Nucor Steel Management Style
Nucor Corporation (NYSE:NUE) is one of the United States’ largest steel companies. Steel has been a tough business since the 2007 to 2009 recession, facing falling prices amid intense competition domestically and from foreign imports. But Nucor has managed to hold up really well, relatively speaking – partly because of its unique cost structure. Here’s why.
Nucor’s employee relations philosophy is simple and effective:
- Employees should have the opportunity to earn according to their productivity.
- If employees do their job well today, they should have a job tomorrow. (They haven’t laid off employees in 28 years.)
- Employees have the right to be treated fairly. The company listens to employees through crew meetings, department meetings, shop dinners, and employee surveys.
- Employees must have an avenue of appeal if they believe they have been treated unfairly. This complaint procedure allows employees to carry their complaints to the President of the company.
Nucor pay system
The company pays much lower base wages — sometimes half of what the competition pays hourly workers — then uses weekly bonus cash payouts as an incentive. And they are not small amounts, either. Employees can earn 100 percent, 200 percent, and more of their regular hourly wage, with nocap, according to the amount of quality steel produced by, or passed through, a work team on a shift.
We have the highestproductivity of any steel mill in the United States in terms of tons peremployee or tons per hour. We have the highest-paid steelworkers on earth, andwe have arguably among the lowest labor costs per ton produced. So that’s prettyphenomenal if you can have the highest-paid employees but the lowest laborcost
James M. Coblin, vice president of human resources at Nucor
The Nucor’s nucor steel salary also include a rare in the industry compensation system based on each worker’s performance. Up to 1/4 of employees’ nucor salary is calculated based on their plant’s Return on Assets (ROA) while the standard hourly rate is considerably lower than industry’s average. This basically means that the individual productivity is the key factor for how much workers earn: the better you perform and exceed set productivity quotas, the more you get paid. Yes, that simple.
For instance, in other companies, a worker is expected to smelt 6 tons of steel every hour. Nucor’s minimum for such employee would be 4 tons per hour. At the same time, every ton of smelted steel over that rate brings a worker +5% bonus. Guess what: the average volume achieved by Nucor’s employees is… 20-25 tons per hour! The nucor production bonus method proved highly effective as the absenteeism rate doesn’t go above 1,5%.
If you give a bonus to somebody of 15 percent, of course they like it, or20 percent, even 25 percent, of course they love it. But if you give them a bonus of 100 percent, you get their attention big-time, and when they startseeing 150 percent bonus or 160 percent bonus, they are focused on that bonus. And when they know it’s not going to be changed, like ratcheting up the basewhen they really start producing or putting a ceiling on it … they catchfire.
James M. Coblin, vice president of human resources at Nucor
How much does nucor steel pay?
The average Nucor entry level production salary ranges from approximately $47,547 per year for Detailer to $86,764 per year for Metallurgist. Average Nucor hourly pay ranges from approximately $15.00 per hour for Clerical Assistant to $18.00 per hour for Scheduler. Salary information comes from 200 data points collected directly from employees, users, and past and present job advertisements on Indeed in the past 36 months. Please note that all nucor steel salaries figures are approximations based upon third party submissions to Indeed. These figures are given to the Indeed users for the purpose of generalized comparison only. Minimum wage may differ by jurisdiction and you should consult the employer for actual salary figures.
Nucor management style
For more than two decades, Nucor management has invested back in the business with an aim to weather the business cycles, increasing the ultimate returns during both the peaks and troughs. A 10-year chart of earnings per share (EPS) and stock price shows both the cyclical nature as well as the longer-term gradual increase in EPS.
Eventually, Nucor salaries compensation scheme makes all employees – from entry-level worker to higher executives – clearly understand that numbers in their paychecks are directly due to how productively they work. For the company in general, it results in increased performance and higher revenues.
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