The Legacy Of The Lincoln Electric Company Essay

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.

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

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.

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

The effectiveness of the company’s doctrine is attested to by its continued growth after James F. Lincoln’s death in 1965. This illustrates that the culture he had founded was strong enough to ensure the company continued to prosper even in his absence. When still in infancy, the company suffered major setbacks including being gutted down but bounced back to employ about 30 workers by 1906 while sales kept growing too. James Lincoln pioneered an advisory committee that was elected from the staff members. The innovation, akin to a tradition, has persisted to date whereby the CEO meets with the Advisory Board twice every month. This kind of representation is critical in ensuring that the employees’ interests are taken care of. This certainly is a disincentive for go-slows and strikes as the grievances can be routinely handled at the highest

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

The incentive management plan of the company is one of the important aspects in the management of a company in general. It will be noted that an organization’s culture may be one of its strongest assets or its biggest liability. A well-structured incentive management plan for a company can indirectly increase production. Even as a disorganized incentive management plans of an organization may also affect production negatively. In the Lincoln electric company incentive management plans is an outcome oriented culture, since its stated in their case study that if you can produce more you will be paid more, disregarding the amount of years you have spent in the company. Lincoln electric company reward

Lincoln’s incentive management plan is not only exemplary in its structure, but also in its implementation. For example, piece work has been shown to increase worker productivity, but has also been widely abused as a means of rewarding workers less for the work

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.

In 1923, the Lincoln Electric Company began a piecework pay system; employees were paid based on their rate of production. This system, still in practice today, allowed a worker to determine the amount of money they would make daily. This incentive along with the performance bonus plan, discussed later, helped increase production and lower labor costs thus allowing Lincoln Electric to sell its products at a reduced price to the consumer. According to Arthur Sharplin, employees earned nearly twice as much as the average factory worker in the Cleveland area but labor costs were well below average. This can be attributed to the attitude of the worker and their desire to work harder than their competitor.

It is said that early company values exert influence over future company values. This is true in the case of Lincoln electric. As stated earlier, many programs have been incorporated into the business to aid employees. The first year the advisory board was put into place, the work week went from 55 to 50 hours. In 1915, the company gave each employee a life insurance policy. In 1917, a welding school was created which still continues today. In 1918, a bonus plan was put into action on trial basis. It was removed and then reinserted later and became a strong point of Lincoln’s management system. In 1919, Lincoln created the “Employee Assocation” to provide health benefits and social activities for employees. By 1923, employees were given two weeks paid vacation

Lincoln Electric Company was founded by John Lincoln and his brother James Lincoln. The company is now the world’s largest manufacturer of welding machines and electrodes (Sharplin, 1989). As stated previously, the founders’ values have a huge impact on what becomes of an organisation’s culture and James Lincoln (and his golden rule) is a good example. From early on he took a different approach to managing his company than others at the time. James Lincoln’s innovative

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.

The Lincoln company from its start in 1906 began business under destitute circumstances. The company was started with a mere $200 after the founder, John Lincoln, couldn’t gain footing in the family company. He took a patent ideas he had developed with him and later recruited his younger brother to oversee most of the business side of the company while he was more or the creative brains of the duo. With their partnership, the business transformed from a fledgling small business to a people centered production staff. The company instituted an advisory board of employees. “The Advisory Board, elected by the workers, meets with the Chairman and the President every two weeks to discuss ways of improving operations.” and “every Lincoln employee has access to

James F. Lincoln was the founder of The Lincoln Electric Company that is well known all around the world now. Of course, the company’s organizational culture was not established by just one person but with efforts of many coworkers. Values of the founder were a guiding light for all workers and the managerial staff. When Lincoln died in 1965, the employees of the company were frightened that old system of the founder would not work as well as before, but since the company had its long history and it was an already formed organizational culture, they successfully gone through the death of the great founder and succeed. The values of the man are still alive. The founder was a great believer and he had the golden rule that sound as following “The program that Christ announced, ‘As ye would that others would do to you do ye even so to them’ is the complete answer to