study the below case and answer the following questions

1)Identify the elements of organizational structure in Nucor which are evident in the case and suggest changes in structure to suit its current challenges and future expansion plans. 2)Based on the case, critically evaluate the horizontal and vertical coordination techniques used by Nucor to improve integration within the organization.

CHAPTER TEN MANAGING DIVERSE HUMAN RESOURCES 345 CONCLUDING CASE 1 NUCOR PROSPERS IN group then receives extra pay based general manager have dinner with TOUGH STEEL INDUSTRY on the amount it produces above every employee in his or her plant at the standard. There is no maximum, least once a year, in groups no larger The Nucor Corporation has pio and the bonuses are paid weekly so than 50. Most general managers necred so-called minimills, which that workers can see the fruits of have dinner with employees twice a melt scrap iron to produce basic their efforts quickly. Standards year. After the first dinner, employ- products such as joists, decking, and about punctuality and attendance ees learn that they can speak up. steel bars. Through this method, also apply. "If you're late even 5 Iverson remembers one incident in Nucor has been making steel very minutes, you lose your bonus for the particular "A fellow got up and said, efficiently-at about one third of its day," says Iverson. Lateness of more "You guys are really rotten. You competitors' costs. This has resulted than 30 minutes or absenteeism for haven't done anything about the in an annual compounded growth any reason results in a bonus loss for parking lot, and they're stealing us rate of more than 20 percent during the week (there are four "forgive blind out there. Another one stood the past decade or so. ness days" available to each worker up and said, "They stole so much gas Despite Nucor's almost $3,5 per year). The bonuses received by out of my car I couldn't even startit billion in annual sales, company groups are normally more than 100 when I came off my shitt.' A third headquarters located in suburban percent above base pay, giving the had a $400 car stereo stolen. We Charlotte, North Carolina) operates steelworkers an average annual pay didn't know about any of this, of with a small staff of 24 or so. There of more than $30,000, with some course. It took us exactly 3 days to are only four management levels making more than $40,000. Also, fence the parking lot and put up The chairman, F. Kenneth Iverson, the company has a profit sharing lights. That's the way we work." and John Correnti, who has suc plan, whereby 10 percent of earn Nucor faces fierce competition ceeded Iverson as CEO, make up ings before taxes are distributed to as competing new minimills start up. the first level. The second level employee accounts within the plan. The company is gambling on staying consists of vice presidents, each of Although pay is higher at Nucor ahead with an experimental $100 whom is also a general manager of a than at its competitors' facilities, million iron carbide plant in steel mill, a joist plant, or a division, productivity in terms of tons per Trinidad based on a new technology At the third level are the departe employee has been running more that can produce a substitute for ment heads, who might be managers than double. This is partly because scrap iron--the raw material used in of melting and casting, sales man workers have suggested many innov its minimills. It's the first plant of its agers, or division controllers. The ative ideas. The Nucor system is not kind, and despite a number of diffi- fourth level comprises the first-line for everyone. When the company culties, it is finally operating at supervisors. The company tries hard starts up a new mill, turnover is about 60 percent capacity. Correnti to eliminate distinctions between usually in the range of 200 percent says Nucor's most immediate chal- management and workers. For ex the first year. After that, turnover is lenges include maintaining the pace ample, there are no assigned park extremely low. Iverson says that the of technological innovation; ex- ing spaces, no executive dining system appeals best to goal-oriented panding into related, steel-product rooms, and no hunting lodges. individuals who are willing to work businesses, and moving into higher Management and workers have the hard same benefits, such as vacation time Nucor has a no-layoff policy. and insurance. When 3% or 4-day workweeks are A particularly unique aspect of necessary to avoid layoffs, a worker's Nucor within the steel industry is pay may be cut by as much as 25 the company's incentive pay system. percent. The pay of department A significant portion of most organi heads and officers is cut even more, zation members' pay depends on perhaps as much as 40 and 70 per- worker productivity or on company cent, respectively success. For example, in the steel Nucor limits the work force at mills, the company identifies groups each of its plants to 500 ettployees. of 25 to 35 people doing a complete "We don't feel that a general man- task and puts them on a bonus pro ager can communicate effectively gram. There are