Nucor

"I can't tell you how many times I've heard a Nucor general manager say that "this is how we ought to structure compensation" or "this is how we should look at risks," and thought: "Yeah, that's the right way to run a business." I've latched onto those ideas and pushed them around Nucor as hard as I can. Some people assume they are all my ideas. I should be so smart."

"The greatest counterweight to divisiveness in Nucor is that the general managers of our divisions are also officers of our corporation. Most of the year, a general manager is preoccupied with running his own show. He thinks about his own revenue totals, his own profits, and his own return on assets employed. ployed. But three times each year-in November, February, and May-he takes off his general manager's ager's hat to focus on his role as an officer of the corporation. poration. He meets with the other general managers to set policies and make decisions that shape Nucor, as a whole. These meetings usually begin with a 3-to 4-hour session on a Wednesday evening, then run all day Thursday and Friday and, occasionally, into the weekend. In November, the general managers present budgets gets for their divisions for the upcoming year. They also outline their plans for capital expenditures. In February, we finalize the budgets and capital plans. The May meeting is devoted almost entirely to human resource issues, compensation, safety, and benefits. Collectively, the general managers created our personnel policies, and they refine them each May."

"We don't look over the shoulders of our general managers and we don't ask them to submit voluminous nous reports, explaining their actions. But that doesn't mean we're not paying attention. Delegation without information is suicide. Every week, each division sends headquarters a few key numbers that, taken together, give us a "snapshot" shot" of their basic operations from beginning to end: • Quotes (bids) • Orders • Production • Backlog • Inventory • Shipments These numbers for all of Nucor's divisions print out on one 8.5" x 11" sheet of paper. A second weekly report, about four pages long, compares the current week's numbers with those of the preceding week, shows each division's numbers over a period of thirteen weeks, and compares the current figures to the corresponding thirteen weeks of the preceding year. This enables us to look at trends. And since the reports are compiled by a computer, puter, these comparisons are very easy to generate. In total, then, we rely on about five pages of data to keep abreast of the weekly operations of twenty-one one divisions across a multibillion-dollar corporation. tion. I review the weekly reports every Wednesday morning over coffee. If the numbers for a particular division look out of whack, we know we need more information. John Correnti (Nucor's president and CEO) or I will call the general manager right away. They're rarely surprised to hear from us. They know when the numbers are likely to trigger questions. If, on the other hand, the numbers are on track, we assume their operations are doing just fine. We know they'll call us if they need us."

"Here is the gist of my opening remarks to them: Many of you, with your short-term view of corporations, rations, remind me of a guy on drugs. You want that quick fix, that high you get from a big spike in earnings. So you push us to take on more debt, capitalize start-up costs and interest, and slow down depreciation and write-offs. All you're thinking about is the short term. You don't want to think about the pain of withdrawal that our company will face later on if we do what you want. Well, Nucor isn't going to respond to that kind of thinking. We never have and we never will."

"every company has the same opportunity nity to build a culture that yields competitive advantage. tage. Yet remarkably few seem to act on that opportunity. One reason, I think, is that the culture has to be consistent to be real. Consistency is the name of the game, as far as I'm concerned. Consistency begins with really believing in the culture you hope to shape. Nucor is founded on principles so basic, they sound corny. We believe in treating people the way you'd want to be treated. That's a fundamental building block of our company. It sounds simplistic, but it works."

"AT N u c OR, people get what they ought to get from their work: Good pay. Real job security. Interesting challenges. Respectful treatment. The chance to accomplish complish something every day. A fair and equitable workplace. The pride of being a part of a very successful cessful enterprise."

"Nucor has consistently required its general managers agers to generate a return of at least 2 5 percent on the assets we place under their control. The assets belong to the shareholders of the company, and entrusting them to a general manager is like making a deposit at the bank. The shareholders have every right to expect a healthy return. "That's fine by me," Joe stresses. "I take the same approach with the people who work here in the division. sion. My department heads, the people in the control trol rooms ... they all spend thousands of dollars without anybody's approval. All of us can make that kind of decision, because all of us stand behind our decisions. We're accountable for getting the job done.""

""How do you explain Nucor's success?" My stock reply: "It is 70% culture and 30% technology." The truth is, I'm not sure if it's 80 to 20 or 60 to 40 percent, but I'm certain our culture accounts for more than half of our success as a business. Equality, freedom, and mutual respect promote motivation, initiative, and continuous improvement. Without a doubt, Nucor's culture is its most important tant source of competitive advantage, and always will be."

"To my eyes, two of the most fascinating sights to behold are hot metal in motion and a group of people ple in headlong pursuit of a shared purpose. Those images are the essence of Nucor. They convey how we turned a confused, tired old company on the brink of bankruptcy into a star player in the resurgence gence of American steel."

"We have no performance appraisals in Nucor. People earn according to what they produce, and those earnings are determined simply and objectively. tively. We also have no job descriptions. We let our employees define their own jobs as they search for ways to optimize their productivity."

"Why make products when there's nobody to buy them? Cutting back to four-day or even three-day work weeks reduced the average Nucor worker's earnings by 25 percent. You know that had to hurt. Still, as I'd walk through our mills and plants, I never heard one employee complain about it. Not one."

""What Nucor management has been able to do is get workers to identify their own interests ests fundamentally with those of management, something thing managers have been attempting to do, not very successfully, since the dawn of industry."'"

"What we did was push aside the notion that managers agers and employees have inherently separate interests. ests. We've joined with our employees to pursue a goal we can all believe in: long-term survival. We run Nucor first and foremost to ensure that, a decade or two from now, there will still be a place for our children dren and grandchildren to work without being laid off. That is our higher cause."

"Nucor employee, in alphabetical order, on the cover of our annual report. In a lot of companies, that would be seen (justifiably) as a hollow gesture. In ours, it's an expression of what we truly believe, that each and every one of those people is equally important. tant. And let me tell you, if we mistakenly leave off a name, we hear about it from that employee, even though the print is getting so small some of us have to search for our names with a magnifying glass."

"The company is highly decentralized. Each division within Nucor acts as a totally separate, independent business entity. Nucor divisions have almost complete local autonomy, and the communication among the divisions is high. The goal is to get each division to share its best practices and to provide support for one another."

"John H. Patterson —National Cash Register Simon Marks —Marks & Spencer Sol Price —FedMart & Price Club Les Schwab —Les Schwab Tire Centers Herb Kelleher —Southwest Airlines Chester Cadieux —QuikTrip F. Kenneth Iverson—Nucor 3G partners —Garantia, Lojas Americanas, and Anheuser-Busch InBev"

"Nucor also maintains a flat organizational hierarchy, with only four layers of management."

"According to Kenneth Iverson, Nucor’s success was ultimately tied to how the company paid its people; he really understood the iron rule of nature: At minimum, pay systems should drive specific behaviors that make your business competitive. So much of what other businesses admire in Nucor —our teamwork, extraordinary productivity, low costs, applied innovation, high morale, low turnover —is rooted in how we pay our people. More than that, our pay and benefit programs tie each employee’s fate to the fate of our business. What’s good for the company is good—in hard dollar terms—for the employee."