A lean, bottom-line approach at this steel company empowers employees.
Nucor Corp., a manufacturer of steel products in Charlotte, N.C., practices its own brand of no-frills human resource management.
James M. Coblin, Nucor's manager of personnel services, keeps his eye on the bottom line and has little regard for many of the practices that more conventional human resource managers rely on. At Nucor, time is not spent on team-building sessions or performance appraisals. To Coblin those activities are nothing more than fads he is happy to let pass by. Instead, Nucor concentrates on being ahead of the curve in vital areas such as management structure and employee empowerment.
Having worked in human resource management at General Electric and Ingersoll Rand, Coblin knows how large corporations operate. He accepts their approach, but believes it is wrong for Nucor. At the same time, "our way is not for everybody, I'd be quick to say, and probably would be a disaster for many people. It's been successful for this company because it's been our culture from the ground up."
And while his company's management approach may not work in most places, Coblin marshals an impressive array of figures to demonstrate how it's working for Nucor. The company has 16 operating facilities in eight states, with each plant operating as an independent business unit. With only four levels of management and about 6,000 nonunion employees, the company does $2.1 billion a year in sales.
LOW PAY, HIGH BONUSES
Nucor has few requirements of the general managers of its plants, "other than making a 25 percent return," Coblin says. That single-mindedness has made the company the fourth largest producer of steel products in the United States.
Managers can earn as much as an extra 75 percent of their salaries in bonuses tied to their units' profits. Hourly employees are on a weekly bonus system based on the production of their eight-to-20-member work groups. For example, an employee working in one of Nucor's bar mills usually makes a base pay of about $9 an hour straightening steel, about half what union workers make in big steel mills. But that employee probably is making about $13.50 an hour in bonus pay for a total of $22.50 an hour.
In a bar mill, the bonus pay is based on the amount of steel straightened each hour. Nucor set its base at 8 tons an hour, slightly below the industry average, because "we wanted to set it low enough that they can experience some success right away," Coblin says.
For every ton produced over 8, employees receive a 5 percent bonus.
The key to success, Coblin stresses, is to not put a maximum on what an employee can earn. Often, a more traditional company makes the mistake of raising the base rate when hourly employees start earning a lot of money.
"That takes the wind out of the employee's sails, and the employee begins to think 'it doesn't do me any good to kill myself working for this company because they're only going to let me make so much and it's not worth it.'"
It's worth it to Nucor to let employees make as much bonus pay as they can, Coblin says, because as a result of their efforts some work groups are turning out from 35 to 42 tons of straightened steel an hour, far above the 10-ton industry average.
HR LEAN, CONSULTATIVE
Production is paramount at Nucor. Everything else is pared down. Plants have no marketing departments, no advertising departments, no purchasing departments. Usually there isn't even an engineering department. Human resource management for the Fortune 500 company is handled by Coblin and benefits administrator John Giavianco, with part-time help from one of the corporate secretaries. Two plants have personnel generalists, but in the others typically someone in the finance department handles HR duties.
Coblin didn't set out to work in human resources. He had a law degree from the University of Kentucky and was planning to join the FBI when General Electric persuaded him to work in labor relations management at its Louisville plant. That was in 1969. In 1975 he moved to Ingersoll Rand and in January 1986 he joined Nucor as manager of personnel services.
He sees his role as that of internal consultant and spends about a third of his time visiting Nucor's plants around the United States, always at the invitation of the plant manager.
"I don't say 'I'm coming to check up on you.' That would be suicide in our environment," he says. He works with each plant on issues such as benefits, safety and the Nucor Foundation, which gives scholarships to sons and daughters of employees.
At Nucor's modest headquarters in Charlotte, Coblin's time is spent mostly on policy and benefits administration. He estimates that at least twice a day he fields calls from plant managers and supervisors with questions and concerns. Coblin believes in giving straightforward responses, without unnecessary meetings and memos.
"I know communication has a positive aspect, but the negative aspect I see is that so many people say, 'we have to touch base with this person, we have to touch base with personnel.' And you end up touching all those bases and you're overly communicating yourself into inertia.
