...more than is humanly possible – The root cause being personal limitations. (Regardless of an employee’s motivation to be compensated for producing more, they do not have the capabilities to do so.) The organization has excess employees in slow times because of employment policies and a shortage of employees in prosperous times. Management is not maximizing profits. 3. Practice of promoting within can lead to group think, and lack of innovation. Analysis Lincoln Electric has an impeccable control system in place. It is multi-dimensional and does not just focus on one issue. Instead if an issue arises, there are controls in place to deal with the issue. For example being compensated by piecework is an example of results control. An employee is unable to cut corners; because employees are not compensated for the time it takes them to rework their botched goods. Lincoln’s performance is tied to their strong management control systems. Employees are motivated, because their wages are dependent on the success of the company that they have an ownership stake, and more importantly, because they virtually have guaranteed job security. The organization provides direction that all the employees understand. Managements’ openness towards its employees and their constant involvement with employees, allows communication to run up and down the management ladder easily. Even though the nature of the work is action oriented, employees feel empowered, because they have the ability to offer suggestions...
Words: 565 - Pages: 3
...The purpose of this case analysis is to analyze the culture of Lincoln Electric Company. According to Harvard Case Study by Arthur Sharplin, this company is the world’s largest manufacturer of welding machines and electrodes. Let’s look at the Continuing Influence of the Founders of the Company. John C. Lincoln business was incorporated but in 1906 and he expanded his workforce to 30 and sales grew to over $50,000 a year. James F. Lincoln joined the company still small and he became the General Manager and Vice –President of the company. Employee morale and productivity remained with higher profits and bonuses and Lincoln’s market share is stable. When the advisory Board came into power, between 1915 and 1917, a paid-up life insurance policy was given by the company to the employee and a welding school was begun. In 1918, an employee bonus was attempted. In 1919, the Lincoln Electric Employees’ association was formed. In addition, the Board of Directors voted to start a suggestion system in 1929. The legendary Lincoln bonus plan was proposed by the Advisory Board and accepted on a trial basis by James Lincoln in 1934. The golden rule emphasizes on James Lincoln’s Christian ethics which he says “Treat People as you would like to be Treated” “In his words, he says if the Christian ethics control our acts, the savings in the cost of distribution will be tremendous.” In his view, the customer should always come first. Lincoln’s Incentive Management Plan was defined by the company’s...
Words: 624 - Pages: 3
...Lincoln Electric: A Case Study Joe Attinello Cali Cook Alia Goss Kurt Oliver Mark Strom Mike Torbenson Business 305 Linda Gibson October 7, 2005 History and Background Lincoln Electric today is the worlds leading manufacturer of arc welding products, and also is one of the leading producers of electric motors, which was their very first product. John C. Lincoln is the founder of Lincoln Electric, which opened in 1895. He previously had been working for the Elliot-Lincoln Company who was a producer of Lincoln’s electric motors, but during the depression the company had lost so much he was forced to leave. Using the $200 he earned from redesigning an engine for Herbert Henry Dow, John opened his new business, with electric motors of his own design as the main product (Buller/Schuler, 2006). During that first few years the company grew but had some setbacks, which include a fire in the first year of operation. In 1906 John incorporated his business and moved it from a fourth floor room in a factory he was in, to a newly constructed three-story factory. He then expanded his work force and the sales grew to over $50,000 a year (Buller/Schuler, 2006). In 1907, John’s brother James joined him as a salesman and to help manage the company, as John preferred to be more involved in the inventing stage and less in the management of the products and company (www.lincolnelectric.com/corporate/about/history.asp). Over the next few years the product line was expanded...
Words: 7457 - Pages: 30
...assigned case study explores the overwhelming success of Lincoln Electric, an American based company and major producer of welding equipment and associated consumables. Lincoln Electric has been in business for over 100 years and has been the subject of countless case studies for MBA students to analyze the reasons why the company is so successful (Lincoln Electric, 2012; Eisenberg, Sieger & Greenwald, 2001). Within this assessment, I will explore the primary reasons why I feel Lincoln Electric has been so successful and a high performing organization for so many years. Specifically, I will propose literature and research based reasons for these reasons as well as specific actions Lincoln Electric can take as a company to achieve even higher performance in the future. Lincoln Electrics Keys to Success From humble beginnings to worldwide example Lincoln Electric started off from very humble beginnings, being formed during a depression and hardly prospering during the first 25 years of its existence (Robbins, De Cenzo, & Coulter, 2013; Wiley, 1993). However, Lincoln Electric has since become a regular on the Forbes magazine’s list of the 400 Best Big Companies in America and the Fortune 1000 list as well (Koller, 2010). Additionally, Lincoln Electric serves as an example for other companies striving for high performance within their own organizations (Koller, 2010). So what has made Lincoln Electric such a successful company? I’d propose it’s directly related to the company’s...
