The Legacy Of Lincoln Electric

But to have an insight on how a company reached its current level of success

Lincoln Electric Company has a very strong culture based on shared assumptions values and beliefs. This is evidenced by the attitudes of both the company management and employees towards the organization. The unchanged policies, practices and products point towards a very strong corporate culture. High employee performance and productivity over the many years of the company’s existence is also another indicator of a strong culture.

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

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.

The Lincoln electric company was founded by John C. Lincoln in 1895 and has grown over

     Headquartered in Euclid, Ohio, a suburb of Cleveland, The Lincoln Electric Company is a world leader in welding and cutting products, as well as a premier manufacturer of electric motors. The company is well known for its dedicated, talented workforce and its superior technology. Lincoln Electric Company gives its customers total solutions along with a commitment to quality. Lincoln Electric Company is also well known for its incentive management system. Many companies strive to duplicate the success that Lincoln has enjoyed over the years.

With the years going by, Lincoln Electric Company, despite its excellent performance in production, has been growing in a very steady speed, and never really grew to a large scale company.

Lincoln Electric is a company operating with the sales of electric motors which was designed by John C. Lincoln himself, The company started off in 1895 when John C. Lincoln started the firm with an extremely low capital of only 200$. A few years later in 1907, John’s brother James decided to join the company Electric motors as a senior manager after just graduating from Ohio State Policies which has highly benefited the company as he introduced a series of policies under human resource and management which were innovative and new. In 1907 the company started to grow and decided to venture into new markets and diversify their production into Welding equipment as well, this has attained the company major success and in the year 1922 (Lincoln Electric, 2015) production of welding equipment and welding consumables has become the main business done by Lincoln Electric.

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

117 Years of Excellence; this is the header of the “Company History” section of Lincoln Electric’s website. I began the analysis at the careers section, looking through a variety of job descriptions and qualifications. The common requirements for management on the site are a Bachelor’s degree (Masters preferred), 5+ years of previous management experience, experience with Lean/Six Sigma tools to create impactful business improvements, proven experience in implementing and/or running an operation in an SAP environment, high level of integrity, confidentially, and accountability, sound analytical thinking, planning, prioritization, and execution skills, a well-defined sense of diplomacy, including solid negotiation, conflict resolution, and people management skills.

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.

In 1895, engineer, inventor, and businessman John C. Lincoln started Lincoln Electric Company. His brother James would join him shortly, in his business endeavor, starting in 1907 (Sharplin, A 1989). James managerial style would most closely be described as people-oriented. He once said “Labor and management are properly not warring camps; they are parts of one organization in which they must and should cooperate fully and happily.” (Sharplin, A 1989) Early on, he created the Advisory Board, a committee made up of both employees who were elected by their peers and upper management, including the chief executive officer. The Advisory Board continues still to this day, meeting bimonthly to discuss employee policies, working conditions, etc. Though these meetings, employees have gained such things as health benefits, life insurance, paid vacation time, retirement pension plans, stock incentives, continued on and off site education, and much more. (Sharplin, A 1989)

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.

John C. Lincoln founded The Lincoln Electric Company in 1895. James F. Lincoln, John’s younger

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.