Nucor Corp., a manufacturer of steel products in Charlotte, N.C., practices its own brand of no-frills human resource management.
James M. Coblin, Nucor's manager of personnel services, keeps his eye on the bottom line and has little regard for many of the practices that more conventional human resource managers rely on. At Nucor, time is not spent on team-building sessions or performance appraisals. To Coblin those activities are nothing more than fads he is happy to let pass by. Instead, Nucor concentrates on being ahead of the curve in vital areas such as management structure and employee empowerment.
Having worked in human resource management at General Electric and Ingersoll Rand, Coblin knows how large corporations operate. He accepts their approach, but believes it is wrong for Nucor. At the same time, "our way is not for everybody, I'd be quick to say, and probably would be a disaster for many people. It's been successful for this company because it's been our culture from the ground up."
And while his company's management approach may not work in most places, Coblin marshals an impressive array of figures to demonstrate how it's working for Nucor. The company has 16 operating facilities in eight states, with each plant operating as an independent business unit. With only four levels of management and about 6,000 nonunion employees, the company does $2.1 billion a year in sales.
LOW PAY, HIGH BONUSES
Nucor has few requirements of the general managers of its plants, "other than making a 25 percent return," Coblin says. That single-mindedness has made the company the fourth largest producer of steel products in the United States.
Managers can earn as much as an extra 75 percent of their salaries in bonuses tied to their units' profits. Hourly employees are on a weekly bonus system based on the production of their eight-to-20-member work groups. For example, an employee working in one of Nucor's bar mills usually makes a base pay of about $9 an hour straightening steel, about half what union workers make in big steel mills. But that employee probably is making about $13.50 an hour in bonus pay for a total of $22.50 an hour.
In a bar mill, the bonus pay is based on the amount of steel straightened each hour. Nucor set its base at 8 tons an hour, slightly below the industry average, because "we wanted to set it low enough that they can experience some success right away," Coblin says.
For every ton produced over 8, employees receive a 5 percent bonus.
The key to success, Coblin stresses, is to not put a maximum on what an employee can earn. Often, a more traditional company makes the mistake of raising the base rate when hourly employees start earning a lot of money.
"That takes the wind out of the employee's sails, and the employee begins to think 'it doesn't do me any good to kill myself working for this company because they're only going to let me make so much and it's not worth it.'"
It's worth it to Nucor to let employees make as much bonus pay as they can, Coblin says, because as a result of their efforts some work groups are turning out from 35 to 42 tons of straightened steel an hour, far above the 10-ton industry average.
HR LEAN, CONSULTATIVE
Production is paramount at Nucor. Everything else is pared down. Plants have no marketing departments, no advertising departments, no purchasing departments. Usually there isn't even an engineering department. Human resource management for the Fortune 500 company is handled by Coblin and benefits administrator John Giavianco, with part-time help from one of the corporate secretaries. Two plants have personnel generalists, but in the others typically someone in the finance department handles HR duties.
Coblin didn't set out to work in human resources. He had a law degree from the University of Kentucky and was planning to join the FBI when General Electric persuaded him to work in labor relations management at its Louisville plant. That was in 1969. In 1975 he moved to Ingersoll Rand and in January 1986 he joined Nucor as manager of personnel services.
He sees his role as that of internal consultant and spends about a third of his time visiting Nucor's plants around the United States, always at the invitation of the plant manager.
"I don't say 'I'm coming to check up on you.' That would be suicide in our environment," he says. He works with each plant on issues such as benefits, safety and the Nucor Foundation, which gives scholarships to sons and daughters of employees.
At Nucor's modest headquarters in Charlotte, Coblin's time is spent mostly on policy and benefits administration. He estimates that at least twice a day he fields calls from plant managers and supervisors with questions and concerns. Coblin believes in giving straightforward responses, without unnecessary meetings and memos.
"I know communication has a positive aspect, but the negative aspect I see is that so many people say, 'we have to touch base with this person, we have to touch base with personnel.' And you end up touching all those bases and you're overly communicating yourself into inertia.
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