Words: 2748 - Pages: 11
...interested in doing research on the company becauseresearcher wanted to learn more about control system especially managementcompensation, both theoretical and practical. Lincoln Electric Company one of companies has realize the method of control system especially managementcompensation in their company.In the Lincoln Electric Company, researcher get knowledge of control systemespecially management compensation, particularly its association with corporate profits. However, in its application is often the application of compensation hasexperienced various problems and constraints. So also happened in the LincolnElectric Company.Every company absolutely has a strategy to sustainable them company. The top priority of Lincoln is customer. Company always sensitive with consumer needs.Certainly, the firm’s customer wants to get the best price and the best quality. And, product of Lincoln fulfill it. Lincoln also concerns employee and stockholders needs.Management compensation always was determined by a wage survey of similar jobsin Cleveland area where the company do operational process. Lincoln ElectricCompany is a good example for other company which is concern to customer,employee and stockholders. Not all company like Lincoln Electric Company. So, because of that, we choose Lincoln Electric’s Case. 1.2 Motivation Researcher motivation to conduct research on issues of control systemespecially management compensation in the Lincoln Electric Company because 2 researcher wanted to know...
Words: 4682 - Pages: 19
...Lincoln Electric Pay Scale Curtis Pelston Personnel Management When a person graduates from high school or college either one they seem to look for what company or which job they can work in order to make the most money. What most people fail to look for is which job is going to offer the overall best atmosphere to work in. This includes bonuses they will be paid, vacation time received, health care benefits, how they will progress in the company, and the conditions they will be working in. There are a lot of different aspects of a job that people tend to overlook when looking for their first or next job. The truth is most people jump to conclusions and take the job that offers the biggest paycheck. One company that is an older company that has been offering some of the best pay systems possible for their employees is a company called Lincoln Electric. In this paper I am going to discuss the different ways in which the employees are paid and what puts Lincoln Electric heads and tails above the competition when it comes to employees. First, you have to look at what the company does to understand the jobs that are to be offered by the company and what the employees are to be qualified in or what they are to do at their job. Lincoln Electric is a company that started out in 1895 by John Lincoln creating small motors for different tools and other items. They later moved into creating the first portable welder in 1909 which came to be what Lincoln Electric is most known for...
Words: 1871 - Pages: 8
...Lincoln Electric Case Analysis Situation: Through the year 1974, the Lincoln Electric Company experienced rapid growth in net income and overall sales. Though a small company, Lincoln Electric was able to dominate the welding market by focusing on reducing costs and raising quality. These goals were achieved by rewarding employees with an innovative financial incentive program. Lincoln Electric paid their employees a base salary that was slightly lower than market. However, all employees were included in a merit-based profit sharing program. This program rewarded hard-working, efficient, and quality-conscious employees with big bonuses that could potentially equal up to 100% of their full-time salary. After having gone through an initial work probation period, all employees were guaranteed employment. One of the founders of the company, James F. Lincoln, believed that competition was a fundamental foundation of employee development. He set up a system that would reward the hardest working and most efficient workers with large financial prizes. The workers were encouraged to skip smoking breaks, take short lunches, and work as quickly as possible, while still paying attention to quality standards. Though challenging, the work environment was viewed favorably by the employees who were interviewed for this case. All respondents admitted that there were serious deficiencies in the system, but that it was generally favorable. The employees accepted that...
