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Motivation of Nucor
BAI Long, ZHAO Yufei
1. School of Management, Southwest University for Nationalities, P.R.China, 610041
2. School of International Management, Guangdong University of Foreign Studies, P.R.China, 510006
swunbailong@foxmail.com
Abstract: Nucor is one of the most successful companies in the US, and the effective motivation means
in the company play an important role in the company’s success. In this report, we analyze the
motivation system of Nucor from 4 aspects, i.e. performance based salary system, decentralized
management philosophy, encouragement of continuous study and egalitarian culture. And finally we
make a comparison between Nucor and Chinese Anyang steel company to see what enlightment Nocor’s
success can bring us.
Keywords：：：：Motivation, Nucor, salary system, non-financial incentives
1 Brief Introduction of Nucor
Nucor is the largest producer of steel in the United States, and Nucor's performance, propelled by a
red-hot steel market, has been nothing less than sensational. It has grown into a company with 2005
sales of $12.7 billion, up from $4.6 billion when DiMicco took over in 2000. Last year net income was
$1.3 billion, up from $311 million in 2000. In 2005 the company shipped more steel in the U.S. -- 20.7
million tons -- than any other company. "In terms of a business model," says Louis L. Schorsch,
president and CEO of Nucor rival Mittal Steel USA, "They've won in this part of the world." But more
than a steel maker, Nucor is the world’s foremost steel recycler, and one of the largest recyclers of any
kind.
1.1Philosophy
“Ironically, we’ve gotten big by thinking small.”
While most of America’s steel manufacturers clung to old blast furnace production methods requiring
huge integrated steel mills, Nucor pioneered new roads with electric are furnaces and mini-mills. They
also did something else few manufacturers would ever venture to do: they stripped away management
layers and gave all employees, even hourly wage earners, respect, power and rich rewards for doing
good work safely.
1.2 Mission
Nucor Corporation is made up of more than 21,000 teammates whose goal is to take care of our
customers. They are accomplishing this by being the safest, highest quality, lowest cost, most productive
and most profitable steel and steel products company in the world. They are committed to doing this
while being cultural and environmental stewards in our communities where we live and work.
1.3Products
Using scrap as their primary feedstock, they have become the leading U.S. producer of structural steel,
steel bars, steel reinforcing bars, steel joists and girders and steel decks. In addition, Nucor people are
also a major producer of steel in sheet and plate form; cold finished steel; steel fasteners; metal building
systems; light gauge steel framing; rebar fabrication; and the largest U.S, scrap processor and Brokerage
Company.

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Table1.1 products of Nucor
Nucor Products
Carbon Steel Fasteners Alloy Steel
Bar & Structural Cold Finish Steel Bars Cold Finish Steel Bars
Sheet & Plate Finished Hex Nuts Finished Hex Nuts
Mesh Hex Head Cap Screws Hex HeadCap Screws
Cold Finish Steel Bars Structural Bolts Structural Bolts
SBQ Steel Bars Structural Nuts Structural Nuts
Wire Rod SBQ Steel Bars
Drawn Wire
Coiled Rebar
Grating
Steel Products Raw Materials MSDS By Product
Composite Floor Joist Ferrous Scrap Brokerage Bar Steel
Floor Deck Non-Ferrous Scrap Brokerage Sheet Steel
Joist Girders Ferro Alloy Brokerage Steel Joists
Joists Transportation & Logistics Steel Decking
Metal Building Systems Mill Services Building Systems
Roof Deck Direct Reduced Iron Plate Steel
Signposts & Barrier Systems Cold Finish
Special Profile Steel Trusses Stainless Sheet
Light Gauge Steel Framing SBQ Steel
Rebar Fabrication
1.4 Culture & responsibility
Considering the success of Nucor, culture pays an important role in it, the culture of Nucor is listed as
follows which make Nucor’s operating effective and efficiency.
Safety first
Eliminating hierarchy
Granting trust and freedom
Giving all workers a stake in the company
Turning everyone into a decision maker
Inspiring a work ethic
Employee relations principles
And as a corporate citizen, all of people at Nucor take very seriously their responsibility to create a
cleaner environment, a safer workplace, and a stronger community.
2 Motivation Culture of Nucor Steel
The motivation culture of Nucor steel can be summarized in four areas: Performance based salary
system, decentralized management philosophy, encouragement of continuous study and egalitarian
culture. In the following, we will introduce the motivation culture from these four aspects.
