Study on Nucor Corp.
An Organization’s productivity and efficiency depends to a large extent on what employees think or perceive about their organization. It is a well-known concept that “If you keep your employees happy, they will make your customers happy”. So to make them happy or motivated, challenging jobs, tasks, assignments are to be provided along with better or superior environment to excel in. As a result, we can have two benefits; on one hand it will enhance the employees’ job experience and on the other hand organization’s productivity will increase.
Turnover and absenteeism will be low, employee commitment will be high. In short, job satisfaction and dissatisfaction play a major role behind overall employee motivation. Herzberg’s Motivator-Hygiene theory is a good way to understand the concept of job satisfaction and dissatisfaction in an organization. Frederick Herzberg’s Motivator-Hygiene Theory tries to determine specific factors responsible for job satisfaction and dissatisfaction. His study found separate and distinct cluster of factors associated with job satisfaction and dissatisfaction.Achievement, recognition, characteristics of the work and advancement are considered to be the motivators which mean job characteristics associated with job satisfaction.
On the other hand company policy and administration, technical supervision, salary, interpersonal relations with one’s supervisor and working conditions were most frequently mentioned by employees expressing job dissatisfaction. These are categorized under hygiene factors i. e. job characteristics associated with job dissatisfaction.The hygiene factors and motivators influencing employee behavior at Nucor are presented below: Hygiene Factors: Pay and Security| * Nucor has an unusual pay system.
The company pays lower salary than the market average for a worker. The average market salary is $16- $21 an hour, where a Nucor employee gets $10 per hour. Although Nucor pays lower than average, it facilitates its workers with bonuses and profit shares. So that, an employee’s entire shift can triple the average steelworker’s take-home pay. Nucor gave out more than $220 million in profit sharing and bonuses to the rank and file in 2005.
The average Nucor Steel worker took home nearly $79000 last year. In addition, each got $2000 onetime bonus to mark company’s record earnings and almost $18000, on average, in profit sharing. * Such huge bonuses make their workers think that “It’s like I got a second job, and I’m doing the same one” * For this unique facility, the employees feel more motivated towards productivity and efficiency. | Company policies and Administration| * Company policy is structured in such a way that people at the company always feel like being on the front line of business.Top level managers talk to common workers time to time, listen to their problems, hope and aspiration, thoughts and ideas; also take risks on their ideas and accept occasional failure. * The company not only rewards good work but also penalizes bad work.
Bonuses are calculated on every order and paid out every week. If workers make a bad batch of steel and catch it before it has moved on, they lose bonus the otherwise would have made on that shipment. But if it gets to the customer, they lose three times that. * Compared with other companies pay disparities are modest at Nucor.A typical CEO makes 400 times what a factory worker takes from; whereas Nucor’s CEO makes only 23 times that of his average steel worker.
Like general worker CEO and top managers also suffer when performance is low| Technical Supervision and Interpersonal Relationship| * Supervisors and employees also count themselves as parts of the company. For a instance, as mentioned in the case, three Nucor electrician move to Hickman (Ark) plant as soon as possible, when they got to know about the accident happened there.Nobody asked them to make the trip, but they went there on their own, leaving behind what they were then doing. The team worked 20-hour shifts to get plant up and running again. There was no direct financial incentive for them.
But for the company their contribution was huge. * It has become a standard procedure for the Nucor’s worker to visit their counterparts time to time and through co-operation and idea-sharing, developing a healthy competition aim towards greater common goal-‘more production more bonus’| Work Environment| * At Nucor, work is always team based.It’s not the CEO and other top managers’ organization; it’s also the common workers’ organization. Following comment of one worker testifies the ultimate truth “At Nucor we are not ‘you guys’ and ‘us guys’. It’s all of us guys. Wherever the bottleneck is, we go there, and everyone works on it”| Well-organized Management| * Through continuous process of trial and errors, improvement action Nucor’s management has found a way to safety efficiency increased output, cost reduction and profitability.
“They’ve got everything down to a science; it gives something to shoot for”.Although they have taken the essence of scientific management, negative outcomes of such type of management (job dissatisfaction, poor mental health, higher level of stress, and low sense of accomplishment and personal growth ) have been avoided through profit sharing and bonuses and by promoting commitment and dedication among the workers. | Top to bottom open system| * At Nucor, open system prevails from top to bottom. even the CEO is accountable to the common workers; he talks to them takes, takes question from them, asks them for feedback and clears the company’s intentions and visions.Even he does not enjoy more facilities than a common worker; for instance, he flies commercial himself, manages without an executive parking space and really does make the coffee himself in the office. | Motivators: Achievement| * Nucor’s employees try their best to achieve high level of standard in productivity and profitability.
The organization’s culture is developed in such a way that employees experience satisfaction through accomplishing difficult task, manipulating and managing organization’s assets for effective production. The trends of rivaling make employees highly motivated to seek for further achievement. Recognition| * All the employees of Nucor feel recognized for their contribution to the company as every year the name of the annual report. This influences the employees positively and they work for the employees with spontaneity like the three electricians from different plants mentioned at the beginning of the article. Plant managers regularly set up contests for shifts to try to outdo one another on a set goal related to safety, efficiency or output.