Words: 1615 - Pages: 7
...Lincoln Electric Case The Lincoln Electric Company upholds the motto of producing the best quality products at the lowest cost. It is the world's largest manufacturing company that primarily makes welding products. It has also become one of the world's leading manufacturers in arc welding equipment since World War II. Lincoln Electric's organizational culture and philosophy is still strong and consistent and continues to persist. Its strong culture and company philosophy has driven the company to remain successful over the years and the reason why it's still successful today. The company's approach to motivate its employees is both simple and unwavering. It has built a climate that fosters individual growth and continual improvement and productivity and has implemented a very clever incentive system. Firstly, the company creates better quality products and progressively continues to make better quality products than its competitors at such low costs mainly because of its employees. Lincoln Electric nurtured the idea of individual growth. The foundation of the company is based on employee development. To drive its employees to seek growth in their abilities and to motivate them to be more productive, they championed the idea competition. The company believed that competition makes a man work harder. It eliminates lazy and incompetent workers and pushes people to perform at their ultimate best. Competition develops progress and determination. It takes the hidden talents and...
Words: 1084 - Pages: 5
...ACP IBOM International Business Strategy Case Study: Management focus Lincoln Electric Presented by Raphaël ROBIN Raphaël ROBIN Table of content Introduction………………………………………….page 2 … The beginning of Lincoln Electric………………..page 3 … From the motors to the welders production……..page 4 … Becoming International…………………………....page 4 … A new era…………………………………………...page 5 … Conclusion………………………………………….page 6 … References………………………………………....page 6 … page 1/6 Raphaël ROBIN Introduction A picture of John C. Lincoln "The Welding Experts" Created in 1895 by John C. Lincoln a capital investment of $200 Lincoln with , the Electric Company is today a world leader in the design, development and manufacture of welding products, archery, robotic systems, equipment oxyfuel and plasma cutting and occupies the first position in the global market for brazing and soldering alloys. Lincoln Electric continuously invests in the development of welding solutions to meet the specific needs of customers worldwide. Choose Lincoln Electric as welding partner is offer your company a wide range of equipment and consumables proven in industrial environments, and designed to meet the most stringent requirements...
Words: 1028 - Pages: 5
...Lincoln Electric: Case Study 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. Company’s Basic Principle Lincoln Electric’s foundations are based on values of trust, overt nature to management, self reliance, righteousness, commitment, answerability and inter-collaboration. These beliefs and moral code formed a powerful base of Lincoln’s culture and management regularly providing the rewards to deserving employees. Pride of workmanship and feelings of involvement and contribution are intrinsic awards that flourish at Lincoln electrics. Company always update their employees about the company’s functioning and financial achievements which encourage the hard work in employees. James Lincoln firmly believed that customers are valuable assets of company. Company’s primary goal should be in the interests of customers. Researchers (Kanji 2010) have made theoretical models relating the Customer Satisfaction with growth in business. Kanji introduces customer satisfaction as critical factor for the model he presented. Other benefits which are included in Customer Satisfaction is Company’s Efficient Advertising and its Human Capital Performances (Luo 2007). Luo and Homburg (2007) findings indicate that...
Words: 2222 - Pages: 9
...Question 1 Does Lincoln follow a hierarchical or decentralized approach to management? Explain your answer and give examples. Answer 1 Structurally, Lincoln electric appears to use a decentralized approach to management. According to (Draft, 2010), “decentralization relies on cultural values, traditions, shared beliefs, trust and an egalitarian spirit to foster compliance with organizational goals” (p. 548-549). Lincoln Electric also uses a lateral approach between management and employees to achieve organizational goals. Examples of Lincoln Electric’s decentralized approach include their open door policy, which is for all employees from the top to the bottom of the hierarchy, their no lay-off policy and their procedure of promoting from within. Another example of Lincoln Electric’s decentralization approach is the fact that the organization encourages a practice of face to face communication between employees and management. They also encourage employees to challenge management if they feel that they are being treated unfairly in regards to compensation rates and practices. Lincoln electric also encourages their management staff to reward employees who exhibit the core values of trustworthiness, openness, self-management and loyalty (Draft, 2010). Question 2 Based on what you have just read, what do you think makes Lincoln System so successful in the United States? Answer 2 One reason Lincoln Electric is so successful is because they fully invest in their intellectual...
