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 alignment through process. This process guaranteed that the internal ratings were consistent with the results the company was achieving. Often, companies will have a high number of highly rated employees which does not reflect the overall performance of the company.
The Guaranteed employment and the rigorous performance management system is another example of internal consistency. High