The shifts also get recognition for that as High performers, High achievers e. g Nucor’s Utah Plant. Stimulating Work | * The work assigned to the employees are highly challenging as well as stimulating. As they strive for better performance and excellence for the positive culture of competition among different plants and shifts, they feel more motivated to work. As when the radish is put in-front of an ass it starts to move fast, similarly the promise of bonuses and profit sharing influence workers to take up more challenge to do better.
| Responsibility| * Each employee of the company hold a certain level of the responsibility. They are self-directed and committed to the company.They take risk on their own tries their level best to ensure profitability for the company. It is because they will suffer if the company does bad. “In average-to-bad years,we earn less than our peers in other companies. That’s supposed to teach us that we don’t want to be average or bad.
We want to be good. | Advancement & Growth| * There’s always room for improvement at Nucor. Each employee has an opportunity of advancing his/her career through better performance. At Nucor there is no production ceiling or output barrier or restriction. Very high co-operation exists among the managers and workers.Such a congenial environment fosters advancement and growth.
And the company excels towards progress and developmen Analyzing Nucor’s Hygiene and Motivational factors; we see that hygiene factors at Nucor are organized in such a way that negative feelings towards work environment are absent or very less. This implies that no job dissatisfaction exists there and even if exists it is very low. At the same time motivational factors are present so job satisfaction comes in the mind of employees, which ultimately reduces turnover, absenteeism, develops commitment and improves job performance.This implies that there is job satisfaction among the workers and it is more likely that they think of their company not as a separate entity but their very own. Analyzing the entire scenario, we can say that it would not be easy for other companies to copy Nucor’s approach to employee motivation.
The reasons grounding this conclusion can be described as follows: At Nucor, an overall motivation is created through maintaining a proper combination of motivators and hygiene factors suggested by Herzberg. For this purpose, the company follows specific procedures.The company has consciously developed a culture where the art of motivation is about an unblinking focus on the people on the front line of the business. At Nucor, the top managers regularly talk to the company people, listen to them and risks are often taken on their ideas with an acceptance of occasional failure. This culture is often hard to develop for other companies because for promoting this culture managers need to move away from the command-and-control model which is predominant in American business for the better part of a century. This shifting of culture is not possible for many other companies in a short period of time.
Nucor also views their employees from theory Y assumption made by Douglas McGregor (1960) in which employees are regarded as responsible and creative. The company management trusts their people and encourages cooperation and idea-sharing among them. Other companies will also find it difficult to follow this method as many of them have a tendency to perceive employees on the basis of traditional theory X. Though, now almost all the companies are breaking the negative barrier of the theory X assumption through promoting theory Y, it is somehow still a discomforting matter for some managers to implement theory Y to its fullest extent.Nucor has been very successful in this respect.
Another important factor of Nucor’s approach to employee motivation is its unusual pay system. . The company pays its workers a regular salary lower than the average salary in the market. The average market salary is $16- $21 an hour, where a Nucor employee gets $10 per hour. Although Nucor pays lower than average, it facilitates its workers with large-scale bonuses and profit sharing. So that, an employee’s entire shift can triple the average steelworker’s take-home pay.
Nucor gave out more than $220 million in profit sharing and bonuses to the rank and file in 2005.The average Nucor Steel worker took home nearly $79000 last year. In addition, each got $2000 onetime bonus to mark company’s record earnings and almost $18000, on average, in profit sharing. Such huge bonuses make their workers think that “It’s like I got a second job, and I’m doing the same one”. For this unique facility, the employees feel more motivated towards productivity and efficiency.
Though Nucor has seen success in its policy of paying employees, it is often risky for other companies to follow the same procedure.Many employees will not be eager to work for a company which pays its employees a regular salary, much lower than the market average. Many companies are not likely to follow this innovative though risky approach. Nucor’s another approach to employee motivation is its culture of total teamwork. The people at Nucor are rewarded not solely on the basis of their individual performance rather they are rewarded more on the basis of the company’s overall performance as mentioned in the article, “The bonus of a plant manager, a department manager’s boss, depends on the entire corporation’s return on equity.So there’s no glory in winning at your own plant if the others are failing.
” This clearly shows that Nucor put much more importance on teamwork than most other companies. People at Nucor are very much concerned about the over-all performance of the company and for improving this performance they continuously cooperate and share their ideas and experiences with different workers from different plants. This high-stakes teamwork can be a very hard thing for other companies to get used to.Nucor has developed an integrated approach to employee motivation and has been successfully implementing the methods in day-to-day business operation. Some of their initiatives are highly innovative but at the same time risky enough to implement for many other companies. The managers with traditional mindset do hardly think about doing something unconventional like Nucor does.
So though it is not totally impossible to follow the footsteps of Nucor, it is quite a difficult task in the context of current business policies.