2.1 Performance Based salary system
All Nucor employees, from senior officers to hourly employees, are covered under one of four basic
compensation plans (in addition to base pay) which reward employees for meeting certain incentive
specific goals and targets:
Production Incentive Plan
Operating and maintenance employees and supervisors at the facilities are paid weekly bonuses based

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on the productivity of their work group. The rate is calculated based on the capabilities of the equipment
employed, and no bonus is paid if the equipment is not operating. In general, the Production Incentive
bonus can average from 80 to 150 percent of an employee's base pay.
Department Manager Incentive Plan
Department Managers earn annual incentive bonuses based primarily on the percentage of net income to
dollars of assets employed for their division. These bonuses can be as much as 80 percent of a
department manager's base pay.
Professional and Clerical Bonus Plan
This bonus is paid to employees that are not on the production or department manager plan and is based
on the division's net income return on assets.
Senior Officers Incentive Plan
Nucor's senior officers do not have employment contracts. They do not participate in any pension or
retirement plans. Their base salaries are set lower than what executives receive in comparable
companies. The remainder of their compensation is based on Nucor's annual overall percentage of net
income to stockholder's equity and is paid out in cash and stock. In addition to these established bonus
plans, Nucor has periodically issued an extraordinary bonus to all employees, except officers, in years of
particularly strong company performance. This bonus has been as high as $2000 for each employee.
2.2 Decentralized Management Philosophy
Nucor is highly decentralized in its operations; Nucor has a flattened organizational hierarchy and there
are only five managerial levels at Nucor. Most operating decisions are made at the division level or
lower. Also, in Nucor, they pay a lot attention to the advice from employees. In addition, Nucor claims
that its corporate office staff numbers around 75 employees, which may possibly be the smallest number
of corporate office employees among major corporations.
2.3 Encouragement of continuous study
Employees in Nucor are encouraged to learn new things. And there is a benefit called tuition
reimbursement at Nucor. Nucor will reimburse up to $3,000 of your approved educational expenses each
year. We'll also reimburse your spouse up to $1,500 per year for a maximum of 2 years. Thus we can see
how seriously Nucor take the continuous education. What’s more, Nucor also encourages cooperation
and idea sharing among workers, and it holds contests for shifts to try to outdo one another on a set goal,
either safety, efficiency or output.
2.4 Egalitarian culture
Nucor's senior officers are not provided with traditional style such as company cars, executive parking
spaces, or executive dining rooms. In fact, several programs (such as Nucor's Profit Sharing, Scholarship
Program, Employee Stock Purchase Plan, Extraordinary Bonus, and Service Awards Program) are not
available to Nucor's officers but only to lower-level employees. As a symbol of Nucor's egalitarian
culture, each annual report since 1975 has listed the names of every employee. In 1975, there were
2,300 workers and their names fit on the back cover. In the 2007 annual report, it took 12 pages to list
the names of all 18,000 employees. In August 2006, the company did purchase a corporate jet for use by
senior management.
3 Importance of This Motivation Culture
Nucor's incentive plans not only encouraged the employees to perform well at individual level but also
encouraged them to excel at the team level as the incentive plans took the performance of the teams into
consideration. And Nucor's incentive plans also resulted in healthy competition among the company's
different plants. For instance, workers one plant worked hard to break the production records of another

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plant.
Decentralized management philosophy and egalitarian culture will give employees the sense of
responsibility which will result in organization commitment and higher quality.
Thus, we see that this motivation culture has played an important role in the success of Nucor Steel. We
all know that job performance largely depends on the synergy of motivation and ability. Motivation
determines the direction of effort, the intensity of effort and the persistence of effort, so it can affect job
performance and organizational commitment. Under this culture, the employees in Nucor have the
passion to improve the productivity; also they have the sense of responsibility which will help to
improve the quality of products. That is the contribution of this motivation culture.
Figure 3.1 the importance of motivation
High motivation in Nucor from rank and files to high hierarchy managers plays an important role in the
success of the company. After our analysis, we group the motivation means of Nucor into 4 categories,
i.e. performance based salary system, decentralized management philosophy, encouragement of
continuous study and Egalitarian culture. In the following passages, we will analyze the four different
aspects in detail.
