Each division is also responsible for creating the demand for its products by winning and retaining customers. Unlike other steel companies, Nucor’s plants aren’t mere manufacturing sites, but end-to-end businesses. Accordingly, each division has its own P&L, which is entirely free of corporate cost allocations.

Across the 5 company, full-time managers and executives, a population that doesn’t include team supervisors, account for only 2 percent of employment—four times less than the percentage in the overall economy. As a percentage of revenue, Nucor’s general and administrative expenses hover around 3 percent, or roughly half that of its competitors.

PROFIT SHARING FOR ALL. 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. In 2018, Nucor paid in $308 million, which worked out to about $12,000 per employee. Teammates receive a small portion in cash and the remainder goes into a retirement account, which, for many employees, constitutes their largest financial asset.

True to the spirit of humanocracy, Nucor’s model isn’t about pushing employees to do more, but giving them the opportunity to be more—more than blue-collar workers, more than order takers, more than mere operators, more than employees. Nucor’s frontline team members are experts, innovators, risk takers, and owners.

We encourage our managers to apply the Keeper Test regularly. But we are very careful to not have any firing quotas or ranking system. Rank-and-yank or “you must let go of X percent of your people” is just the type of rule-based process that we try to avoid. More important, these methods get managers to let go of mediocre employees, but they kill teamwork at the same time. I want our high-performing employees to compete against Netflix’s competitors, not one another. With rank-and-yank what you gain in talent density you lose in reduced collaboration.

Fortunately, there is no reason to choose between high talent density and strong collaboration. With the Keeper Test we can achieve both. That’s because there is one critical way we are not like a professional sports team. On the Netflix team there is no fixed number of slots. Our sport isn’t being played to a rule book and we don’t have limits on how many people we play with. One employee doesn’t have to lose for the other to win. On the contrary, the more excellence we have on the team, the more we accomplish. The more we accomplish, the more we grow. The more we grow, the more positions we add to our roster. The more positions we add, the more space there is for high-performing talent.