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Nucor Uses an Integrated Approach to Employee Motivation

EMPLOYEE MOTIVATION CASE STUDY: NUCOR Identification of relevant problems The case study does not call for a determination of a of action, because there is no problem situation to resolve. The question posed at the end is, given the success resulting from the HRD policies of Nucor, what are the reasons for this success, and could the elements that contributed to this success be replicated in other organizations in order to yield the same positive results?
Identification of options or alternatives
If any set of alternatives need be identified, it could only be: Whether or not the Nucor model is applicable to other companies?
Analysis of the Nucor Model
1. How does Nucor’s approach to motivation build on recommendations from Maslow’s, Alderfer’s, and McClelland’s need theories? Explain.
Maslow’s Theory states that humans are motivated to fulfill their needs in hierarchical order: firstly the physiological, followed by the safety, social, internal esteem, external esteem and finally self-actualization needs. Nucor’s HRD program is consistent with Maslow in providing a fixed, though comparatively lower level, of regular pay, just enough for the worker to meet his basic sustenance. But at Nucor higher pay must be justified by higher productivity, which in effect pertains to the workers’ esteem needs through pride in their workmanship. By linking good workmanship with performance bonuses, Nucor is able motivate its workers to be rewarded not only financially but with a feeling of pride in their work.
Alderfer’s ERG Theory builds on Maslow’s Theory but groups the needs into a simpler hierarchy of Existence, Relatedness and Growth needs. But Alderfer differs from Maslow in that the ERG hierarchy need not be satisfied one level before the other, that is, a lower motivator does not need to be satisfied before higher motivators take over. In Nucor, this was evident in the situation in Hickman, where company electricians, without any order from supervisors, took the initiative to respond to an emergency including defraying traveling expenses from their own pockets and working 20-hour shifts to repair the damage. The case study states that this was done without any extra remuneration nor any kind of financial incentive. This is indicative of the ERG theory, since the workers fulfilled their relatedness and growth needs (i.e., pride in their company and commitment to their job) even above and beyond additional pay that would have meant to fulfilling existence needs.
On the other hand, McClelland’s acquired-needs theory (also three advances the proposition that an individuals’ specific needs are acquired over time and are shaped by life experiences. The needs are classified as either achievement (nAch), affiliation (nAff) or power (nPow), and that a person’s motivation and effectiveness on the job are influences by these three needs. All three of these needs are present in Nucor’s system, where workers are allowed to work under their own discretion (nPow) such as the case of Hickman, to coordinate unmonitored with other members of the organization (nAff), and that recognition in the form of bonuses and rewards when the company does well (nAch).
2. To what extent are the hygiene factors and motivators influencing employee behavior at Nucor?
At Nucor, hygiene factors such as the regular pay are not as important to the employees as the motivators. As already mentioned, the electricians in the Hickman episode gave up their rest period, transportation fare, and the comfort of their own units in order to respond to the situation. Their sense of accomplishment and pride in their firm, both motivating factors, far outweighed the implied hygiene factor – additional pay commensurate to additional work done. At Nucor, motivating factors are given greater importance by workers than the hygiene or maintenance factors.
3. What role does equity theory play in this Case? Discuss.
Adam’s equity theory does not envision a needs hierarchy, but is simply based on the perception of a fair balance between an employee’s inputs (e.g. hard work, skill) and his outputs (salary, benefits, recognition). At Nucor this was achieved by rewarding good work with bonuses and rewards, and penalizing poor work with deductions and sanctions. A sense of fairness prevails only because Nucor was able to foster a sense of fairness, and that the company will take care of the employee who takes care of Nucor.
4. To what extent is Nucor’s approach to employee motivation consistent with expectancy theory? Explain.
Under the expectancy theory states that when deciding among behavioural options, individuals will choose the alternative with the greatest motivation forces, where a motivational force is the product of three perceptions: expectancy, instrumentality and valence. Nucor is consistent in its dealings with its workers to the point that they could confidently expect the commensurate rewards or recognition for the effort they have exerted (expectancy). The belief is engendered that if one does meet company expectations, he will be rewarded with greater pay or a promotion (instrumentality probability). Finally, because of the sense of pride in their firm, Nucor employees place great personal value in exerting the extra effort and taking pleasure in the achievement (valence).
5. What role does organizational culture play in this case?
The uniqueness in Nucor’s organizational culture is evident in the relationship between managers and rank-and-file. Managers have developed a camaraderie with their subordinates in that their remuneration is, like their subordinates, made to depend upon the group effort. As the case study quoted one employee, At Nucor, we’re not ‘you guys’ and ‘us guys.’ It’s all of us guys. Wherever the bottleneck is, we go there, and everyone works on it. The empowerment given employees and the work being shared by management bespeaks of a partnership that builds esprit-de-corps. Furthermore, units learn best practices from one another in a friendly yet constructive competition. The organizational culture is one of cooperation and collaboration.
6. Would it be easy for other companies to copy Nucor’s approach to employee motivation? Why or why not?
As to how well other companies could benefit from emulation of the Nucor model will depend very much upon the other company. It is not easy for a structured, centrally controlled company to turn its corporate culture around into one of dispersed control, collaboration and participation. Nucor’s experience is not just a list of policies or procedures that may quickly be transplanted. Its core is human and intangible, a relationship and common respect among individuals and a willingness to share stewardship of the firm that each employee perceives as his own and identifies with. As long as managers are willing to regard the rank-and-file as partners, and the rank-and-file to assimilate and identify with company objectives, then there is a great chance that copying Nucor would be easy.
Decision recommendations
For all its advantages, the Nucor model should be sought to be adopted by companies as far as the nature of their business will allow. Only when the nature of the business or the core values (such as those dealing with the social environment) of the company would not allow should attempts to adapt Nucor be abandoned.
Implementation tactics
An excellent tactic was given by the case study, where the Auburn workers were convinced of the advantages of the Nucor’s pay system. This refers to the payment continuing under the old formula while posting the possible returns to the employees under the new formula. Without coercion, the employees were eventually converted to the new plan. It is important, however, that coercion be avoided, and that persuasion and sound argument be used to win over minds and hearts.
Assessment criteria for success or failure
Success becomes apparent when productivity goes up and human resources problems (on discipline, infractions, and frequent turnovers) go down. Increase in the company’s profitability coupled with high morale would be excellent markers by which to assess success.
On the other hand, failure will be apparent where the new system would fail to yield higher productivity, and it may be perceived that the rank and file would revert back to old expectations or clamor for a return to the old regime.
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ERG Theory of Motivation – Clayton Alderfer. Envision Software, as seen in
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Expectancy Theory,, Internet Center for Management and Business Administration, Inc. as seen in
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Herzbergs Motivators and Hygiene Factors as seen in
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Historical Background of Organizational Behavior (prepared by Professor Edward G. Wertheim, College of Business Administration, Northeastern University, Boston, MA 02115)
As seen in Accessed March 11, 2009
McClelland’s Theory of Needs, Net, Internet Center for Management and Business Administration, Inc. as seen in
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Organizational Culture, Strategic Leadership and Decision Making
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