Lincoln Company Plan For Achieving High Worker Productivity

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

Primary features of the Lincoln Electric business model and employment system are displayed through the company’s overall strategy, philosophy, compensations and benefits policy, leadership, and communication within and outside the organization.

Lincoln serves their customers first, and stockholders last. Lincoln's goal is to evolve continually to offer better quality products at a lower price point. These views have not changed since the very humble beginnings of the company. The company's motto is the actual is limited, but the possible is immense. James Lincoln began managing this business by asking employees to elect members to weigh in decisions about company operations in a twice-monthly meeting. This practice still continues. The turnover is nearly nonexistent, with the exception of retirements and employee relocations. And the list of benefits available to employees is extensive, including job security for a guaranteed amount of hours and stock purchase option, bonuses, and

Besides, managers in Lincoln Electric Company were not high in the sky, they worked and lived with workers in daily life, they had free atmosphere at work and they strengthened the feeling that workers were managing themselves.

After analyzing the story of Lincoln Electric Company I’ve come to the Conclusion that their organizational culture they practicing is People-oriented culture. Because the company values fairness, supportiveness and they respect individual rights. There is a greater emphasis on expectation of treating people with respect and dignity.

Lincoln Electric Company separated itself from the competitors for its innovative policies. For instance, hours were reduced from to 55 to 50 hours a week. Life insurance was offered to each employee. A welding school was created, which it still exists today. “An employee bonus” was contemplated but was not accomplished successfully. But until now, the employee bonus remains in the Lincoln management system. In addition, employees were empowered to form an association, which let to health benefits and other things. Furthermore, employees received two weeks of paid vacation and raises. These are the benefits that continue up to this day.

Over the decades and since it was first created, the ongoing guidance and encouragement of the management towards their employees made Lincoln’s expansion possible to a global level. The ideas and philosophy of the founders are still at the core of the organizational culture because they strongly supported the company in its initial stages and helped distinguish it from others. “Thus, by providing a competitive advantage, these values were retained as part of the corporate culture and were taught to new members as the right way to do business.”

Lincoln Electric was formed in 1895 by John Lincoln and was later taken over by his younger brother James Lincoln in 1914. While the inventions of John created the patents that formed the basis of the company’s profitability, it was James that in many ways founded the culture of Lincoln electric that still flourishes today. James saw the customer’s need as the primary reason for the company’s existence. He also saw that for a company to achieve its primary need it must do so via the productivity and performance of its employees. Seeing the employees as central to success has played a huge part in the formation of the culture of Lincoln Electric. There has never been an attempt at unionising in the company and this is partly

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.

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.

These tough beginnings draw deeply the formation of Lincoln’s no-frills approach to how a company should be ran. John C. Lincoln was an engineer at heart and left the company to his younger brother, James F. Lincoln, who took the company onwards keeping the company family run and true to his brothers’ values. Not just an engineer, James philosophies were marked in Christian values, which contributed to the deeply engrained nature of the culture. Further, James possessed a deep sense of business acumen that fed the company’s general philosophies. One example is his customer

Management style and beliefs was second to none among its contemporaries. Such belief that customer 's interests should be the first goal of the company; that is customers should come first and not the stockholders. Labour and management are a part of one organization, in which they must and should cooperate fully and work happily together. Not as warring camp mates but as a part of a united entity. Each worker proceeds with his task as at due thoughtfully, not engaging in idle chatting but busy. They are efficient in discharging their duties and give no room for wastage in the company. A typical employee at Lincoln company earns about twice as much as other factory workers, because it is part of the founder 's belief that earnings of each employee must be in accordance with his accomplishment. The founder also believe that complete honesty and mutual understanding must be between the

The continued influence of founder James Lincoln’s values and belief system is visible throughout every aspect of the organizational culture at the Lincoln Electric Company. Although James Lincoln believed that businesses should follow Christian morality, he did not impose religion on any of the employees. Instead, his beliefs are reflected in the company’s policy of always placing the customer first, and its view that this practice is not only morally correct, but also beneficial to the company’s economic success -- which has been proven true.

While the way to deal with management at Lincoln Electric contrasts extraordinarily from that at most other American organizations, it is not significantly not quite the same as the Japanese style of