The Legacy Of The Lincoln Electric Company Essay

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

Besides, managers in Lincoln Electric Company were not high in the sky, they worked and lived with workers in daily life, they had free atmosphere at work and they strengthened the feeling that workers were managing themselves.

The Lincoln Electric Company is the largest manufacturer of welding equipment in the world. John C. Lincoln founded the company in 1895 and incorporated it in 1906 where he moved it “from his one-room, fourth-floor factory to a new three-story building he erected in East Cleveland.” (Sharplin, 1989, A Historical Sketch pp. 1.). In 1907 John’s younger brother joined the company and in 1914 became the general manager and vice-president. It is here where the company began to define its culture with James instituting an employee elected advisory board who would be tasked with keeping James apprised on the operation of the company. This committee was also to be the voice of the employees to the executive team, a practice that is still performed today with twice-monthly meetings. The incentive programs set forth in these early years have laid the groundwork for sustaining high production levels while engaging employees in the feeling of pride and ownership of their and the company’s success. Many of the original incentive programs have changed little over the years and they continue to influence Lincoln Electric today.

Lincoln Electric became a family run business with brothers working together in various different roles. The Lincoln family had faced a great deal of adversity including the Great Depression, a large fire and typhoid fever, yet they never gave up and carried on with the company. It is this adversity they faced that I believe gave rise to their solid company culture.

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.”

Culture, or shared values within the organization, maybe related to increased performance. Researchers found a relationship between organizational cultures and company performance, success indicators such as revenues, sales volume, market share, and stock prices. Retrieved from, The Principle of management. (Understanding organizational culture, ch. 8, p.184). What is the continuing influence of the founders of Lincoln Electrical Company: This influence is their strong-willed in which the value has been imposed on their firm. Virginia P.Dawson (1999). Lincoln Electric. A History. Retrieved from https://www.h-net.org/reviews/showrev.php?id=4370.

The culture at the Lincoln Electric Company would be described as a strong one. A company culture can be strong or weak influence on the employees of a work place. A company culture can also be a positive or a negative aspect to a company’s bottom line. For example: it would be possible for a company to have a weak culture in management, but lucky with employees who are hardworking and need little direction. This is not the case at Lincoln Electric but I used it as an illustration. In the eyes of the employees interviewed in the case study it seems the strong influence of culture is a positive one in their lives, and is achieving what the company has set out to do.

The overall impression, after reading the Case Study, is that Lincoln Electric has a strong culture. In our textbook, Carpenter, Taylor, and Erdogan (2010, p. 197) define a strong culture as “one that is shared by organizational members… a culture in which most employees in the organization share a consensus regarding the values of the company”. This can be considered the foundation of all the successive subcultures that exist within the company, and it starts at the very beginning with the founders. John C. Lincoln started the company on next-to-nothing after he had been let go from his former venture. Despite being started during an economic recession and suffering a fire after barely one year, John Lincoln moved the company to a new location and grew his workforce, which correlated to higher sales and profits. John’s brother, James F. Lincoln, joined the company and took over as General Manager/Vice President while the company was still in its early stages. The first indicator that the company took on a people-oriented culture is with the creation of the “Advisory Board”, which served as a means to advise Lincoln of operations –

After the Great Depression in 1934, the company developed the Lincoln system. The Lincoln system is a three-pillared approach towards employee compensation consisting of yearly discretionary bonuses, a piece rating system and a promise of guaranteed employment. Yearly bonuses are paid out based upon personal worker performance and company profits. The company uses a performance evaluation system to determine the amount of each individual’s yearly bonus. Lincoln Electric adopted the piece rating system so workers ' compensation is based upon the quality of each material unit rather than quantity of units produced (Dyer et al., C-114). In 1958, the company implemented the guaranteed employment promise which guaranteed workers up to 30 hours per week regardless of current economic conditions (Dyer et al., C-114). The Lincoln system has increased the company 's competitive advantage in the welding equipment market by increasing productivity and decreasing turnover rates.

Lincoln Electric Company was started in 1895 by John C. Lincoln. It was officially incorporated in 1906. Although John Lincoln started the company, he prefered engineering over management. In 1914, James Lincoln, his younger brother, took over the company. John Lincoln is the original founder of the company, but James Lincoln is what made the company into the multinational success story that still is today. During his tenure, he implemented some revolutionary changes to the culture and business structure of the company. According to wikipedia, “Lincoln Electric 's business model was listed as one of the most studied by the Harvard Business School.” ("Lincoln Electric", 2016) The company had so many new ideas that it inspired a book written about the company named Spark by Frank Koller.

Lincoln Electric Company of Cleveland Ohio USA`s organizational Culture is exceptional and has earned it the acolade of being the best managed manufacturing company in the whole world. I will explore and attempt to identify culture aspects of Lincoln Electric from several issues such as; the continuing influence of founders of the company, the golden rule, the incentive management plan,the performance appraisal system, how people communicate in the organization, the merit pay plan, the bonus plan, and the management style.

Although he died in 1965, the organisational culture he established regarding shared assumptions, values, and beliefs are still evident today. His founding philosophy was broken down in to four areas. The first is the company’s attitude towards the customer; Lincoln said, “When any company has achieved success so that it is attractive as an investment, all money usually needed for expansion is supplied by the customer in retained earnings. It is obvious that the customer 's interests, not the stockholder 's, should come first” (Lincoln. J. 1961). The current President, Mr Willis, still ranks the customer as Lincoln 's most important constituency (Sharplin. A. 1985).

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 Lincoln had a vision, he understood how to give and get the most and the best out of people. Lincoln Electric’s success is a direct result of the investment of James Lincolns’ belief and vision that ultimately produced a well established highly productive organizational culture. We’ve now seen examples of what I deem as an exceptional organizational culture, but it is best written by Charles G. Herbruck, found in the Prologue of James F. Lincoln’s last book, he wrote “they were expressions of mutual respect for each person’s importance to the job to be done” (Sharplin 1989)