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. During World War II their production skyrocketed as the company was used first hand in putting together ships and tanks as well as being used on the battlefield to repair the different items at hand. With Lincoln Electric being such an old company you would think that their philosophies would have been vastly different in the early 1900’s than they are today but in most cases that just is not the case. They have actually succeeded by perfecting the ideas that they stand behind, especially when it comes to how they treat their employees. They only thing that has really changed for them is how they have come to grow globally and become a household name to any mechanic or welder as they are the number one company in the welding supplies business.
With being such an old company as Lincoln Electric is you would think that they just took control of the market and were able to treat their employees well because they are such a big company. Maybe you think that yeah they might treat their employees well now but what will happen when the company goes on a downturn or another recession takes full force and drops the company down in the gutters. Well through my research you will see that Lincoln Electric will put its employees’ health and well-being way above the company itself. As you read throughout the paper you will see the different pay plans where Lincoln Electric shows how it cares for its employees.
One of the first things that shows that Lincoln Electric puts its employees first is that they have a policy in place called their Guaranteed Employment Policy since 1958. This policy states that no employees should be laid off due to how the company performs. This means that if the company has fallen on hard times or the recession takes its toll on the company that the company is not going to start letting people go just to make sure they are still making a profit. Now when the employees sign up to work with Lincoln Electric they will know this policy when they walk through the doors. This policy also states however that employees may have to change shifts, work fewer hours, or be able to perform multiple tasks in order to be able to keep the company on track and from losing any serious profit so the company can continue to thrive and keep the company employing the people has working for them. When you look at it though if you were told that the country has fallen into a serious recession and you see on the news that thousands of people are being thrown out onto the streets because they lost their jobs would it not make you feel better knowing that you work for a company that has this philosophy set in place to be sure that you are not going to lose your job and that at most you might lose a few hours of your weekly shifts. It is a lot easier to downsize a few dollars a week rather then you having to rely solely on what you have saved up until you find another job.
This philosophy also helps the company in a couple of different ways as well. First, you have to look at it from a logistics standpoint. The company doesn’t have to train anymore new people when the recession is over and they will still be running at full speed throughout the time period which keeps production up and when Wall Street flattens back out Lincoln Electric will be the first to recover from the fallen sales. This philosophy also helps out the company in a more underlying way as you can see that by offering this idea to employees it will bring in better employees that are better trained as well as having more experience under their belt. Employees are more likely to be able to even take a pay cut to work for a company that offers such a comforting feeling that they are not going to just randomly lose their job and give them a feeling of stability.
Lincoln Electric hands out pay raises and upgrades employees based on a merit pay system that they have in place for the production line employees. This merit pay system is based on the amount of inferior products that the production line employees produce on any given shift. They give only so many points to each shift, so the person with the highest quality products crossing the line will get the most points offered and the person with the most inferior products that cross the line will receive the least amount of points available if any points. They will then take these points into consideration during the yearly performance appraisal and decide the percentage of a pay raise that will be given to that employee. This means that the employee that receives the most merit points will receive the highest pay raise and the employees with the lowest amount of points will receive the lowest raise if any raise. These merit points will also go into figuring out the best employee for a new job opening in a higher position because the person the cares the most about their job is going to get the best look at the promotion.
Now this merit pay system sounds really nice and equal, which it is but it just has a couple of things people see as problems for the company. One thing that people look at and do not like about the system is that the employees are to check the products on their line during their off time. This means that if you really want to make sure that you are the best of the best in your department that you are going to have to put in a lot of off time to be sure that the products that you put out are flawless when they reach the next stage. Another flaw some people have seen in the system is that it creates some strong competition between employees because there are only so many points given out to each shift. With only so many points for each shift that means the people that maybe should be working together are going to fight to produce better and more parts than the other people they are working with day in and day out. This causes problems and can split teams against each other causing friction which could overall slowdown production.
Another great thing about Lincoln Electric in how they put their employees first is how they hand out their bonuses. Lincoln Electric has paid out its annual bonuses to its employees the last eighty years. This is crazy to think that a company is going to give out bonuses to its employees while even during a recession and even during times when the company just hasn’t been as profitable. For 2012, the company distributed $99.3 million in pre-tax profits those workers, amounting to an average bonus of nearly $34,000 per worker. This is an insane statistic for a company that most employees probably don’t even have on their radar when they are out and looking for a new job.
Lincoln Electric is able to pay their employees the way they do and give them the bonuses that they deserve because they will always put them first. This means that when they are in a down period that instead of cutting money from the bottom of the barrel they will take off some of the extra that is on top. For example, during the recession, the then CEO John Stropki didn't hesitate to cut executive salaries as part of overall cost-cutting efforts, accepting a base-pay cut and a 55% cut in his bonus in 2009 from the previous year. If this doesn’t prove that the company supports its lower employees as much if not more than it does the higher up executives, then I don’t know what does.
So most people overlook Lincoln Electric and what kind of company they truly are. If you weren’t a welder or didn’t really deal with tools a lot, then you probably did not even know who Lincoln Electric even was. I bet this though, the next time you see the name Lincoln Electric come across some Indeed or Monster Jobs advertisement that you will take a second look into the company and see if it actually fits what you are looking for. With pay systems like they have and the other things that Lincoln Electric has to offer you should be able to easily see yourself working there and would probably recommend them to people who ask you about them. I mean Lincoln Electric had their two plants in the United States ranked in the top ten Forbes list for best managed in the country. So with these accolades and just straight facts why wouldn’t you look for more out of your company too.
References
Fool.com. (2010). Best in America. Retrieved from Fool.com: http://www.fool.com/investing/general/2013/02/27/what-makes-lincoln-electric-one-of-americas-best-c.
Glass Door . (n.d.). Glass Door Lincoln Electric. Retrieved from Glass Door: https://www.glassdoor.com/Benefits/Lincoln-Electric-401K-Plan-US-BNFT13_E3658_N1.htm
Lincoln Electric. (2012). Lincoln Electric Comapny History. Retrieved from Lincoln Electric: http://www.lincolnelectric.com/en-us/Pages/default.aspx?locale=1033
Pay for Performance. (n.d.). Pay for Performance Compensatino Systems. Retrieved from http://debwagner.info/hpttoolkit/pfp_hpt.htm