typically nine with employees when you have a bonus groups. In each case, a stan group larger than that," says Iverson. dard is set for production. The Company policy requires that the margin steels CHAPTER TEN MANAGING DIVERSE HUMAN RESOURCES 345 CONCLUDING CASE 1 NUCOR PROSPERS IN group then receives extra pay based general manager have dinner with TOUGH STEEL INDUSTRY on the amount it produces above every employee in his or her plant at the standard. There is no maximum, least once a year, in groups no larger The Nucor Corporation has pio and the bonuses are paid weekly so than 50. Most general managers necred so-called minimills, which that workers can see the fruits of have dinner with employees twice a melt scrap iron to produce basic their efforts quickly. Standards year. After the first dinner, employ- products such as joists, decking, and about punctuality and attendance ees learn that they can speak up. steel bars. Through this method, also apply. "If you're late even 5 Iverson remembers one incident in Nucor has been making steel very minutes, you lose your bonus for the particular "A fellow got up and said, efficiently-at about one third of its day," says Iverson. Lateness of more "You guys are really rotten. You competitors' costs. This has resulted than 30 minutes or absenteeism for haven't done anything about the in an annual compounded growth any reason results in a bonus loss for parking lot, and they're stealing us rate of more than 20 percent during the week (there are four "forgive blind out there. Another one stood the past decade or so. ness days" available to each worker up and said, "They stole so much gas Despite Nucor's almost $3,5 per year). The bonuses received by out of my car I couldn't even startit billion in annual sales, company groups are normally more than 100 when I came off my shitt.' A third headquarters located in suburban percent above base pay, giving the had a $400 car stereo stolen. We Charlotte, North Carolina) operates steelworkers an average annual pay didn't know about any of this, of with a small staff of 24 or so. There of more than $30,000, with some course. It took us exactly 3 days to are only four management levels making more than $40,000. Also, fence the parking lot and put up The chairman, F. Kenneth Iverson, the company has a profit sharing lights. That's the way we work." and John Correnti, who has suc plan, whereby 10 percent of earn Nucor faces fierce competition ceeded Iverson as CEO, make up ings before taxes are distributed to as competing new minimills start up. the first level. The second level employee accounts within the plan. The company is gambling on staying consists of vice presidents, each of Although pay is higher at Nucor ahead with an experimental $100 whom is also a general manager of a than at its competitors' facilities, million iron carbide plant in steel mill, a joist plant, or a division, productivity in terms of tons per Trinidad based on a new technology At the third level are the departe employee has been running more that can produce a substitute for ment heads, who might be managers than double. This is partly because scrap iron--the raw material used in of melting and casting, sales man workers have suggested many innov its minimills. It's the first plant of its agers, or division controllers. The ative ideas. The Nucor system is not kind, and despite a number of diffi- fourth level comprises the first-line for everyone. When the company culties, it is finally operating at supervisors. The company tries hard starts up a new mill, turnover is about 60 percent capacity. Correnti to eliminate distinctions between usually in the range of 200 percent says Nucor's most immediate chal- management and workers. For ex the first year. After that, turnover is lenges include maintaining the pace ample, there are no assigned park extremely low. Iverson says that the of technological innovation; ex- ing spaces, no executive dining system appeals best to goal-oriented panding into related, steel-product rooms, and no hunting lodges. individuals who are willing to work businesses, and moving into higher Management and workers have the hard same benefits, such as vacation time Nucor has a no-layoff policy. and insurance. When 3% or 4-day workweeks are A particularly unique aspect of necessary to avoid layoffs, a worker's Nucor within the steel industry is pay may be cut by as much as 25 the company's incentive pay system. percent. The pay of department A significant portion of most organi heads and officers is cut even more, zation members' pay depends on perhaps as much as 40 and 70 per- worker productivity or on company cent, respectively success. For example, in the steel Nucor limits the work force at mills, the company identifies groups each of its plants to 500 ettployees. of 25 to 35 people doing a complete "We don't feel that a general man- task and puts them on a bonus pro ager can communicate effectively gram. There are typically nine with employees when you have a bonus groups. In each case, a stan group larger than that," says Iverson. dard is set for production. The Company policy requires that the margin steels