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Nucor Steel is one of the leading steel manufacturing and recycling firm in the United States. The corporation enjoys a huge number of non-union employees and billions of turnover per annum.
According to Achtmeyer (2005), the company has adopted “two critical objectives” (pp. 3) so as to counter rivalry in the steel industry. These key goals include: Building steel facilities economically and making sure that these steel facilities run productively (Achtmeyer, 2005). The corporation treats each of its established facilities independently and has a short organizational structure so as to attain these objectives. Moreover, employees working at Nucor are highly regarded as ‘teammates’ and the company recognizes them as the basic foundation of the company without whom the firm would attain nothing.
In addition to this, the company has a well-established rewarding structure for its workers. This remuneration structure is properly connected to the productivity of the company. That is, a reward based on the input to the company (Achtmeyer, 2005). The common employees’ remuneration strategies available at Nucor include:
- Production Incentive Plan – Through this plan, employees under similar workgroups receive regular (weekly) bonuses according to their productivity. The plan is non-discriminating because employees and their supervisors receive (or are denied) equal shares of the bonuses.
- Department Manager Incentive Plan – Departmental managers in charge of production supervisors receive a yearly bonus according to the performance of the whole plant (return on investment) within a particular facility where they were based.
- Non-Production and Non-Department Manager Incentive Plan – This plan caters to all those workers, (clerks, receptionists, engineers among others) not on the Output-Based or the Department Manager incentive plan. Bonus is calculated based on each plant’s updated monthly return on investment.
- Senior Officers Incentive Plan – This plan caters to ‘senior officers’ who include company executive officers and plant general managers. This group of workers is not under any engagement contract and also, the workers do not take part in profit sharing, retirement, or pension plan. Workers’ remuneration is based on the company’s returns. In addition to this, employees under this scheme, receive cash and stock as a bonus.
The well-elaborated incentive plan at Nucor has had an appealing influence on its workers (Achtmeyer, 2005). This is because every employee is determined to keep the cost at a lower level for their own good (employees have an interest in the company gains); they are well remunerated for their dedicated efforts; recycling and manufacturing steel products that are highly competitive.
Generally, incentive plans help employees in achieving their goals by performing their work diligently. Moreover, rewarding workers increase their entire performance. On the other hand, employers express their value for the employee through the various reward systems. The reward system leads to a friendly working environment and reduces workers’ absenteeism by securing employee commitment. The incentive plan at Nucor is extremely fundamental to the company. The strategy has worked to the advantage of the company. This is because the plan has improved the productivity of the firm. The direct relation between the employee’s output and their earnings provides an immense motivation to the workers (Smith, 2001).
I cannot think of any changes to make to the existing incentive plan at Nucor. This is because the incentive plan has had a positive impact on the company: Low operating costs, improved employee morale, and enhanced loyalty to the entity (Achtmeyer, 2005).
Achtmeyer, W. F. (2005). Nucor Corporation (A). Dartmouth: Tuck School of Business at Dartmouth – Center for Global Leadership.
Smith, G. P. (2001). Here Today Here Tomorrow: Transforming Your Workforce from High-Turnover to High-Retention. Michigan: Dearborn Financial Pub.