W h y s o m e c o m p a n I e s m a k e t h e
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| Could become the best in the world at denominator of harnessing culture Nucor's T HREE C IRC LE S 1970-1 995 lobby, which itself was not much larger than a closet. Instead of a corporate dining room, executives hosted visiting dignitaries at Phil's Diner, a strip mall sandwich shop across the Executives did not receive better benefits than frontline workers. In fact, executives had fewer perks. For example, all workers (but not executives) were eligible to receive $2,000 per year for each child for up to four years of post-high school In one incident, a man came to Marvin Pohlman and said, "I have nine kids. Are you telling me that you'll pay for four years of school-college, trade school, whatever-for every single one of my kids" Pohlman acknowledged that, yes, that's exactly what would happen. "The man just sat there and cried" said Pohlman. never forget it. It just captures in one moment so much of what we were trying to When Nucor had a highly profitable year, everyone in the company would have a very profitable year. Nucor workers became so well paid that one woman told her husband, "If you get fired from Nucor, divorce But when Nucor faced difficult times, everyone from top to bottom suffered. But people at the top suffered more. In the 1982 recession, for example, worker pay went down 25 percent, officer pay went down 60 percent, and the CEO's pay went down 75 138 Jim Collins Nucor took extraordinary steps to keep at bay the class distinctions that eventually encroach on most organizations. All 7,000 employees' names appeared in the annual report, not just officers' and Everyone except safety supervisors and visitors wore the same color hardhats. The color of hardhats might sound trivial, but it caused quite astir. Some foremen complained that special-colored hardhats identified them as higher in the chain, an important status symbol that they could put on the back shelves of their cars or trucks. Nucor responded by organizing a series of forums to address the point that your status and authority in Nucor come from your leadership capabilities, not your position. If you don't like it-if you really feel you need that class distinction-well, then, Nucor is just not the right place for In contrast to Nucor's dental suite-sized headquarters, Bethlehem Steel built a twenty-one-story office complex to house its executive staff. At extra expense, it designed the building more like across than a rectan- gle-a design that accommodated the large number of vice presidents who needed corner offices. "The vice presidents. had to have windows in two directions, so it was out of that desire that we came up with the design" explained a Bethlehem In his book Crisis in Bethlehem, John Strohmeyer details a culture as far to the other end of the continuum from Nucor as you can imagine. He describes a fleet of corporate aircraft, used even for taking executives' children to college and flitting away to weekend hideaways. He describes a world-class eighteen-hole executive golf course, an executive country club renovated with Bethlehem corporate funds, and even how executive rank determined shower priority at the We came to the conclusion that Bethlehem executives saw the very purpose of their activities as the perpetuation of a class system that elevated them to elite status. Bethlehem did not decline in the sands primarily because of imp rts or technology- Bethlehem declined first and foremost because i was a culture wherein people focused their efforts on negotiating th nuances of an intricate social hierarchy, not on customers, competit rs, or changes in the external world. From 1966 (at the start of its buildup) to 1999, Nucor posted thirty-four consecutive years of positive profitability, while over those same thirty-four years, Bethlehem lost money twelve times and its cumulative profitability added up to less than zero. By the Nucor's profitability beat Bethlehem s every single year, and at the end of the century, Nucor-which Good to Great had been less than a third the size of Bethlehem only a decade finally surpassed Bethlehem in total Even more astounding, Nucor's average five-year profit per employee exceeded Bethlehem by almost ten And for the investor, $1 invested in Nucor beat $1 invested in Bethlehem Steel by overtimes. To be fair, Bethlehem had one giant problem not faced by Nucor: adversarial labor relations and entrenched unions. Nucor had no union and enjoyed remarkably good relations with its workers. In fact, when union organizers visited one plant, workers felt so ferociously loyal to Nucor that management had to protect the union organizers from workers who began shouting and throwing sand at But the union argument begs a crucial question Why did Nucor have such abetter relationship with its workers in the first place Because Ken Iverson and his team had a simple, crystalline Hedgehog Concept about aligning worker interests with management interests and-most importantly- because they were willing to go to almost extreme lengths to build the entire enterprise consistent with that concept. Call them a bit fanatical if you want, but to create great results requires a nearly fanatical dedication to the idea of consistency within the Hedgehog Concept. Download 3.69 Mb. Share with your friends:
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