Nucor Corporation

1
Nucor Corporation

• A Case Study
• Presented by
• Lisa Gislason and David Holmes

2
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.

3
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.

4
How does Nucors 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

5
HR Policies

• Organizational Structure
• Employee relations principles
• Compensation
• Benefits

6
Organizational Structure

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

7
Employee relations principles

• 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

8
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

9
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 plants 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 stockholders 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

10
Benefits

• 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

11
Scenarios
Team 1 Compensation Determine Bonus amount Team 2 HR Policy Grievance Team 3 Benefits Determining Stock contribution
Van Joyce Ken George Amy Yasu Jeffrey Darnell Jessica Elvira Bea
12
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
  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?

13
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 plants return
  on assets. What would you say to this employee?
  What action would you take?

14
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?

15
Thank you

• Any questions?