ORGANIZATION MANAGEMENT

Pre-reading

1). Explain what is meant by organization architecture.

2). Give your advice what company should do to gain the competitive advantage.

Reading

Read through the article and do the exercises that follow.

Pay for Performance Is in Our Nature

Managers at Nucor Steel believe that the competitive advantage of the company is rooted in its flat decentralized structure, pay for performance systems, and organizational culture—all aspects of its organization architecture.

Courtesy of Nucor Corporation

Nucor Corporation, a manufacturer of steel and steel products, is something of a phenomenon. In an industry characterized by shrinking demand, excess capacity, trough pricing, and persistent losses that have driven some of the most venerable steelmakers in the United States into bankruptcy, Nucor has made good money and grown its sales and profits steadily for over 30 years. Today Nucor is both the largest steelmaker in the United States and the most profitable.

How did the firm get to be this way? Part of the answer is that Nucor was an early investor in mini-mill technology, a small-scale steelmaking technology that uses electric arc furnaces to smelt scrap steel. However, Nucor is hardly alone in this; many other steelmaking enterprises use mini-mill technology. What distinguishes Nucor is its organization architecture—including a flat organization structure, a tradition of decentralizing decision making to the lowest level possible, controls and incentive pay systems that reward the workforce for hitting productivity goals, an egalitarian culture characterized by gain sharing, and an employee base selected for its ability to thrive within this environment.

Collectively these elements of Nucor’s organization architecture combine to foster very high employee productivity, which lowers Nucor’s cost structure and helps the company to record strong profits while its rivals struggle.

Date: 2015-01-12; view: 1799