Management

Your assignment # 3 relates to chapter 7 Case 7-2 Nucor, The Surprising Performance Culture of Steelmaker Nucor by Mosley, Pietri, Mosley, designed to reinforce the learning objectives of the course, and in conjunction with the final exam will provide a measure of your material’s knowledge and critical thinking skills.

Your case analysis will require for you to complete the readings for Chapter 7 “Motivation”, and Case 7-2 from the textbook.

* Answer Case 7-2 question from the textbook.

* Your answers must be written in a short essay format APA Style of Writing, no less than 3 full pages in written content.

With multiple academic resources and citations to support the content of the case study

BOOK: Supervisory Management 10th edition by Mosley

Chapter 7: Motivation
Case 7-2
NUCOR, THE SURPRISING PERFORMANCE CULTURE OF STEELMAKER

NUCOR: In the early afternoon, three Nucor electricians got a call from their Hickman, Arkansas, plant colleagues. The Hickman mill’s electrical grid had failed, which meant the mini-mill couldn’t melt the usual auto parts, appliances, and mobile home parts it uses to produce steel. But why should an outage in Arkansas concern anyone at plants in other Nucor locations? Here’s why. At Nucor, steelworker production bonuses are based not only on what their own mill does, but on how others fare also. When a grid goes out, it hurts all. That’s why when Hickman’s electrician colleagues called for help, people didn’t need top man agement to tell them to go; they responded on their own. Two electricians from the company’s South Carolina plant boarded the first plane they could get to Memphis. Arriving at 11:00 p.m., they rented a car and drove two hours directly to the Hickman mill. The third electri cian, from the company’s Decatur, Alabama, plant, was in Indiana, visiting another Nucor site. He immediately drove to Hickman. Combined with Hickman staff, they camped out on site and worked 20-hour shifts to mobilize the plant in three days—much less than the anticipated week. They received no extra pay for their effort. Why would they do such a thing? It’s because of Nucor’s unique way of motivating their workforce and the strong family bond throughout its employment ranks. First, there’s pay. Nucor steelworkers make only about $10 hourly, compared to the typical steelworker’s $16 to $21 hourly. Managers also earn salaries as much as 20 percent below what competitors pay. But what a differ ence incentives can make! Based on previous production incentives for their mills, Nucor’s steelworkers have aver aged $79,000 in pay and incentives. Nucor also has par ticipated in company profit sharing, in which bonuses vary from year to year. In good years, employees earned a $20,000 one-time bonus, bringing the total to $99,000. Workers’ incentives are tied not only to quality produc tion in their own mill, but also to that of other mills and overall company profits. They can track their perfor mance each week, so they know exactly where they stand. However, it’s more than just dollars that make Nucor special. The company became the darling of the late 1980s when its unique “pay for performance” system was implemented under then CEO Ken Iverson. Iverson insisted on a culture resulting in employees feeling like owners. In addition to their pay system, Iverson empow ered employees to make critical decisions, implement their ideas, and take risks. The rest is history. Operating in a single North Carolina location then, and in an underdog role to U.S. Steel and other giants, the lean mini-mill company in 2013 had approximately 22,000 employees and was the largest steel producer in the United States, with revenues of $18.91 billion. Between 2002 and 2006 its 387 percent return to shareholders beat almost all companies listed in the Standard and Poor’s stock index. However, like most companies, Nucor’s market value suf fered due to the Great Recession. Successful organizations, like Nucor, take advantage of down times to strategically position themselves for when things improve. Analysts predict as the economy gets stronger, Nucor’s sales, rev enues, and earnings per share will grow again. The Nucor culture includes some symbolic actions, like every employee’s name being placed on the cover of the annual report. There’s something egalitarian in the culture as well, such as present CEO Daniel DeMicco flying commercial jets rather than having his own, find ing his own parking space in the headquarters lot like every other employee, or making the coffee when it’s his turn. In 2005, when the average CEO pay of big compa nies averaged 400 times that of the hourly employee, at Nucor, DiMicco’s was 24 times that of his steelworkers. Plant managers’ incentives are based on the compa ny’s overall return on equity, rather than specific results from their own mill. As one stated, “At Nucor, it’s not my plant versus someone else’s, as they’re all ‘our’ plants. When one plant has a problem it’s everyone’s problem.”

CASE 7-2 QUESTIONS 1. What are the most relevant concepts from the chapter reflected at Nucor? Comment specifically about the following: Maslow’s hierarchy of needs Herzberg’s motivation-hygiene theory Expectancy theory Equity theory Goal-setting theory

Sources: Nanette Byrnes and Michael Arndt, “What Can You Learn from a Company That Treats Workers Like Own ers. Inside the Surprising Performance Culture of Steelmaker Nucor,” pp. 56–62. Reprinted from May 1, 2006, issue of Busi nessWeek by special permission, copyright © 2006 by the McGraw-Hill Companies, Inc.; “Nucor Corporation Key Statis tics,” Yahoo Finance (online), 2013, http://finance.yahoo.com/q/ ks?s=NUE+Key+Statistics; and “Nucor Corporation Analyst Estimates,” Yahoo Finance (online), 2013, http://finance.yahoo .com/q/ae?s=NUE+Analyst+Estimates. Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or

ANSWER

Introduction

Motivation is an essential key for a company to be successful so as to maintain a powerful continuity of work and boost the survival of the company (Abdi Mohamud et al., 2017). It is the willingness of an employee to put more effort in achieving the company’s goals. There are three relevant concepts of motivation as described in this article. The first one is effort which is described as an element that shows the individual’s level of intensity towards work. Needs is the second one; it is the internal situation that enables some outcomes to look attractive. When a need is not satisfied, tension will be created that in return will stimulate drives in an individual (Al-Madi et al.,2017). The drives will push the individual to look for specific goals that will satisfy the need when achieved hence reducing the tension. Finally, a company’s goal is the third one; goals are important element in an organization because they show and direct employees on what should be done and the level of effort required.

