Making Gold from Scrap - Small Business Article

By:W. Dave Free

Nucor's business is not new and sexy. In fact it is as rust belt as it comes: melt down scrap steel to make new steel. What's amazing about Nucor is not the business they are in but their results.

How does 387% return to shareholders over the past five years sound? That's better than Amazon, Starbucks and eBay. Since the 1980's it has grown into the largest steel company in the U.S. In 2005 it did $12.7 billion in sales, up from $4.6 billion in 2000. Income was $1.3 billion up from $311 million in 2000.

Their secret? This radical insight from their legendary leader F. Kenneth Iverson: employees, even hourly clock-punchers, will make an extraordinary effort if you reward them richly, treat them with respect, and give them real power. Sounds like something we in the service industry might be able to learn from.

From a recent article by BusinessWeek:

"At Nucor the art of motivation is about an unblinking focus on the people on the front line of the business. It's about talking to them, listening to them, taking a risk on their ideas, and accepting the occasional failure."

Lot's of people talk about empowering employees and paying for performance, at Nucor it's not just talk. Base hourly pay at Nucor is around $10 an hour compared to other companies that average $16 to $21. But a bonus tied to the production of defect-free steel made by the worker's shift can triple the average to $30 at Nucor. Bad work is also penalized. If a bad batch is caught before it leaves the plant the shift loses the bonus on that batch. If the defect doesn't get caught till it gets to the customer, they lose three times that amount.

Thinking this plan will only work with certain employees? Nucor has applied it at several acquired sites with tremendous success. They don't force new employees to switch immediately to their new pay system, they just start posting what the employee would have made. It doesn't take long for employees to demand the switch even as production at the facilities goes up.

That's just one side of how Nucor runs its business. They also listen and take risks on employee suggestions, this is not a command and control kind of place. This is a place where people are passionately working together, being rewarded for their successes and feeling the responsibilities of failure. Natural consequences.

Managers are in the same compensation boat. The shift, plant, or company does well and they get bonuses to compensate for their lower than industry standard salary. If things don't go well then they feel the pinch.

It all makes sense and this company is certainly has the Midas touch.

Digg del.icio.us Blink Stumble Spurl Reddit Netscape Furl

Article keywords: business, business growth, customer satisfaction, innovation, entrepreneur

Article Source: http://www.articles2k.com

Dave Free is president of Zeryn, makers of PromoterZ(tm) (promoterz.com), a customer care system for small business growth. Mr. Free received an MBA from BYU and has worked as an Intel executive domestically and internationally, at a Washington think tank, and entrepreneur. You can read more of Mr. Free's commentary in his Seeds of Growth blog.

Top Small Business Articles
1). Taking Business Phone for Granted By : Kingston Amadan Located in Manhattan, my company occupies a small space in the basement of a upper east side brownstone. Because the space is so limited, we store our servers and phone equipment in the boiler room. I know what you're thinking, and you're absolutely right. It's not a good idea to put your most expensive equipment in a tiny room that feels like the foyer to hell.
2). Categorizing Business Plans According To Types By : David Gass Lists the different types of business plans and stresses the importance of planning.
3). Small businesses main problem? They need more customers. By : W. Dave Free In September of 2005 our company sponsored a survey of small businesses in the service areas. The purpose of the survey was to ask the business owners, many of them franchise owners, what their significant business hurdles were. The key areas of the survey were customers, growth, technology and research, and employees. You can see the complete results at http://seedsofgrowth.
4). Preparing Your Business for a Bird Flu Pandemic By : Bird Flu How would your business operate if half your work force were out sick? Would your business continue to function if several of your top key employees died? How many employees are cross-trained in other positions? A recent study showed the threat that most preoccupies the world's business leaders is a global influenza pandemic. This is why you need to start asking these questions now so your business can be prepared for a possible bird flu pandemic.
5). Phone Sales not Ready to Yeild to the Internet By : Kingston Amadan There is no question that the internet has revolutionized business. Many people are not only paying their bills online, but also ordering products and services at an ever expanding rate as well. Businesses with a web presence have opened themselves up to new market where many consumers take advantage of the ease of shopping from pages visually no different from a catalog.
6). Small Business Computer Consulting: Additional Qualifications for the Sweet Spot By : Joshua Feinberg To find the ideal clientele for your small business computer consulting, you want to target small businesses by their number of PC's, (10 to 50) as well as their revenue. Generally, companies that have anywhere from 1 million to 10 million in revenue are the sweet spot of small business computer consulting. In this article, you'll learn why you should target this type of business.
7). Small Business Strategies - Four Critical Success Factors By : Leanne Hoagland-Smith With many companies being small businesses, understanding what takes your company to the next level is critical. These Four Success Factors will help you gain that advantage.
8). 4 times your account is in trouble!!!!! By : Jack Chevalier 4 times your account is in trouble!!!!!
9). New Vending Machines – Where And How To Buy Them By : Peter Crump When you purchase new vending machines, you are getting the latest models with all the bells and whistles that make them attractive to customers. However, you do have to look for the cheapest prices so that you can save as much money as possible in the investment of getting started in the vending machine business. This is one of the businesses that is easy to get started with and you can determine the type and number of vending machines you do want to start with.
10). Interview with a Vampire - The High Cost of Recruitment to the SBO By : Dana Wallert Many small business owners and entrepreneurs don’t anticipate how much the actual hiring process can cost them in both cash and time. It can really suck them dry of their resources!

New Small Business Articles
1). Make Your Extra Cash Walking Dogs By : james lowe Here is a creative income venture for you if you like dogs
2). How to Choose a Watch Wholesaler By : Dustin Cannon Choosing a watch wholesaler is not quite as easy as it may sound. Sure, you could just find a company that offers this service and get started. But do you really want to take the chance of getting mixed up with the wrong people?
3). Get the Most Out of Tradeshows By : Shannon Cherry Learn how to make your tradeshows the most successful.
4). Things You Should Know Before You Attempt to Work From Home By : Ray Mann The idea of working from home has often been on the minds of many people today find how
5). Reasons Why Home Businesses Fail By : Terence Young The decision to start a home business can often be one of excitement and promise. There are many reasons why people start a home based business but to fail is not one of them.5 Reasons Why Home Businesses Fail
6). How To Turn Competitors Into Allies By : David Gass Gives strategies for turning potential competitors into allies, who can help you grow your business
7). 4 Things to Avoid When Marketing Your Small Business By : John Edmond Opening a new business is fraught with difficulty, not the least of which is just keeping up with 1001 things that need to be done. This article explains why marketing your small business should be of the highest priority.
8). Buying Your First Company By : Dave Kauppi This article gives some helpful hints on how to approach your first business acquisition as an individual investor.
9). Understanding The Need For Small Publishing Companies By : David Gass Explains the need for small presses in order to fill special niches in the publishing market.
10). How To Get Your Website Indexed In MSN For Free In Just 24 Hours By : Karin Manning There are many inexpensive and even free methods to get indexed in search engines almost immediately. This is great news for small businesses looking for affordable seo techniques. Today I am going to focus on the search engine MSN.