Human Resource & Competitive Advantage- A Case of Nucor Study

Human Resource & Competitive Advantage- A of Nucor - Case Study Example Looking at the financial aspect of the pay for performance system the system might seem as inappropriate to modern organizational setting but they pay system of Nucor needed to be viewed from the human side of the equation. However there are advantages and disadvantages that are associated with the pay for performance scheme of Nucor. Advantages According to the case study, pay for performance has helped Nucor to retain top performers and create the sense of responsibility among employees because employees know that their pay scale is directly related to their performance level. Korda has pointed out that leaders need to adopt alternate solutions in order to enhance performance of subordinates. Same is the case for Nucor, leaders of the company have designed a unique pay for performance scheme for employees which can positively impact the overall production performance of the company. According to the case study, workers in Nucor Corporation three times incentives along with the fixed pay when they perform exceptionally well. Now from an egalitarian perspective, the pay for performance model can be appreciated, for example, in a fixed salary based compensation scheme with separate performance appraisal system; all employees are equally compensated irrespective of their performance level in the organizations.... mpensation scheme with separate performance appraisal system; all employees are equally compensated irrespective of their performance level in the organizations. Such type of pay system might discourage employees to put their hard work hence overall productivity of the firm will get hampered. The case is opposite when organizations link incentives along with fixed payment to appreciate workers to enhance their effort level earn more monetary rewards. Disadvantages According to Bernardin and Russell (2013) there are two major limitations associated with pay for performance scheme, 1-it is not a standardised procedure to measure performance because performance of employees can be downgraded by variety of reasons apart from incompetency of workers and 2- biased pay for performance system can decreased the level of output from workers. These problems are associated with the pay system of Nucor Corporation. Careful analysis is showing that, hourly workers in steel manufacturing giant earn $10/hour which is far less than the industry average of $16-$21/hour while rest of the payment is made in terms of incentives and bonuses which are linked with the quality and productivity of entire shift. Now imagine a case, where overall productivity of Nucor Corporation gets reduced due to decrease in demand for steel across the globe for various macro-environmental reasons. From the law of economics, in such cases, Nucor will not be able provide bonuses or incentives to workers hence the workers will go home with fixed salary which is way below than the industry average. The same case happened to Nucor during 2003, when the demand for steel was chopped; hourly workers earned only $59,000 annually. Answer 2 Nucor Corporation uses both financial and non-financial incentives to motivate