Lincoln Electric Executive Summary Michael Gillespie, The Lincoln Electric Company’s new president for the Asia Region, was “encouraged to develop plans to open welding consumables factories in several Asian countries” by the new CEO, Anthony Massaro, and Gillespie had specifically “turned his attention to plans for Indonesia [O’Connell,[1] main reference, p 1].” We worked with Gillespie to prepare for the September 1996 meeting with Massaro and the presidents of the other worldwide regions. We analyzed Lincoln’s current capabilities and its past experiences and prepared a transformative plan based on business concept innovation [Hamel[2], ch 3], documented by this report, with a three pronged approach for the Asia Region. The first …show more content…
2. Lincoln needed continued organizational development just as Lincoln’s equipment needed continued maintenance to remain viable. James Lincoln was a principled visionary and an organizational development innovator[d]. However, he did not prepare successors for assuming the critical role that continued organizational development. Neither of his successors, first William Irrgang and later Georges Willis, had contributed anything of note in developing the organization to meet Lincoln’s changing environmental demands. In particular, during Willis’s tenure, Lincoln did not even practice organizational maintenance: “By 1992, nearly all of the newly acquired plants, plus France, were operating in the red [and corporate executives] paid little attention [p 7].”Lincoln needed to develop the Asian organization and to develop the entirety ofLincoln as a wholly integrated organization in order to meet the demands of its expansion effort. 3. Lincoln’s culture could not be imposed but must be nurtured. “Willis retained the existing managers of most of the acquired companies to take advantage of their local knowledge, but directed them to implement [underlined by author]Lincoln’s incentive and manufacturing systems [p 6].” While Willis appreciated the benefits of implementing Lincoln’s systems, he did not consider James Lincoln’s caveat that “All those involved must be satisfied that they are properly recognized or they will not cooperate – and
1. The observable artifacts associated with the Chrysler culture was that the CEO was located in a penthouse office of the building which Mr. Marchionne moved to the middle of the engineering department; he streamlined senior leadership, and to the remaining 15 members he gave them added responsibility feeling that the more decisions they had to make the faster they would work to meet the deadlines; he also gave them the opportunity to take full authority to take risks without worrying about bureaucrats barriers and they were allowed to make smart decisions and to be held accountable for them (Lueneburger, 2014).
1. How was Lincoln able to grow and prosper for so long in such a difficult commodity industry that forced out other giants such as General Electric, Westinghouse, and BOC? What is the source of Lincoln’s outstanding and enduring success?
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.
Key elements of the first wave of LE's international ventures are: domestic operations accounted for 85% of the worldwide production and nearly all new product development until the late 1980's, universal application of the "incentive management programs", and in general the corporation paid little attention to there international divisions. However, as of 1996, Lincoln re-organized its international ventures by naming a president for each of the five regions, this is a demonstration of a new emphasis and focus on the international ventures from LE. In additional to the CEO having a planned oversight into the expansion there will be council consisting of each of these presidents to plan, integrate and implement global strategies. The compensation for these presidents will also include interregional cooperation. Both of these efforts address key Lincoln weakness from there prior international ventures of: "sink or swim" corporate attitude and interregional destructive competition. One final item is that Lincoln realized that in the second wave of international expansion true understanding of a country/culture is as important as technological skills.
In his book, Phillips delves into the leadership qualities embodied by Lincoln and explores Lincoln’s own leadership style as it related to both his early career as a lawyer and later, into Lincoln’s political life. Through his research into this book, Phillips relates how Lincoln developed strategies for management based upon his own early lessons in life. Phillips then demonstrates how Lincoln used this knowledge to not only convince the public he was the right man to lead the nation as president, but also to win the Civil War.
In conclusion, this incentive system was crucial for Lincoln Electric Company’s success. However, it is difficult for the others to copy because it is based on the culture of competition and justice, which was set up in the very beginning. In the future, the effects of this system might be comparatively lower because machines, which don’t have incentive, are replacing workers in production. However, it still has advantage as there are people in the company, and their innovation in production line design will also benefit the company for long.
I think that Lincoln Electric (LE) should definitely has a production facility in India because of its growth and foreseen opportunities, but if I were LE I would suggest to enter with a local partner in order to gain knowledge and experience in how the country operates in terms of bureaucracy, labor, culture and so on.
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,
Ans. Lincoln has not been very successful in making successful and profitable acquisitions outside of North America, especially when the company has tried to enter a market strictly through the acquisition route. Inexperience of Lincoln’s executives with trade-unions and lack of knowledge of labor practices and laws in other countries proved major stumbling blocks in the effort to integrate the new acquisitions into Lincoln’s distinctive management culture. Local managers and employees are not convinced that these practices are appropriate for their local environment. As a result the Lincoln has realized that it would rely more on joint ventures and strategic alliances rather than an acquisition. In consonance with its investment philosophy Lincoln would only go forward with an acquisition only if it is immediately accretive, the investment had a minimum internal rate of return of 10%, increasing it to over 18% in 3-4 years also the acquisition should be done at less than 8XEBITDA. Since India is a booming market, Lincoln would not be able to achieve its initial investment goals, any acquisition would require paying up a premium. One of the target companies is already owned by the competitor and other local target had a company of family ownership and dispersed ownership structure.
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.
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.
The idea that stuck out the most about the Lincoln Electric Company is that they obviously have a strong culture that all levels of employees are proud to be a part of. According to Carpenter, Taylor, and Erdogan (2010), “culture is a more powerful way of controlling and managing employee behaviors than organizational rules and regulations” (pg. 193, para. 2). The Lincoln Electric Company encompasses facets of multiple types of cultures instead of adhering to only one.
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.”
In order to gain an understanding of the Business culture at Lincoln Electric, I will create a model describing how the culture was created and continues to be maintained. I will attempt to show also that Lincoln has a strong culture which affects the way the employees think and behave. There are several factors are involved in the creation of their Business culture:
A company’s culture is inevitably tied to the personality, background, and values of its founders. The way these people want to do business determines the organisation’s rules, the structural set up, and the people they hire” (Uopeople.edu, 2016). Looking at the influence James F. Lincoln had on the Lincoln Electric Company, it is clear the things he implemented decades ago, continue to be part of the Lincoln Electric Company’s culture.