4 Analysis of Nucor’s Motivation System
4.1 Performance based salary system
Although financial incentives are not the sole motivation means in Nucor, it is undoubtedly a key player
in getting the employees moved. Performance based remuneration has penetrated into every level in the
company. As we can see, both managers and common workers will get base salaries that are lower than
market average, but they can get handsome bonuses depending on their performances. Department
managers will get their bonuses based on the ROA (return on assets), and senior officers will get their
salaries according to ROE (return on equity). 1
Bad work penalties are also made clear in Nucor. Workers who make a bad batch of steel and catch it
before it has moved on will lose their bonuses, but if the bad products go to customers, the worker will
lose three times as much as bonus.
Besides, the company also has a well-developed benefit plan, ranging from 401(k) and profit sharing to
medical and dental plan. What is special in Nucor is the scholarships for the children. Nucor provides
the children of every employee up to $3,000 worth of scholarship funding each year to be used at
accredited academic institutions.2
Rank and files of a factory are usually most concerned about the financial benefits and materials
1
Gregory. P. Smith, How Nucor steel rewards performance and productivity
2
http://www.nucor.com/careers/benefits/

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provided by the company since they are not so well off. This group belongs to the bottom or at most
middle level in the Maslow hierarchy, so the financial incentive will work most effectively for them.
Figure 4.1 expectancy theory analysis of Nucor motivation
On top of Maslow hierarchy, all these financial incentives are classic explanations of the expectancy
theory. The employees in Nucor know clearly that their effort can make a difference in the production
process. Since the pay in Nucor is performance based and punishments are written black and white in
the company rules, the workers and managers can easily foresee the outcomes of good performances and
bad performances. When the performance of the company is good, every member will get benefits. A
case in point is that employees in Nucor earn much higher salaries than their counterparts in other steel
plants in America. This kind of “positive valence” outcome will reinforce the good behaviors of staffs in
the company, which will keep them devoted and make stable contributions to the organization.
4.2 Decentralized management philosophy
The art of motivation in Nucor also lies in the empowerment and encouragement to the common
employees. In Nucor, workers don’t see themselves as worker bees waiting for instructions from above,
instead they adopt a mindset of owner operators. In Nucor, most operating decisions are made at the
division level or lower and it gives unblinking focus to people on the front line. Nucor employees also
enjoy more decision making in their work.
Figure 4.2 Empowerment analysis of Nucor motivation
The managers in Nucor allocate power to common workers to help them make decisions in work, and
when the decisions are made by employees themselves, the employees usually feel that they are valued

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and respected, and they can easily capture the meaning of their work and themselves to the whole
organization. What’s more, when the decision and tasks are chosen by the employees instead of the
managers, a high level of self-determination often comes along, which may insure the devotion and
commitment of the common employees to the organization. As we can see in the case, the managers in
the company often talk to their employees and provide necessary feedbacks, which will give the
employees a sense that progress is made along the way and they are on the right track. And this reflects
a sense of impact.
4.3 Encouragement of continuous study
According to the Alderfer’s ERG theory, as the lower-level needs such as existence needs are satisfied, a
person is motivated to satisfy higher level needs, i.e. the relatedness needs and growth needs. The
cooperation and idea sharing that are encouraged by Nucor are good examples of relatedness needs. It
provides chances for the common workers to share thoughts and feelings through two-way
communication, thus good interpersonal relationships are established among the workers. And the
intuition reimbursement in Nucor shows its efforts to satisfy the growth needs. It allows people to
continually improve their skills and abilities and engage in meaningful work.
According to Alderfer, when the higher level needs is satisfied, motivation to satisfy lower level needs
decreases. So the encouragement of continuous study is a pretty effective complement to financial
incentives in Nucor, and together they will make the employees more satisfied with the organization.
4.4 Egalitarian culture
Equity exists everywhere in Nucor. For example, the managers and executives don’t have special
parking space, and they are not provided company cars or jet either. Every year, every single employee’s
name goes on the cover of the annual report, and everyone in the company has the same basic benefit
plan, from the janitors to the CEO. The company also requires managers to abandon the
command-and-control management model to trust their people, and do a better job of sharing corporate
wealth. Another thing that we want to point out is the modest pay disparities in Nucor. A typical example
is that CEO of Nucor only earns 23 times more than the common workers in the company, while in
average American CEO earn more than 400 times than common workers in the company.
