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Incentives and Culture at Lincoln Electric INTERNATIONAL BUSINESS 2015/04/13 | |

Incentives and Culture at Lincoln Electric
-1 To what extent are the organization culture and incentives systems of Lincoln Electric aligned with the firms strategy?
To a greater extent the organizational culture of LINCOLN was not aligned with the firm’s strategy, because when the company entered in the international market their culture did not align with their long-term strategy of expansion. The culture was not welcomed in other countries due to culture and managed difference, labor laws and unions.
The local managers of Lincoln’s subsidiaries’ had little or no working knowledge of its strong culture, some of them were unwilling or unable to impose the incentive system on their units, because they had their own established organizational cultures. Also when they tried to impose the culture they faced legal and cultural barriers.
The difference in labor laws did not went well with the Lincoln’s culture of incentives. For example in Germany the incentives system is illegal. Also in Brazil a bonus paid for more than two years it becomes a legal entitlement. While in other countries managers and the employees opposed the culture of incentives. Also many companies the Lincoln had acquired were unionized , and the local unions were in vote against the introduction of the piecework system.
Cultural difference did not align the Lincoln’s strategy, in many countries piecework is viewed as an exploitive compensation system that forces employees to work ever harder. Lincoln found that most workers in European countries they valued their leisure time more than high income from working too much.
As a result from these unsuitable conditions that did not align Lincoln’s culture and incentive system with its strategy. The company was unable to obtain its high level of employee productivity, its expansion strategy pulled down the performance of the entire company.
However to lesser extended their culture was aligned with their strategy, because the company managed to be very successful with their culture and strategy in the United States. Lincoln success has been based on its culture of incentives.
The system gave the employees an incentive to work hard and to generate innovations that boost productivity, for doing so influenced their level of pay. The workers were so productive that Lincoln had a lower structure than its competitors. They were able to offer lower prices to their customers than most of their competitors.
2 How was the culture at Lincoln Electric created and nurtured overtime?
The Lincoln culture managed to create and nurture overtime on its from its employees because. This was because of the incentive system motivated people to work hard.
The Lincoln employees were not paid a base salary, like what other companies do but were paid according to the number of pieces they produced. This would motivate the workers to work more hard in order to receive a higher income. The piece rate system at the company allowed employees working on a normal pace to receive a salary equivalent to that of average wage of manufacturing worker in other companies.
Workers were given a responsibility for the quality of their output. This would motivate the employees produce high quality outputs. The employees would work overtime to avoid and repair defects that will be spotted by quality inspectors, before the pieces were included in the piecework calculations.
Since workers received semiannual bonus based on merit ratings , these ratings were based on employee’s level and quality output ,and an employees’ attitudes towards cooperation’s and his or her dependability. This gave Lincoln employees an incentive to work harder and overtime to obtain high ratings in order to receive the semiannual bonuses.
3 Why did the culture and incentive systems work well in the UNITED STATES? Why did it not take in other nations
The Lincoln culture and incentive system worked well in the United States because of the individualist culture in the country. People in America have a saying of “Each man for himself, God for us all”. Which proves that the country is indeed has an individualist culture.
During the 1980s to 1990s Lincoln expanded to the international market such as Europe and Latin America. They left local managers of these areas to manage the business, because they would have knowledge of their local conditions.
However it did not work in other nations mainly because of cultural difference, also some labor laws and social life styles. First the local managers had little or no working knowledge of the Lincoln’s strong organizational culture and were unable or unwilling to impose that culture on their units which had their own long established organizational cultures.
Also some local managers when they tried to impose the incentive system they would ran into some legal and cultural barriers. Because in some countries piecework is regarded as an exploitive compensation system that forces employees to work ever harder. For example in Germany where Lincoln had made an investment, the system is illegal. Also in Brazil a bonus paid for more than two years becomes a legal entitlement.
Also in other countries where Lincoln had made acquisition, most of the management and employees opposed the idea of piecework. Lincoln realized that most countries in Europe the workers valued leisure time more than extra income and were not prepared to work hard as their American counterparts.
Labors laws also affected the Lincoln culture in these nations. Because many of the companies it had acquired there were unionized and these local unions vigorously opposed the introduction of piecework.
This resulted in Lincoln to be unable to acquire high level of employee productivity that it had always been achieving in the United States. Thereby the expansion pulled down the performance of the entire company.