Nucor Steel is a great example of how to use knowledge management and be very good at doing it. Nucor made sure whenever they built new plants; they were built in rural areas with an abundance of hard-working and mechanically inclined people. The company became a leading employer in those locations and offered a top-of-the-line compensation package. That type of approach created a hunger for a new knowledge through a high-powered incentive system for every employee. There was no limit as to where how high the bonus could be. Some payouts in the 1990s for production employees averaged 80% to 150% of base wage.
Whenever employees are encouraged to experiment there is always a chance of failure. Nucor understood that if they did not tolerate failure it would severely inhibit experimentation, whereas a company that experiences in nothing but failures will not survive. 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 also had great policies about making sure that their employees did not leave and take their knowledge elsewhere. When hit by a recession, the company reduced the workweek rather than the workforce. Employees regarded a reduced workweek and the corresponding lower wages as a relatively attractive option when compared with the prospect of being laid off in a rural area where Nucor was the leading employer. Any reduction in worker's compensation was accompanied by a greater reduction in managers' compensation and a still greater cut in the CEO's pay. Nucor enjoyed the lowest turnover rate of any company in its industry.
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