James F. Lincoln Electric Company 's Culture

The Lincoln Electric company, under the leadership of James F. Lincoln saw a major shift in the way business was to be directed and operated with visionary mind-set emulating companies like Ford, Wal-Mart, Merck, 3M as focus was towards the customer’s needs and employee’s compensation. Philosophically customer needs become critical as the reason for being in business and the employees also being the vehicle in achieving the needs of the customers as the case study by Sharplin, A (1989, p.3) clearly positions the companies aspirations. James Lincoln places much importance on the relationship with employees that is guided by mutual respect and individual effort.

The founders of the Lincoln Electric Company left a legacy of an organization culture that promotes high productivity through sound management policies which have stood the test of time. The exponential growth of the company after the death of James F. Lincoln was a direct result of the establishment of a rich culture mix based on values that were widely shared and accepted by the members of the organization. Management empowered employees to become part of the decision making process through the contribution of ideas through the Advisory Board which was elected by the employees from amongst themselves. Reward management systems and all the other artifacts of the Lincoln Electric’s distinguished strong organizational culture will be analyzed in greater detail in this essay.

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.

The founder, James F. Lincoln used his Christian upbringing as the basis for his vision of how he defined entrepreneurial success. The customers ' needs are first priority, the employee second, and the stockholders are last. Quality and cost efficiency are the two most important factors considered in their product engineering and manufacturing. The hierarchy is stringent, however, the culture of the company is greatly people-oriented. This company has a strong culture that is instilled in new employees from the beginning and continuously practiced by every member of every facet in the organizational structure.

The Lincoln Electric Company has been built on clear and solid ethical principles. The reason for its centenarian success can be found in the fact that the ethic culture of respect and customer orientation fostered by its founder has remained unchanged. James F. Lincoln had a strong Christian background that guided his culture and vision. As he wrote, “The Christian ethic should control our acts. If it did control our acts, the savings in cost of distribution would be tremendous. Advertising would be a contact of the expert consultant with the customer, in order to give the customer the best product available when all of the customer 's needs are considered. Competition then would be in improving the quality of products and increasing efficiency in producing and distributing them; not in deception, as is now too customary. Pricing would reflect efficiency of production; it would not be selling a dodge that the customer may well be sorry he accepted. It would be proper for all concerned and rewarding for the ability used in producing the product” (Lincoln J. F., 1961. p. 64). The culture of the Lincoln’s brothers was centered on satisfying the customer’s needs. Their efforts were not devoted to increasing profits rather to a constant search for cheaper and more effective products that would improve customer’s satisfaction. For the Lincolns customers represented the reason for the company’s existence. He made sure that this philosophy permeated the company until the very last

Another fascinating aspect of James Lincoln and his perception of business is how he treated his customers. As mentioned by him, “the customer's interests, not the stockholder's, should come first” (1, Harvard). In today's market, shareholder's are the main concern of companies. Businesses today may talk about how important the consumer is, but the shareholder always dictates how the company is ran and it's future path. James Lincoln saw past the greed and utilized his Christian values as a basis of morality. Even Lincoln said it himself when he downplayed the

The overall impression, after reading the Case Study, is that Lincoln Electric has a strong culture. In our textbook, Carpenter, Taylor, and Erdogan (2010, p. 197) define a strong culture as “one that is shared by organizational members… a culture in which most employees in the organization share a consensus regarding the values of the company”. This can be considered the foundation of all the successive subcultures that exist within the company, and it starts at the very beginning with the founders. John C. Lincoln started the company on next-to-nothing after he had been let go from his former venture. Despite being started during an economic recession and suffering a fire after barely one year, John Lincoln moved the company to a new location and grew his workforce, which correlated to higher sales and profits. John’s brother, James F. Lincoln, joined the company and took over as General Manager/Vice President while the company was still in its early stages. The first indicator that the company took on a people-oriented culture is with the creation of the “Advisory Board”, which served as a means to advise Lincoln of operations –

That both employees and management want to be a part of something great, a part of a team that is working for the same goal of making their company successful. Lincoln believed that a worker is worthy of what they earn. If they work hard, they should be paid commensurate with that effort.

Lincoln Electric was founded by John C. Lincoln in 1895 in Cleveland, Ohio and has remained one of the most prominent and successful American manufacturing companies over a century later. Lincoln’s place in the world of welding machines and electrodes was not done by accident or attributed to luck. It was built by vision and design. John was more of the scientist, preferring to focus on being and engineer rather than managing a company. That’s when James, his brother took the reins (along with a typhoid illness that kept him away from the plant). James Lincoln had a vision for the company that reflected his Christian values, though those values were not imposed on his employees. He used his values as a guiding force as to how to encourage and empower the staff at Lincoln Electric to invest one hundred percent of their efforts into creating the strongest, and most stable manufacturing company in the world.

An example from Sharplin’s research is Lincoln’s policy to “at all times price on the basis of cost and at all times keep pressure on our cost…” Clearly, this is giving the customer what they wanted. Another example from Sharplin’s research is the fact that the Lincoln Electric Company hasn’t had a layoff since 1949! Lincoln identified early on that, “The greatest fear of the worker… is lack of income.” By providing job security and great wages, Lincoln was able to give his employees what they wanted. Even stockholders, despite being listed by James as least important, still benefited from James’ strategy because taking care of customers and employees first naturally increased the company’s profitability. Increased profitability is what every stockholder wants.

In those early years, James F. Lincoln implemented a number of programs and initiatives with served to define a company culture that was unique in its day and which has persisted for a century. Those programs and initiatives grew out of a stated mutual respect between workers and management, based largely on James F. Lincoln’s Christian beliefs and apparent genuine respect for the people who developed, manufactured and sold the company’s products. Among those programs was the creation of an Employee Advisory Board, a production based employee pay structure, and a group insurance program which was a rare benefit in its time. Today, Lincoln Electric continues to thrive and according to its 2014 Annual Report, generated revenues on the order of $2.8 billion resulting in net income of $255 million. The Cleveland, OH-based company now employs 10,000 worldwide where it operates 40 manufacturing facilities in 20 countries. Lincoln distributes its products to 160 countries.

“An organization’s culture may be one of its strongest assets…,” (Principles of Management p. 184). Culture at the Lincoln Electric Company exemplifies this statement, and has since 1914. The Lincoln brothers’ attitude towards the employee has helped skyrocket this once small company to the powerhouse that it is today. Examining this outcome oriented company yields a perfect example of how a strong culture can add to the overall bottom line.

How this culture came to be in the Lincoln Company begins with the founder’s values and principles. When James Lincoln

As mentioned before, the relationships that were built continued to keep the company aligned moving in one direction, toward growth. More productivity, more sales, more money, created bigger bonuses and happier employees. Lincoln wanted to embrace the people-oriented culture and relate with employees to show them you value and respect them.

The simplest definition of culture is how things get done in an organization. Each company has a culture and Lincoln Electric Company seems to have a strong culture based on limitless possibilities. Continuing influence and vision of the founders are still evident when analyzing the company and its vision.