Lincoln Electric Company 's Culture

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 Lincoln Electric Company was a legacy company from which the families ' personal values were incorporated in the beginning and continue to be the fundamental beliefs compromising the company 's culture. By creating and implementing a culture of service, respect, and loyalty, the Lincoln Electric Company has become an institutional leader in American business standards. Lincoln 's culture cannot be summarized by a single dimension of cultural analytics because of its multifaceted culture that is innovative, outcome-oriented, people-oriented, and team-oriented

The Lincoln Electric Company has dominated the market of welding machine manufacturing since its infancy in the late 1900’s. Their continued success is due to companies’ ability to adapt different organizational cultures, into a beautiful melting pot of profitability. Management could be described as a mix of both outcome-oriented and stable styles, with a hefty dose of people-oriented cultures, all wrapped into one.

An organization’s culture “consists of unseen elements such as assumptions and values that affect organizational life,” it is the “personality” of the company. At Lincoln Electric, even though they “never had a formal organization chart,” the culture is an extremely significant aspect of everyday life and a powerful asset; its rare and hard-to-imitate conceptualization gives the firm an undeniable competitive advantage and “insures maximum flexibility.”

Lincoln has grown in size due to its management style such as how its leadership has been structured and company ethos never being compromised. The founder James F Lincoln and his family members that followed after him, have always tried to maintain the morale and productivity of the company through innovative leadership and organisational skills.

The Lincoln Electric Company was created by John C. Lincoln in 1895 after being forced out of the Elliot-Lincoln Company. The Lincoln Electric company would go on to become the world’s largest manufacturer of welding products and machines. This all came to be due to the business culture instilled by the founders and continued up to the present. A Harvard case study done by Arthur Sharplin, shows the organizational culture within Lincoln Electric is unique to any single ordinary business culture. There is evidence that points to the use of all seven OCP (Organizational Culture Profile) principles, in order to maintain one of the world’s most successful and efficient companies.

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.

The continuing influence, employee benefits/incentives, and management styles initiated by company founder John C. Lincoln and James F. Lincoln have built a profitable business for shareholders and employees alike. Let’s, look at Mr. Author Sharplins Harvard Case study and The Lincoln Electric Company webpage to further delineate the styles of organizational culture and how they have established The Lincoln Electric Company as the foremost manufacturer of welding machines and electrodes. (Sharplin, 1989)

The success of a business is intimately tied to the success of its culture. To understand better how organisational culture is created and maintained we will examine one of America’s most successfully managed companies, the Lincoln Electric company. We will examine many aspects of the company that contribute to its culture, such as the influence of the company’s founders, the golden rule, the incentive management plan, the performance appraisal system, the merit pay plan, the bonus plan, the way people communicate in the company and the management style. In analysing these we hope to understand not only what the culture of Lincoln Electric is, but also how it was formed and how it is maintained.

Founded in 1895 by John C. Lincoln, the Lincoln Electric Company is a high-quality manufacturer of welding machines and welding equipment based out of Cleveland, Ohio. Lincoln Electric was founded upon a strong foundation of competitive logic, using many levels of synergy in its manufacturing process to create the highest quality welding equipment and the lowest costs. Through the company’s unique management system and vertical integration strategies, they have created and maintained a strong competitive advantage in the welding industry. Lincoln has outlasted and defeated multinational competitors to become the world’s leader in welding technology and equipment.

The success of a business is intimately tied to the success of its culture. To understand better how organisational culture is created and maintained we will examine one of America’s most successfully managed companies, the Lincoln Electric company. We will examine many aspects of the company that contribute to its culture, such as the influence of the company’s founders, the golden rule, the incentive management plan, the performance appraisal system, the merit pay plan, the bonus plan, the way people communicate within the company and the management style. In analysing these we will reveal a strong people oriented culture formed and maintained for over a century.

“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.

The Lincoln Electric Company is one of the largest manufacturers of welding machines and electrodes in the world. With about 2,400 employees in the USA and near 600 workers in other countries. The Lincoln management plan is well known for accomplishing the highest worker productivity. His founder Mr. James F. Lincoln died in 1965, leaving a profitable and reliable company. As a president of the business, he invigorated a committee that was confirmed by representatives elected by employees. This committee called the Advisory Board met with him twice a month to advise him on the company operations. The Advisory Board was the pioneer of personal policies to provide benefits to their employees including the reduction of hours from 55 hours to 50 hours a week. In 1915 the workers received a paid-up life insurance. Two years after, the company opened a welding school that is still operating today. In 1919 The Lincoln Electric Employees’ Association was created to offer Health benefits and social activities to their employees.

In the Harvard case study from 1985, Arthur Sharplin gives us a great overview about the history and governance of the Lincoln Electric Company. The company was founded by John C. Lincoln at the beginning of the 20th century and he was later joined by his brother James F. Lincoln (Sharplin, 1985, p. 1). We can already see that John C. Lincoln had a strong desire for his company to succeed because he continually looked at how he could improve the company. This is shown in his opinion that worker input is important (Sharplin, 1985, p. 2). In the book, Principles of Management, Carpenter, Taylor, Erdogan (2009, p. 187 – 189), introduce us to a variety of profiles of Organizational cultures. The first impression from reading the early history of the company from the Harvard Study could be that the Lincoln Electric Company is an “aggressive” company, however, a person would err in their conclusion. The Company actually is “outcome” oriented. What does that mean? It means that a company, in this case the Lincoln Electric Company, has a culture that is geared towards accomplishing goals (Carpenter, Taylor, Erdogan, 2009. p. 188), this is due to the people that first ran the company John and James Lincoln.