Egalitarian culture is another highlight in the management of Nucor. Employees will feel satisfied when
they make both external comparisons and internal comparisons. As for the external comparisons,
workers in Nucor earn higher salaries than their counterparts in other steel plant thanks to the generous
bonus in the company. The average Nucor steelworker took home nearly $79,000 in 2005. 3Add to that
a $2,000 one-time bonus to mark the company's record earnings and almost $18,000, on average, in
profit sharing. So the employees in Nucor will be more committed to their company and more devoted
to their work. As for the internal comparisons, the equity is even more evident. Everyone is paid on
performance and no special treatment to managers, to name a few. Motivation is the highest when as
many people as possible in an organization perceive that they are being equitably treated— their
outcomes and inputs are in balance. Top contributors and performers are motivated to continue
contributing a high level of inputs because they are receiving the outcomes they deserve. Mediocre
contributors and performers realize that if they want to increase their outcomes, they have to increase
their inputs. As a result, the company enjoys a good morale, and no equity distress is experienced.
5 Extension: Comparison Between Nucor and Anyang Steel Company
As mentioned before, the motivation mechanism of Nucor mainly includes performance based salary
system, decentralized management philosophy, encouragement of continuous study and Egalitarian
culture. Let’s use motivation practices of Anyang Steel Company in China as an example to compare
3
The Art of Motivation, Business Week, May 1, 2006

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with the motivation mechanism of Nucor to see how different they are, to see whether there are inspiring
practices Chinese steel companies can learn from Nucor in motivating employees.
There are some measures taken by Anyang Steel Company to motivate employees, including financial
incentive, internal training. Although these measures are similar with Nucor’s in some way, but we can
see clearly the biggest difference lies in lack of egalitarian culture, or steep corporate ladder in Anyang
Steel Company, perhaps in most steel companies in China. Unlike Nucor where pay disparities within is
quite modest, and common employees enjoy more decision making, in Anyang Steel Company, either
financial incentives or internal trainings are designed for managers or other senior employees, and
common workers are rarely involved in the motivation mechanism program.
5.1 Financial incentive
The salary system in Anyang Steel Company is not totally based on performance. In Nucor, base salaries
are lower than market average level, and all employees can get handsome bonuses if they perform well.
However in Anyang Steel Company, only those who contribute a lot to the company, for example
technicians who solve production and technology problems can get huge bonuses. Like other
state-owned enterprises, Anyang Steel Company also makes some preferential policies to those with
higher educations. For example, fresh undergraduates will get one time 2000 living allowance, and
employees with bachelors, master, Phd degrees have priorities over others to buy houses provided by the
company, and will get additional allowance 10000, 30000 and 50000rmb respectively. For those post
doctorates, the financial incentive is more attractive, free house and high salary and bonus. From this we
can see clearly the motivation mechanism in Anyang Steel Company focuses much more on employees
with higher education or those so call key technological professionals.
5.2 Internal Training
Since 2006, Anyang Steel Company has invested 10million each year on average to provide trainings,
continuous study to employees. But again, only those key technicians can get the training opportunities.
For example, in the article written by Anyang Steel Company employee I found, it says 26 key
technicians were sent to Qinghua University for professional trainings in recent years. Again, 10 key
technicians were sent to China Steel Association for study. None of trainings targeting to common
employees are mentioned.
From this comparison, the most impressive and inspiring parts of the motivation culture in Nucor are
decentralized management philosophy and egalitarian culture. Because financial incentives and trainings
can easily be implemented, equity within the company is much more difficulty to be created. It is really
hard to name one company in China where managers and executives don’t have special parking space,
and are not provided company cars or jet either, and where CEO earns only 23 times more than common
workers in the company while average industry level is 400 times. The motivation culture in Nucor is
very inspiring for those steel companies in China to learn how to improve employee performance and
commitment.
References
[1]. Gregory. P. Smith, How Nucor steel rewards performance and productivity
[2]. http://www.nucor.com/careers/benefits/
[3]. The Art of Motivation, BusinessWeek, May 1, 2006
[4]. Essentials of human resource management in modern enterprises, Li Yuanbao, Beijing, Economic
publishing house, 2005
[5]. Motivation and work behavior, Lyman W. Porter, Gregory A. Bigley, Richard M. Steers, Beijing,
Mechanism industry publishing house, 2006
[6]. http://www.nwlink.com/~donclark/leader/leadmot.html
[7]. http://www.themanager.org/Knowledgebase/HR/Motivation.htm