Nucor Steel
... Nucor has evolved to match the demands of its business, but has also managed to keep its fundamentals unchanged. These fundamentals include taking care of its customers, promoting the safest working environment, ensuring the highest quality products and the lowest costs, improving productivity, and increasing profitability. Nucor has achieved this by being a highly decentralized and agile organization, and by using the mentor and monitor approach models. Monitor Role The monitor role is essential to maintaining high performance in both individuals and groups. The monitor function focuses the manager�s attention on internal control issues. For example, a manager might be responsible for managing core processes to ensure consistency. The monitor function is concerned with consolidating and creating continuity. This role encourages critical thinking. In the workplace, you have to support your claims and proposals in a systematic and concise way. When reasons are put together and presented to one or more people, they form an argument. In this sense, this means you make a case for doing, believing, or recommending something. Managing information overload is also critical in this role. Managerial success depends on speed and agility, not just thoroughness and accuracy. Smart managers learn to watch the helpful data and ignore or weed through the irrelevant stuff. Less sophisticated managers drown in information anxiety. If information doesn�t tell us what we want or what we need to know, then this is not useful information that we need to process or store. Good managers review all information, but great managers are able to channel information efficiently. Managing core processes are also very important in the monitor role. A good place to start in improving a process is to understand the present process. The things we do everyday are loaded with inefficiencies that we may not notice. What are the primary or core indicators that tell you how effectively a process is operating? What about inventory � the availability and quality of the supplies needed? Does inventory stack up, wasting money and space, or do supplies run out making it impossible to fill orders and resulting in lost customers? These kinds of questions can help in determining what to monitor in order to improve the process. Nucor Corporation has been the most innovative and fastest growing steel company for the past 30 years. Their success can be explained only by analyzing its social ecology. Even though Nucor�s end product is steel � a tangible commodity, the company has been a knowledge machine for excellence for decades. Nucor achieved its success by excelling at a single task; becoming and remaining the most efficient steel producer in the world. It did so by developing and constantly upgrading three competencies that were both strategic and proprietary: plant construction and start-up know-how, manufacturing-process expertise and the ability to adopt breakthrough technologies earlier and more effectively than competitors. Nucor�s social ecology allowed the company to excel at the three subtasks associated with accumulating knowledge: creating knowledge from direct experimentation, acquiring external knowledge, and retaining internally created or externally acquired knowledge. Nucor�s success at knowledge creation sprang from three elements of its social ecology: superior human capital, high-powered incentives and a high degree of empowerment, which included both a high tolerance for failure and a high degree of accountability. Nucor was able to gain access to superior human capital by locating plants in rural areas that had an abundance of hard-working, mechanically inclined people. There were several ways that incentives motivated Nucor�s employees to push the boundaries of manufacturing-process-know-how. First, because the incentives were a function production output, employees could earn higher bonuses only by discovering new ways to boost productivity. Second, because the incentive payouts depended only on output that met quality standards, employees were motivated to develop innovations that would help them do things right the first time. Finally, because the magnitude of the bonus payouts was not limited and employees� discovery of new process innovations did not lead to a resetting of the standards, people were challenged to expand the frontiers of process know-how. Whenever employees are encouraged to experiment, there is always the possibility of failure. A company that does not tolerate failure will severely inhibit experimentation, whereas a company that experiences nothing but failures will not survive. Ken Iverson, Nucor�s architect, and, until recently, its chairman, explains that Nucor fostered experimentation within a context of accountability. He says, �We try to impress upon our employees that we are not King Solomon. We use an expression that I really like, good managers make bad decisions. We believe that if you take an average person and put him in a management position, he�ll make 50% good decisions and 50% bad decisions. A good manager makes 60% good decisions. That means that 40% of those decisions could have been better.� The point is, learn from your mistakes. In order to be a leader in the industry, risks are necessary. Because Nucor�s social ecology drove every employee to search for better and more efficient ways to make steel and steel-related products, its operating personnel had a deeper mastery of the industry�s manufacturing processes than personnel at other steel companies. Nucor Steel primarily embraces the second and third core competencies of the monitor role, which are: managing information through critical thinking and managing core processes. Nucor�s goal within each plant is to build a social community promoting trust and open communication. Everyone has the opportunity to interact. Also, Nucor believes in transferring knowledge among plants. Plant general managers' meet as a group three times a year to review each facility�s performance and to develop formal plans for the transfer of best practices. Plant general managers, supervisors and machine operators periodically visit each other�s mills. Each person is able to see how the other mills operate. This gives each person firsthand knowledge of the factors that make particular practices superior or inferior. Each person is able to learn from each other and offer ideas on improving processes. The Mentor Role As our book suggests, being a mentor can be identified with being a concerned human. This role reflects a caring, empathetic orientation. In this role, the manager is expected to be helpful, considerate, sensitive, approachable, open, and fair. In acting out the role, the leader listens, supports legitimate requests, conveys appreciation, and gives recognition. Employees are seen as important resources to be understood, valued, and developed. The manager helps them with individual development plans and also sees that they have opportunities for training and skill building. In the mentor role, the manager is also expected to have a high level of self-awareness and to consider how one�s actions as a manager influence employees actions. (p 29) The entire article of Knowledge Management�s Social Dimension: Lessons from Nucor Steel discusses the human factor in knowledge management. Nucor Steel recognizes the importance of its employees in its knowledge management's, and as such has identified three stages of knowledge management: creating knowledge, acquiring outside knowledge, and retaining knowledge. So, how does the mentor role fit in this? I would say that the mentor role is most prominent in first and third stages of knowledge management. As mentioned earlier, a good mentor will provide its employees with opportunities for training and skill building. Nucor built its foundation on investing in continuous, on-the-job multifunctional training. Furthermore, it cultivated hunger for new knowledge through a high-powered incentive system for every employee-from the production worker to the corporate CEO. There was no upper cap on the incentive payouts. (p 75) The article further suggests that there were several ways that incentives motivated Nucor�s employees to push the boundaries of the manufacturing process know-how. First, because the incentives were a function of production output, employees could earn higher bonuses only by discovering new ways t...