Each division is also responsible for creating the demand for its products by winning and retaining customers. Unlike other steel companies, Nucorâs plants arenât mere manufacturing sites, but end-to-end businesses. Accordingly, each division has its own P&L, which is entirely free of corporate cost allocations.
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Beyond the CEO, Nucorâs executive ranks include only one other functional head, the CFO. Similarly sized U.S. Steel, based in Pittsburgh, has at least eight central functionsâincluding performance analytics, strategic planning, compliance, supply chain, manufacturing excellence, IT, HR, and financeâwhich are supported by a head-office staff group of about a thousand individuals.
Across the 5 company, full-time managers and executives, a population that doesnât include team supervisors, account for only 2 percent of employmentâfour times less than the percentage in the overall economy. As a percentage of revenue, Nucorâs general and administrative expenses hover around 3 percent, or roughly half that of its competitors.
As part of their training, Nucor teammates participate in a daylong, Monopoly-like game called âDollars and Tons,â where five-person teams run a fictional Nucor division. Teams make decisions on how much scrap to buy at what price, on how many people to hire, and when to invest in new equipment to expand capacity. At the end of the simulation, teams are assessed on profitability, return on assets, working capital management, and balance sheet strengthâall drivers of a plantâs performance.
True to the spirit of humanocracy, Nucorâs model isnât about pushing employees to do more, but giving them the opportunity to be moreâmore than blue-collar workers, more than order takers, more than mere operators, more than employees. Nucorâs frontline team members are experts, innovators, risk takers, and owners.
Each of these companiesâNucor, Haier, Handelsbanken, and Vinciâ has built an organization that is, at its core, a league of owners. Over the decades, each company has demonstrated conclusively that distributed ownershipâŚ
- Reduces turnover and creates a smarter, more experienced workforce
- Unlocks reserves of discretionary effort
- Increases the incentives for innovation
- Creates more cohesion and camaraderie
- Strengthens the connection with customers
- Produces faster, better-informed decisions
- Leads to a flatter, leaner organization
- Yields above-average returns