Organization Structure at Nucor Highlights

¶ … organization structure at Nucor highlights the fact that factory workers have relatively easy access to management through a simple, three-tiered structure, it also illustrated the limitations of simple organization structure. As the company grew the first structure, which simply had factory employees reporting to CEOs, became too difficult for one man to manage. This is simply an issue of numbers and effectiveness. As CEO Dan DiMicco gained more and more employees to manage, he had less time to devote to growing his business, paying attention to the "trade battles," and other responsibilities of the CEO. As Nucor continues to grow, this will most likely be the case once again, as the five executive vice presidents cannot handle the influx of employees. Thus, the example highlighted that the limitations of simple organizational structure are primarily opportunity cost, or time taken away from top level management, who could be attending to higher order concerns.

Nucor is a special example because it started with a very simple structure, getting more complex as the company grew. Other companies should not attempt to mimic this structure in a way that changes their current structure. This would cause large logistical problems in the most likely scenario. Companies with already complex structures might attempt to simplify their structure, but undertaking a completely simple structure would simply throw too much responsibility to too few to fast. New companies that are organizing for the first time, however, man consider Nucor's structure if they are small enough to manage it effectively and are flexible to the understanding that as the company grows, it may change.

Other organizations develop structures that are more complex than Nucor's for legitimate and non-legitimate reasons. Legitimate reasons to adopt a more complex structure include a large number of employees, a large geographical distance between plants or headquarters and plants, or the fear that respect will not be established if a simple structure is in place. Large amounts of employees cannot be easily dealt with by one, or sometimes even a few, corporate officers, as the Nucor example makes clear. Corporate officers often can make better use of their time in other ways. If a company begins with a large number of employees, simple structure may not be the answer for them. Similarly, if employees in plants are large distances from the corporate headquarters, or the company has a variety of plants, a separate structure must be adopted for each plant in order to best deal with the problems that arise there. Relying on a single CEO or small group of officers in this case may lengthen reaction times and end up in financial or literal disaster for companies. Finally, a complex structure encourages a great deal of respect while a simple structure can be interpreted as loose and informal, with every day workers appealing decisions to the company's head or founder. Companies that want to achieve a greater level of respect for business and business leaders may choose a complex structure.