive advantage?
• Building steel manufacturing facilities
economically and operating them competitively
• Continuous innovation, modern equipment,
individualized customer service and producing at
competitive prices.
• Mini-Mills
• Large applicant pool to hire from because they
are seen as an attractive place to work, allows
them to be very selective for who they hire
• Have a willingness to take risks.
How does Nucor’s HR policies
contribute to their success?
• Four tier management structure
• Group-based bonus incentive plan that trickles up to
management
• They have a scholarship program for children of
employees which promotes long-term employee
retention
• Managers have dinner with all employees with open
forum for discussion on how to improve and increase
innovation, allows employees to ask questions and
managers to provide feedback
• All managers, including CEO, wear same color hard hat
at work
• Policies promote teamwork and allow the company to
grow from within because of open communication and
experience from their employees
HR Policies
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Organizational Structure
Employee relations principles
Compensation
Benefits
Organizational Structure
Chairman/Vice Chairman/President
Vice President/Plant General Manager
Department Manager
Supervisor
Employee relations principles
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Employees will have the opportunity to earn
according to their productivity
Employees should feel confident that if they do
their jobs properly, they will have a job
tomorrow – job security, reduce work week
instead of fire or lay off employees
Employees have the right to be treated fairly
Employees must have an avenue of appeal
when they believe they are being treated
unfairly – grievance process
Compensation
Production Incentive Plan
• Paid weekly bonuses based on production
– Based on actual output in relation compared to expected tonnages
produced
– Based on group not individual performance
– Expected output did not change unless there was a change the
production process
– If tardiness or attendance kept team from meeting goals, then no one
received a bonus in the group
• If you are 5 minutes late, you lose your bonus for the day
• If you are 30 minutes late or absent, you lose your bonus for the week
– 4 forgiveness days
– Maintenance personnel were assigned to each team
• No bonus paid if equipment is not operating
– Supervisors were apart of bonus teams
• Received same bonus as employees
– Output and bonus info for each team was posted at the entrance
Compensation
Department Manager Incentive Plan
• Annual bonus received based on performance of the entire plant
– Based on return on assets
– A return of 25% or better was expected by the plant
Non-production and Non-department Manager Incentive Plan
• Bonus based on each plant’s return on assets
– Includes everyone not in previous 2 plans
– Every month each plant received a chart showing its return on assets on
year-to-date basis
• Posted in employee cafeteria
Senior Officers Incentive Plan
• Based on return on stockholder’s equity above certain minimum
earnings
– If Nucor did poorly, then Senior Officers would only receive their base
pay
• Senior Officers earned less than other industry executives
Benefits
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No company cars, corporate jets, executive dining rooms or exec. parking spaces
– All employees traveled in economy class
Not available to Officers
– Profit-sharing
• Nucor contributed 10% of pretax earnings per year
• 15 to 20% was paid out to employees in March
– Scholarship program
– Employee stock purchase plan
• Monthly purchase plan
• Nucor contributed a 10% matching contribution
– Service awards
Holidays, vacation schedules and insurance programs were the same
All employees wore the same green hard hats
Company report contained the name of every employee
401K
– Matching contribution of 5 to 25% of employee contribution based on return on
shareholder’s equity
Each employee received 5 shares of stock for each 5 years they worked continuously
Encouraged workers to recruit their friends and family to work for the company
Scenarios
Team 1
Compensation
Determine
Bonus amount
Team 2
HR Policy
Grievance
Van
Joyce
Ken
George
Amy
Yasu
Jeffrey
Darnell
Team 3
Benefits
Determining
Stock
contribution
Jessica
Elvira
Bea
Scenario 1
You are the department manager of melting in one of the ‘mini-mills’
operated by Nucor Corporation. It is Monday, and you are working
on the bonuses earned by the employees the previous week. Every
worker earns an average hourly wage of $10 and works 40 hours
per week. In melting, there is a base requirement of 16 tons of good
billets per hour; above that the workers earn a 4 percent bonus for
every ton per hour. Actual production per hour was 34 tons of good
billets per hour. Determine an individual worker’s pay for the week
without the bonus. How much will a worker make with the bonus for
the week?
Now consider, the worker you are determining a bonus for was 10
minutes late to work one day and will lose their bonus for that day.
What is his weekly earnings including bonus?
Scenario 2
You are the general manager of Nucor-Yamato Steel Company in
Blytheville, Arkansas. You have just received a request from an
employee to review the performance evaluation their supervisor
recently administered. The employee does not believe the
evaluation reflected his/her performance. The employee in the last
month has exhausted their four forgiveness days and has been late
on more than one occasion. The employee claims that when he/she
is at work his department is more productive than when he/she is
not there. The employee is additionally upset about not receiving
bonuses for the days he/she was over five minutes late and weekly
bonuses when he/she was over 30 minutes late. According to the
reports you have on his/her department, productive on days he/she
was at work was 30 percent higher, even on the days in which he
was late, than days he/she was absent. The supervisor would like
to see the employee fired because he/she is unreliable. In addition
the employee has been with the company for three years. Your
bonus is based on the plant’s return on assets. What would you say
to this employee? What action would you take?
Scenario 3
You are an employee at Nucor, and you are about to
complete your fifth year working for them in May. In
January you purchased five shares of Nucor common
stock through the monthly stock purchase plan for $50
per share. How much did you pay for your stocks last
month?
According to the case, Nucor matches employee
contributions. You decide to make the same purchase of
stock over the next 12 months. How many stocks did you
purchase? How many stocks more did you gain from the
Nucor contribution? What is the value of the stocks
provided to you by Nucor?
Thank you
Any questions?