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Nucor Case Study Employee Motivation

958 words - 4 pages

In any business organization, employee motivation is one of the biggest factors that can influence job productivity and worker's attitude. This in turn can affect the performance of the company which in turn influences the bottom line that ultimately determines the success and profitability of the business. Nucor, an American steel-making company, realizes the importance of employee motivation and as such, it builds a working model which encourages and motivates employees to perform their job at the peak of productivity. The business success of Nucor has proven that their model is successful in boosting the productivity of its employees.As one of the largest steel companies in the US, Nucor employs more than 11,300 non-unionized employees, all of which take part in an approach to work which is different from most companies. At Nucor, the traditional hierarchies of the workplace are broken down to a certain extent, and a more social environment is encouraged. The employees, for example, are valued greatly in the company. Management talks to employees, listens to them, and even takes risks on their ideas. Similarly, Nucor's CEO flies commercial, does not have an executive parking space, and relates to his workers by talking to them plainly. Unlike a typical CEO which makes more than 400 times the amount of a factory worker, Nucor's CEO only earns 23 times more than an average Nucor steelworker.Perhaps more importantly in Nucor's motivational scheme is the way in which employees are paid. Unlike most companies which pay their workers based on a fixed rate, Nucor uses a pay-for-performance system which pays employees based on how well they do their job. By producing defect-free steel a Nucor employee can earn triple the amount of what the average steelworker at another company can make. A Nucor employee earned, on average, $79000 in 2005. In addition to that, they earned a $2000 bonus and an average of $18000 in profit sharing. Just as workers are rewarded for good performance, they are also punished for bad performance. By producing a defected batch of steel, they could lose the bonuses they could have potentially earned. High level employees are no exception to this pay-for-performance system. Managers are paid based on how well their departments perform and an executive's pay is based on team building. Teamwork is encouraged by basing the bonuses of managers on the entire corporations return on equity.Nucor's approach in encouraging productivity is clearly working. From 2000 to 2005, it has increased sales from $4.6 billion to $12.7 billion, and net income from $311 million to $1.3 billion. Nucor provides a perfect example as to the importance of employee motivation and how it can greatly influence the success of a company. To fully understand how its motivational strategy works, further analysis is required.Nucor's pay-for-performance system is a well known topic in the field of organizational behaviour. In a pay-for-performance model, employees...

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