An Organization 's Culture At The Lincoln Electric Company

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 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 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,

The Lincoln Electric Employees ' Association was formed in 1919 to provide health benefits and social activities. This organization continues today and has assumed several additional functions over the years. By 1923, a piecework pay system was in effect, employees got two-week paid vacations each year, and wages were adjusted for changes in the Consumer Price Index. Approximately 30 percent of

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

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 standard hour plan was in place for several decades before 1980. This plan rewarded employees for individual performance in regards to, rigorously defined job standards. There were three components of the plan: the hourly wage, the standard and the relationship between pay and performance. The benefits of this plan were, it allowed for high levels of effort from employees and it attracted highly skilled workers. Another benefit is that it allows for incentive employees tasks to be evaluated more objectively. In this plan it also allowed for auditing of industrial engineers to make sure that tasks were being performed with correct methods. In the standard hour plan they also linked compensation to standard fulfillment to motivate their employees. The compensation

However, the employees at Lincoln Electric Company have every reason to hang around. The case study notes that employees enjoy pension scheme, internal promotion policy, incessant service principle and bonuses. Base pay rates are determined by prescribed work appraisal and virtue rating system using merit rating cards. No wonder labor turnover is nonexistent at the Lincoln Electric Company except through normal attrition due to

After the Great Depression in 1934, the company developed the Lincoln system. The Lincoln system is a three-pillared approach towards employee compensation. The system consists of yearly discretionary bonuses, a piece rating system and a promise of guaranteed employment. Yearly bonuses are paid out based upon

brother join the company and subsequently became general manager and vice president in 1914. One of James early actions was to have a committee that would advise him on company operations. Employees was asked to elect representatives to the committee. They met twice monthly with the executive officer ever since. A welding school was formed in 1917 and still continues today. In 1918 an employee bonus plan was initiated then discontinued. It returned later on however. In 1934 the bonus plan was purposed by the advisory board, their has been a bonus every year since then. In 1919 the Lincoln Electric Employees Association was formed providing health benefits and social activities. This has continued today with added functions. The board of directors started a suggestion system that is still in effect today. At least since 1935 Lincoln productivity has been well above the average productivity vs. similar companies.

In 1989, Arthur Sharplin produced a case study, Sharplin (1989), outlining the organizational structure and culture of the Lincoln Electric Company. This report will be focused on analyzing Sharplin’s case study to discern aspects of the Lincoln Electric Company’s culture. First, we will discuss John & James Lincoln and their influence on the development of the culture of the company. We will discuss their Christian influence, and how applying the golden rule of doing to others as you would have them do to you, helped them shape their company. Additionally, we will discuss the company performance appraisal system, the way people communicate in the company, the merit pay plan, the bonus plan, and finally, the management style. After

Management style and beliefs was second to none among its contemporaries. Such belief that customer 's interests should be the first goal of the company; that is customers should come first and not the stockholders. Labour and management are a part of one organization, in which they must and should cooperate fully and work happily together. Not as warring camp mates but as a part of a united entity. Each worker proceeds with his task as at due thoughtfully, not engaging in idle chatting but busy. They are efficient in discharging their duties and give no room for wastage in the company. A typical employee at Lincoln company earns about twice as much as other factory workers, because it is part of the founder 's belief that earnings of each employee must be in accordance with his accomplishment. The founder also believe that complete honesty and mutual understanding must be between the

The Lincoln Electric Company is indeed a success story. It remains the world’s leading welding machines and electrode manufacturer. Notably, estimates indicate that the company may be controlling about 40% of arc welding equipment market. It has two factories in US and 3 more factories abroad with a combined workforce about 3000 excluding field sales staff. However, the immense success the company has registered in its operations is tied to its long-standing management style. This essay discusses the Lincoln Electric Company’s culture and how impactful it has been in maintaining a motivated workforce.

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.

Getting started during an economic depression in the late 80s, that too with a capital investment of just $200.00, John. C Lincoln introduced his own new design for electric motors in the market. Moreover, after the joining of John. C’s younger brother, James F. Lincoln. The company not only expanded its product line but, introduced the world’s first portable wielding machine as well. After turning over the company fully to James, he established an Employee Advisory Board which later on help the employees cover up in a group life insurance, later on introduced a piece rate pay method and made them earned paid vacations for the first time in the country’s history in 1923. The company also launched an Employee Stock Ownership Plan, which helped them received their first annual Incentive Bonus in 1934.