An Organization 's Culture At The Lincoln Electric Company

Lincoln Electric Company has a very strong culture based on shared assumptions values and beliefs. This is evidenced by the attitudes of both the company management and employees towards the organization. The unchanged policies, practices and products point towards a very strong corporate culture. High employee performance and productivity over the many years of the company’s existence is also another indicator of a strong culture.

Lincoln Electric (LE) has been a producer of electrical and welding technology products since the late 1800's. The company remained primarily a family and employee held company until 1995, then approximately 40% of its equity went to the public. James Lincoln, one of the founders, developed unique management techniques that effectively motivated the employees. These management techniques were implemented as an unusual (for the era) structure of compensation and benefits called "incentive management". The incentive management system consisted of four key areas: factory jobs based solely on piecework output; a year-end bonus that could equal or exceeded an individual's regular pay; guaranteed employment; and limited benefits. Management

Every organization has values and beliefs that define what they do and how they do things in the organization. These values have significant influence on how the employees behaves and the general performance of the organization – it is these set of values and beliefs, rooted deep in the company’s organizational structure that depict the “dos”, “don’t” and the “hows”, of the organization and these unequivocally represents the culture of the organization. This concept became popular in the 1980s when Peters and Waterman in their book: “In search of Excellence” presented the profound argument that, the success of any organization is inextricable linked to the quality of its culture. (Carpenter, M., Taylor, B., Erdogan, B. 2009 p183). The purpose of this paper is an attempt to analyse the impact diverse cultures played in the success of the Lincoln Electric Company.

John Deere was using an individual-based, standard hour compensation plan until the 1980s when they decided to install a team-based gain-sharing plan. They believed this plan would encourage more innovation, motivation and cooperation from employees. There are trade-offs with both of these plans and they had to consider them when deciding to change plans.

Lincoln's competitive advantage lies mainly in its effective compensation and benefits system which put forth three main elements to spearhead the company's efforts. The trinity of elements comprised of piecework, bonus system and guaranteed employment. Piecework provided workers with a sense of autonomy in that now, workers can earn as much as they are willing to work for. The bonus levels in Lincoln far exceeded those of industry peers and were based on their contributions in the form of output, ideas, cooperation, dependability and quality. Consequently, the benefits provided by Lincoln were not extensive as they saw higher wages as substitutes for things such as insurance,

The Lincoln Electric Employees ' Association was formed in 1919 to provide health benefits and social activities. This organization continues today and has assumed several additional functions over the years. By 1923, a piecework pay system was in effect, employees got two-week paid vacations each year, and wages were adjusted for changes in the Consumer Price Index. Approximately 30 percent of

Elements of Lincoln Electric’s management system that made it so popular in the U.S. such as piece-rate work, bonuses, and

After the Great Depression in 1934, the company developed the Lincoln system. The Lincoln system is a three-pillared approach towards employee compensation. The system consists of yearly discretionary bonuses, a piece rating system and a promise of guaranteed employment. Yearly bonuses are paid out based upon

In 1934 the famous Lincoln bonus plan was initiated which would give employees of the company a yearly bonus as a percentage of their

While at first glance, Lincoln Electric would appear to be an Outcome-Oriented culture, on deeper reading, it becomes clear that the company takes many of the good points from a few types of organisational cultures to create their own.

In 1989, Arthur Sharplin produced a case study, Sharplin (1989), outlining the organizational structure and culture of the Lincoln Electric Company. This report will be focused on analyzing Sharplin’s case study to discern aspects of the Lincoln Electric Company’s culture. First, we will discuss John & James Lincoln and their influence on the development of the culture of the company. We will discuss their Christian influence, and how applying the golden rule of doing to others as you would have them do to you, helped them shape their company. Additionally, we will discuss the company performance appraisal system, the way people communicate in the company, the merit pay plan, the bonus plan, and finally, the management style. After

The Lincoln Electric Company is indeed a success story. It remains the world’s leading welding machines and electrode manufacturer. Notably, estimates indicate that the company may be controlling about 40% of arc welding equipment market. It has two factories in US and 3 more factories abroad with a combined workforce about 3000 excluding field sales staff. However, the immense success the company has registered in its operations is tied to its long-standing management style. This essay discusses the Lincoln Electric Company’s culture and how impactful it has been in maintaining a motivated workforce.

brother join the company and subsequently became general manager and vice president in 1914. One of James early actions was to have a committee that would advise him on company operations. Employees was asked to elect representatives to the committee. They met twice monthly with the executive officer ever since. A welding school was formed in 1917 and still continues today. In 1918 an employee bonus plan was initiated then discontinued. It returned later on however. In 1934 the bonus plan was purposed by the advisory board, their has been a bonus every year since then. In 1919 the Lincoln Electric Employees Association was formed providing health benefits and social activities. This has continued today with added functions. The board of directors started a suggestion system that is still in effect today. At least since 1935 Lincoln productivity has been well above the average productivity vs. similar companies.

After the Great Depression in 1934, the company developed the Lincoln system. The Lincoln system is a three-pillared approach towards employee compensation consisting of yearly discretionary bonuses, a piece rating system and a promise of guaranteed employment. Yearly bonuses are paid out based upon personal worker performance and company profits. The company uses a performance evaluation system to determine the amount of each individual’s yearly bonus. Lincoln Electric adopted the piece rating system so workers ' compensation is based upon the quality of each material unit rather than quantity of units produced (Dyer et al., C-114). In 1958, the company implemented the guaranteed employment promise which guaranteed workers up to 30 hours per week regardless of current economic conditions (Dyer et al., C-114). The Lincoln system has increased the company 's competitive advantage in the welding equipment market by increasing productivity and decreasing turnover rates.

The company culture of Lincoln Electric is one of teamwork, support and innovation. After reading and reviewing the case study done on Lincoln Electric by Arthur Sharplin of McNeese State University, I have come away with a better understanding of how the company has become the role model for management world-wide.