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Nucor Corporation

By Prof. Neha Patel

(c) Prof. Neha Patel, GLS MBA Programs

Managers are given Decisions are made

autonomy at each plant 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
Promote

produce high quality products competitive prices.

good customer service.

How does Nucor create value?


(c) Prof. Neha Patel, GLS MBA Programs

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.

What is their competitive advantage?


(c) Prof. Neha Patel, GLS MBA Programs

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

How does Nucors HR policies contribute to their success?


(c) Prof. Neha Patel, GLS MBA Programs

Organizational

Structure Employee relations principles Compensation Benefits

HR Policies
(c) Prof. Neha Patel, GLS MBA Programs

Chairman/Vice

Chairman/President Vice President/Plant General Manager Department Manager Supervisor

Organizational Structure
(c) Prof. Neha Patel, GLS MBA Programs

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

Employee relations principles


(c) Prof. Neha Patel, GLS MBA Programs

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 4 forgiveness days Maintenance personnel were assigned to each team Supervisors were apart of bonus teams
Received same bonus as employees No bonus paid if equipment is not operating 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

Output and bonus info for each team was posted at the entrance

Compensation
(c) Prof. Neha Patel, GLS MBA Programs

Department Manager Incentive Plan Annual bonus received based on performance of the entire plant Non-production and Non-department Manager Incentive Plan Bonus based on each plants return on assets
Based on return on assets A return of 25% or better was expected by the plant

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 stockholders equity above certain minimum earnings Senior Officers earned less than other industry executives

If Nucor did poorly, then Senior Officers would only receive their base pay

Compensation
(c) Prof. Neha Patel, GLS MBA Programs

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 shareholders 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

Benefits
(c) Prof. Neha Patel, GLS MBA Programs

Scenarios
Team 1 Compensation Determine Bonus amount Van Joyce Ken George Team 2 HR Policy Grievance Team 3 Benefits Determining Stock contribution Jessica Elvira Bea
(c) Prof. Neha Patel, GLS MBA Programs

Amy Yasu Jeffrey Darnell

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 workers 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 1
(c) Prof. Neha Patel, GLS MBA Programs

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 plants return on assets. What would you say to this employee? What action would you take?

Scenario 2
(c) Prof. Neha Patel, GLS MBA Programs

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?

Scenario 3
(c) Prof. Neha Patel, GLS MBA Programs

Thank you

(c) Prof. Neha Patel, GLS MBA Programs