Words: 769 - Pages: 4
...ANALYSES OF LINCOLN ELECTRIC CASE STUDY Abstract Lincoln Electric is one of the leading producers and manufacturers of Arc Welding Products and Electric Motors. It is undeniable that the success of Lincoln Electric lies on the foundation of the various company policies introduced by James Lincoln. Organizational Strategy Lincoln Electric had a unique organizational strategy with numerous creative ideas. First, to keep and better motivate its employees, the company implemented a special incentive system which effectively distributed profits in the firm. These incentive “were expressions of mutual respect for each person’s importance to the job to be done” (Lincoln, 1961, p. 11). Then, the annual bonus element was also very important for the employees were awarded in accordance with their contribution to the company’s performance in terms of output, ideas, cooperation, dependability and quality. To prevent layoffs, Lincoln didn’t just give money to the employees, but opened a welding school to enable some of the employees add value to themselves. Even though Lincoln is very authoritarian, employees are given the opportunity to participate in management in several ways. The company tries to keep a family-like atmosphere where managers and employees respect each other. The hierarchical barriers are kept at a minimum and open communication is valued. This system results in a sharp sense of ownership in the company from top to bottom because if the company as a whole does...
Words: 1192 - Pages: 5
...The Lincoln Electric Company An inventor by the name of John C. Lincoln designed and developed the electric motor in such a way that it could not be topped by any competitor; however, his passion for inventing kept him from wanting to manage the company he created. So in 1907 John hired his brother, James F. Lincoln, to manage the plant and this is when it all started, the success and growth of a billion dollar company. The Lincoln Electric Company, the world’s largest arc-welding manufacture and top producer of industrial electric motors, now employees over 4000 people and sales have topped $1 billion. But, how did they gain this overwhelming prosperity? Many have tried to figure it out, even studies have been conducted on Lincoln Electric’s organizational structure, James’ incentive management practices, and the keys to their success, and still no one has mastered it. They still operate today the same way they did year’s ago and it is working...for them. However, what does the future hold for Lincoln Electric? Will they be able to keep up with their high demand of productivity without lowering employee job satisfaction? We will examine different factors of Lincoln Electric such as the companies communication between employees, their problem solving techniques, and their conflicts, but the two most important factors we will analyze are: The incentive reward system - Its pro’s and con’s An effective organizational change process to position the firm’s incentives...
Words: 3235 - Pages: 13
...9-707-445 REV: AUGUST 25, 2008 JORDAN SIEGEL Lincoln Electric Introduction John Stropki, CEO of Lincoln Electric, returned home from Mumbai to company headquarters in Cleveland, having sampled the local Maharashtran delicacies while studying opportunities in the Indian market. From his vantage point in 2006, Stropki looked back on his company’s more than 100 years in the welding equipment and consumables industry with pride, wondering whether a strong push into India should be the next step in his company’s globalization. An India expansion had been considered for several years, but thus far the company had focused on growing its operations in China and elsewhere around the globe. If Stropki were to approve a significant allocation of resources toward an India expansion, he wondered what would be the best way to enter. He had a wealth of company lessons and experiences to apply to the India investment decision, as his company had had international operations since the 1940s, had struggled internationally in the late 1980s and early 1990s, and had gone on to regain its global competitive advantage in the late 1990s and early 2000s. During Stropki’s tenure as CEO since 2004, the company had further expanded globally and by 2006 owned manufacturing operations in 19 countries across five continents. Most recently, the company had enjoyed increasing success in China as a result of its aggressive expansion through both a joint venture and set of majority-owned...
Words: 10250 - Pages: 41
...Explain how the human resource (HR) policies at Lincoln Electric are linked to its overall corporate strategy. Jeffery Pfeffer, The Human Equation, (1998), explains the idea of alignment between employment practices and strategy. He states that an organisation should do specific things to manage the employment relationship and these practices need to be first internally consistent and aligned to each other, and secondly, externally consistent in the sense that the organisations procedures produce the behaviors and competencies required for it to compete successfully given its chosen market place and way of differentiating itself from the market place. Going by this definition we need to consider if there is evidence of internal consistency of the HR policies pursued by Lincoln Electric. In order to achieve this objective to first identify what the key human resource management policies were are Lincoln Electric and their alignment to each other. The incentive system and the climate and the culture of open transparent performance management and gain sharing that was fostered by management are a primary example of internal alignment. The incentive system carried out at Lincoln electric could only have been successfully implemented within this open culture. The methods of measuring performance, the method of setting performance benchmarks (through work studies) and the subsequent involvement of all process owners in determining an employee’s rating is another example of internal...
Words: 837 - Pages: 4