In Nucor organization, the employees are given low salaries by the organization but are also awarded huge incentives, hence the cumulative salary is reasonable. The policy of the company indicates that the employees can only be given incentives when the organizational plants are operating well (Al-Madi et al., 2017). In the scenario where there is a plant that is not operating appropriately, then there won’t be any incentives given to the employees. The organization also allows the employees to make their own decisions, formulate policies and take risks without any interference from the management. This policy grant freedom to employees and makes them feel satisfied and enjoy their work. The publishing of the names of employees on the annual report before being released is a good company’s policy. Finally, the difference between the annual salary of the CEO and employees is small since it is only 24% more compared to other companies where the difference is above 400% (Al-Madi et al., 2017). This is a very good policy because it shows fairness and justice between the employees and the CEO.

Maslow’s Hierarchy of Needs

Maslow hierarchy of need helps in studying how individuals take part in behavioral motivation. People are always motivated to attain particular needs. The five needs that he mentioned were; physiological, safety, belonging and love, social need and self-actualization (Stewart, Nodoushani, & Stumpf, 2018). The hierarchy stresses the satisfaction of lower level of need before going to the next one. In this case, the organization motivated employees by allowing them to make their own decision and also giving them good salaries which in return satisfied their basic needs. The publishing of the names of employees in the annual report made them feel loved and appreciated.

Herzberg’s motivation-hygiene theory

The theory tries to explain every factor that motivates people by discovering and meeting their needs. Hygiene and motivation are the two factors of the theory (Chiat & Panatik, 2019). Hygiene factors are; salary, supervision, and reduced employees. Motivation factors are; being recognized, innovative, dedicated and achievement. The following were the factors that made employees feel satisfied; being given good incentives, freedom to make decisions, policy and take risks, their names being published in the annual report. There were no scenarios that showed that employees were dissatisfied.

Expectancy theory

This theory motivates individual to make better decisions which will in return lead to good outcome. There is always a positive relationship between performance and reward. A good performance will result into a reward. an individual is given a reward, his/her important need will be satisfied (Barba-Sánchez & Atienza-Sahuquillo, 2017). In our given scenario, the payment by the organization to the employees was appropriate depending with the effort they put to its growth. When the level of incentives given to the employees rose to around $99,000 per year as income, it meant that there was a direct relationship between the effort being put in by the employees in their wort and the output which is the rewards given to the by the company.

Equity theory

Employees compare their work inputs and outputs with their fellow workers and then respond hence removing any unfairness. This theory shows that employees are mainly concerned with the equity while giving out rewards (Kollman et al., 2020). Examples of Inputs are skills, experience and hard work while the outputs can be gifts and salary. Employees being given high salaries because of their huge effort shows the balance between the effort which is the input and the huge salary which represent the output. There was equity among employees when they were being given the salary which was only 24 percent less than that of the company’s CEO.

Goal-setting theory

Goal-setting theory highlights three elements that are essential for achieving goals; transparency, there was transparency of the goals indicating that the organizational plants were running smoothly. Challenge, the main challenge for these employees was to come up with some new ideas and try to apply them. Finally, dedication, the workers were dedicated to their work for the company because they could only get the incentives only when the company becomes successful.

References

Abdi Mohamud, S., Ibrahim, A. A., & Hussein, J. M. (2017). The effect of motivation on employee performance: Case study in Hormuud company in Mogadishu Somalia. International Journal of Development Research, 9(11), 17009-17016.https://www.researchgate.net/profile/Jamaal-Hussein/publication/321974170_

Al-Madi, F. N., Assal, H., Shrafat, F., & Zeglat, D. (2017). The impact of employee motivation on organizational commitment. European Journal of Business and Management, 9(15), 134-145. https://www.researchgate.net/profile/Fayiz-Shrafat-2/publication/343141142_

Barba-Sánchez, V., & Atienza-Sahuquillo, C. (2017). Entrepreneurial motivation and self-employment: evidence from expectancy theory. International Entrepreneurship and Management Journal, 13(4), 1097-1115.

Chiat, L. C., & Panatik, S. A. (2019). Perceptions of employee turnover intention by Herzberg’s motivation-hygiene theory: A systematic literature review. Journal of Research in Psychology, 1(2), 10-15.

Kollmann, T., Stöckmann, C., Kensbock, J. M., & Peschl, A. (2020). What satisfies younger versus older employees, and why? An aging perspective on equity theory to explain interactive effects of employee age, monetary rewards, and task contributions on job satisfaction. Human Resource Management, 59(1), 101-115.

Stewart, C., Nodoushani, O., & Stumpf, J. (2018, July). Cultivating employees using Maslow’s hierarchy of needs. In Competition Forum (Vol. 16, No. 2, pp. 67-75). American Society for Competitiveness.