## Background - Nucor, the world’s most innovative and consistently profitable steelmaker - Nucor’s 26,000 employees—called teammates—shipped 27.9 million tons of steel and generated $25 billion in sales. - Nucor is also the most diversified steelmaker in North America, supplying beams, sheet, plate, reinforcing bar, and steel grating to a broad range of customers. - Nucor runs its plants on scrap steel and is the largest recycler in the western hemisphere. - Not only does Nucor outperform its peers on profitability and return on capital, it also leads by a wide margin on growth in market value, revenue, income, and tons shipped per employee #### Organisational Design - the foundations of bureaucracy (stratification, standardization, specialization, and formalization) are all challenged by Nucor’s model. - Nucor proves unequivocally that every job can be a good job, whatever the industry. ([Location 1919](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1919)) - At Nucor, ==there’s no caste system, no distinction between thinkers and doers==. ([Location 1925](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1925)) - Note: Atmosphere and the office - There are no “slots” at Nucor and, thus, no artificial limits on where and how team members can contribute. ([Location 1939](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1939)) - Note: Steve was held back because of this. And left. - if you’re looking for an overarching lesson, it’s this: ==whatever your organization makes or sells, its real business is growing human beings. As they say at Nucor, “We don’t build steel, we build people.”== ([Location 1940](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1940)) ## Hub and Spoke ### The Hub - An oft-repeated mantra at Nucor is that ==decisions should be “pushed down to the lowest level.==” ([Location 1693](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1693)) - Head office acts as the corporate bank, reviewing major capital requests, and also sets a few basic rules such as base salary levels and minimum performance standards for the divisions. ([Location 1695](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1695)) - Full-time managers and executives, account for only 2 percent of employment—four times less than the percentage in the overall economy. ([Location 1702](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1702)) ### The Spokes #### Compensation Scheme: - Through its compensation system, Nucor focuses everyone’s attention on innovating in ways that maximize asset productivity and growth. ([Location 1709](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1709)) - ==Once a team’s output exceeds a threshold, typically 80 percent of the plant’s rated capacity, a bonus plan kicks in==. ([Location 1713](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1713)) - team members have a powerful incentive to “sweat the assets,” since the only way to increase their bonus is to produce more steel for a given amount of capital. ([Location 1715](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1715)) - ==bonuses are paid to teams, not individuals==. A typical team comprises twenty to thirty operators who work across multiple shifts and have joint accountability for a particular process. ([Location 1718](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1718)) - “Peer pressure is a wonderful motivator.” ([Location 1731](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1731)) - No one at Nucor is looking to the center for direction. ([Location 1740](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1740)) - Nucor’s ==profit-sharing plan== is another mechanism for building commitment. Each year, the company contributes at least 10 percent of its pretax earnings to the plan. ([Location 1863](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1863)) #### Hiring, Training and Development: - Nucor’s employees are more skilled—technically and commercially—than their industry peers. Team members understand that to become ever more efficient, and generate ever more demand, they have to solve ever tougher problems—which in turn means getting progressively smarter, both individually and collectively. - Nucor’s hiring process is aimed at finding individuals who are eager to learn. The process includes a two-hour, standardized test to gauge quantitative and verbal problem-solving skills, followed by a behavioral interview with a psychologist. ([Location 1757](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1757)) - Nucor teammates are trained for a variety of roles. ([Location 1770](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1770)) - “We’re always trying to find something that a teammate wants to get better at. Some want to grow fast and some don’t, but we work to put people in the best position to succeed.” ([Location 1790](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1790)) #### Teamwork and Culture - Nucor, coordination, like everything else, happens bottom-up. A dense network of lateral connections helps stitch together far-flung divisions with little or no top-down direction. ([Location 1795](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1795)) - Plant managers get together every month, and department managers every six months. In addition, there are annual gatherings of frontline teams. ([Location 1801](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1801)) - Nucor’s capacity for collaboration rests on a foundation of transparency. ([Location 1821](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1821)) - ==Every employee has access to detailed performance metrics including tons produced, cost per ton, tons lost to defects, and much more. Commercial data is similarly open. This includes bids, orders, inventory, shipments, return on assets—anything that’s potentially relevant to running the business==. ([Location 1822](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1822)) - Commitment flourishes in an environment of trust. ([Location 1829](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1829)) - In a 2016 Ernst & Young global survey, fewer than half of the ten thousand employees surveyed said they had a “great deal of trust” in their colleagues or the company overall.6 ([Location 1830](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1830)) - ==“Nucor doesn’t have a chain of command; it has a chain of trust.”== ([Location 1834](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1834)) - Nucor has never laid off employees at its steel mills, ([Location 1838](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1838)) - the company’s long-standing promise to employees: “Do your job well today, have it tomorrow.” ([Location 1840](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1840)) #### Performance - While Nucor does have a formal hierarchy, there’s a commitment to reverse accountability that’s seldom seen in large companies. This reflects Iverson’s belief that ==power should trickle up, not down: “A manager’s authority comes from employees. We have seen general managers fail to effectively lead people to the ambitious goals we set at Nucor==. ([Location 1853](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1853)) - it’s ==frontline team members who take the lead in setting production targets, allocating tasks, meeting safety and quality standards, and solving production snags==. ([Location 1868](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1868)) - Teammates are also the first to intervene when colleagues underperform. They’ll work to identify the underlying issue and typically resolve things without the help of a supervisor. ([Location 1875](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1875)) - ==Teammates give each other feedback through an annual survey== ([Location 1877](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1877)) #### Autonomy - Team members regularly issue purchase orders in the tens of thousands of dollars without consulting plant management. ==Before pulling the trigger, they’ll consult with colleagues, but the goal is to get input, not approval==. ([Location 1882](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1882)) - The logic of relying on operators to source and deploy technology seems obvious to people at Nucor. After all, it’s the people at the sharp end of the business who have the best perspective on what they need to succeed. ([Location 1892](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1892)) - ==teammates have both the incentives and the freedom to experiment with new production techniques.== The result: a company where everyone innovates. ([Location 1902](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1902)) - Ferriola: “We encourage our people not to fear failure. You cannot stretch the limits of your knowledge, your imagination, or your skills, if you’re afraid to fail. It’s very typical to hear a manager or a supervisor coach a new teammate by saying something like: ‘If you’re not failing, you’re not pushing the limits of your abilities.’ ” ([Location 1910](https://readwise.io/to_kindle?action=open&asin=B07B9HFSHX&location=1910))