The Legacy Of Lincoln Electric Company

Lincoln Electric Company was founded by John C Lincoln in 1906 starting with a start up business in a one room, 4th floor factory to a bigger building and started to expand his workforce to 30 people and had a great expand in their sales as it grew over $50,000 a year. He was humble, preferably to be an engineer and inventor rather than sitting around being labelled as manager. The company also gave each of their employee as paid-up life insurance policy in the 1915. After 2 years, welding schools are introduced. A year after the success of forming a welding school, employee bonus plan was attempted.In the 1919 's, Lincoln Electric 's employees association are formed to introduced some social activities and health benefits to care for the workers. After becoming General Manager, in 1925; a purchase stock plan are enable for all employees. Lincoln bonus plan was finally accepted as a trial by the Advisory Board in 1934.

The Lincoln Electric Employees' Association was formed in 1919 to provide hearth benefits and social activities.This organization continues today and has assumed several addittional functions over the years.

Established in 1895 and specialized in producing and selling electric motors, Lincoln Electric Company rapidly developed after the movement to welding equipment and consumable welding products in the USA. By 1995, this company first hit $1 billion in sales and became the world largest company in welding industry. With the differentiate strategy by providing premium -price -products , this company got 60% sales in the North American and expanded internationally since the period of 1986 and 1992. Although this company is facing problems in global expansions, its overall strategy as well as practices in human resources, marketing, technology development, and international expansions is a useful lesson for other businesses.

Though, in reading the Lincoln Electric Company Harvard Case Study by Arthur Sharplin, add up to what I learned from chapter eight this week, I can realize the that the organizational culture is the cornerstone for the growth of any organization. The success of Lincoln Electric Company is due to the environment that is previously established by the Lincoln’s family. If we look at in the introductory of the Harvard case study, Arthur Sharplin states that “The Lincoln incentive management plan has been well known for many years. Many college management texts refer to the Lincoln plan as a model for achieving high worker productivity.” (pp. 1). This is to say that they have already set some policies to make the company what it has always been since its creation.

“We are a global manufacturer and the market leader of the highest quality welding, cutting and joining products. Our enduring passion for the development and application of our technologies allows us to create complete solutions that make our customers more productive and successful. We will distinguish ourselves through an unwavering commitment to our employees and a relentless drive to maximize shareholder value” (http://www.lincolnelectric.com/en-us/company/Pages/vision-statement.aspx). This is the vision of James Lincoln, founder of Lincoln Electric Company. I will look at this vision and apply it towards the

Before anyone can truly understand and respect Lincoln Electrics’ culture values (which has one of the finest corporate cultures), we must look at how the company has evolved to become what it is today. In the early 1900s, the company transitioned leadership from John Lincoln, the original founder, to his younger brother, James Lincoln. John turned management and leadership to James Lincoln in order to pursue his ingenuity through inventing for the company. One of the first orders as General Manger was to assemble and advisory group that would report to him. He did so by requesting the employees from various departments to elect a representative to be on the committee that would meet with management – to this day the advisory group meets two times per month.

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

Lincoln Electric is one of the leading producers and manufacturers of Arc Welding Products and Electric Motors. Lincoln Electric’s success lies on the foundation of the various company policies introduced by James Lincoln. This case study analyzed the critical points on which the success of Lincoln Electric’s has its foundations.

The incentive management plan within Lincoln Electric began its journey in 1914 with the formation of the advisory board. The first change made reduced the weekly working hours from 55 to 50. One year later, they gave every employee a fully paid life insurance policy, welding school in 1917 and a bonus plan in 1918. Of these three the bonus plan was,

Lincoln Electric Company was founded in 1895 by John C. Lincoln, who was joined by his brother younger brother James in 1907 (Lincoln Electric, Inc., n.d.). From the very beginning these no-nonsense brothers set about building a company that valued its customers first, prioritized frugality, focused on delivering ever increasing value and lower consumer costs. The company has a borderline fanatical commitment to achieving competitive advantage through an employee incentive system that drives productivity well beyond any norms for the industry, or manufacturers as a whole. To this day, the influence of the founders is clear in the entire structure of the company and its operating philosophies. The

In order to better structure the company an advisory board was created. The advisory board meets with the CEO twice a month to discuss various matters. It was during these advisory board meetings that Lincoln Electric decided to give its employees two

James Lincoln, one of the founders of the company, accepted a plan that gave their employees a bonus at the end of each year. The bonus that they gave was 25% of what they had earned that year. Today, they still have a yearly bonus. Lincoln also evaluated workers productivity and decided what their base pay would be from that. The way that Lincoln showed respect for his employees rewarded his company with increased profits and productivity. That inspires the company to do the same today because they know that rewarding their employees for their hard work pays off in the end. Lincoln was a Christian and was proud to have strong ethics and morals. “The actual is limited, the possible is immense” is their company motto. It shows how Lincoln had large goals and hopes, which still shows today through the company. A company’s culture has so much to do with the founders original goals and values and that is what shaped such a great culture for The Lincoln Electric

9). This, however has not stifled the atmosphere of equality at Lincoln, that is consistent with the POCP. The management style at Lincoln Electric is best summarized by a quote from James F. Lincoln, brought to attention by Sharplin on page 9, “...Management is the coach who must be obeyed. The men, however, are the players who alone can win the games.” The spirit of this quote is exemplified, not only by the empowerment of employees, but also by the lack of preferential treatment for stakeholders who are usually given a great deal of consideration. Management is not afforded any extravagance, even being made to eat in the same area as blue collar workers (p. 10). Stockholders take last priority on Lincoln’s list of stakeholders ( p. 3). Lincoln was very focused on improving the efficiency of his processes, not for the profit of stockholders, but for the benefit of the customer. He knew that everything else would follow. Lincoln, instead of catering to the wishes white collar stockholders, made an effort to enhance the financial well being of his employees. By setting aside 50% of the company’s stock for employee ownership (p. 10). The inclusiveness of the employee ownership program, as well as the way other stakeholders are treated is essential to maintaining a sense of fairness at the Lincoln Electric Company and in turn their

Lincoln’s attitude towards stockholders, is that they are given last priority. James Lincoln’s belief is that “the philosophy behind this attitude is that in his words “they (stockholders) think that it will be more profitable than investing money in any other way”. He further explains that “this policy is an alternatives for the company to work towards making some of their activities mechanistic while keeping some functions organic”. The other alternative he says is to “keep the company going as is with no change”. He cites that “absentee stockholders receives shares they deserve, even if underserved, out of the greatly increased profits that the efficiency

The general outlook of The Lincoln Electric Company shows that it was a successful company regardless of the death of James F. Lincoln in 1965. The many college management texts refer to the Lincoln plan as a model of achieving high worker productivity.