...The Lincoln Electric Company is the world’s largest manufacturer of arc welding products and a leading producer of industrial electric motors. Their key competency is achieving higher worker productivity. Every year the company has seen high profits and bonuses. Employee morale and productivity remains very good and employees are very loyal to the company. The company also puts customers goals as top priority. This is a very organic organization. They do not have a formal organization chart in this company because they want to ensure maximum flexibility. They have an open-door policy in which employees take problems to the people that are most capable of solving them. Routine supervision is almost nonexistent. Lincoln has a fairly flat organization in which there are usually two or three levels of supervision between production workers and the president. Employees are evaluated on quality, dependability, ideas and cooperation, and output. They also have great job security, while also being able to participate in decision-making. Lincoln Electric does not really seem to have any big problems in their current operations while working under an organic structure, but one problem seems to be the lack of attention that the stockholders get. At Lincoln, the stockholders are given last priority. The whole philosophy behind this is that they think that it will be more profitable than investing money in any other way. Alternatives for this company is to work towards...
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...Lincoln Electric, a company started over a century ago by John Lincoln had grown from a small electric motor company into the worldwide leader in welding consumables and other innovative products. It's success is attributed to dynamic and innovative products coupled with leadership based on shared-knowledge and adaptable incentive plans for it's employees. These incentive plans included company stock offerings, stock bonuses, good salaries, paid vacation, and guaranteed jobs. The incentives were believed to have contributed to the incredible success of the organization, and could be utilized as a model to their international operations.. Though Lincoln had a string of international success in their Canadian, Australian, and French operation,they were failing to realize profits internationally despite having rapid sales growth. Their balance sheet took a major hit as their debt began to climb, and were beginning to run low on cash. There were a number of causes to this failed policy. Just to name a few, acquisitions, management, and a poor business environment. As a result of their acquisitions, they were entering new markets that had poor labor management, unions, and low productivity. The management was dislocated abroad, and local management was highly inadequate. Secondly, the business environment was also poor. They were in the middle of a global recession, and the market was overpriced for companies. They would eventually learn from their mistakes, raise...
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...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...
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...Lincoln Electric case 1. Explain how the human resource (HR) policies of Lincoln Electric are linked to its overall corporate strategy. Would you say that HR is a source of competitive advantage at Lincoln Electric? Lincoln Electric’s competitive advantage is in manufacturing of quality products at a lower cost than their competitors. As stated in the case, their strategy was to concentrate on reducing costs and passing the savings through to the customer by continuously lowering prices. This resulted in expansion of both market share and primary demand for arc welding equipment, primary demand for arc welding equipment and supplies, and encouraged exit of major companies from the industry. The management system also incorporated an incentive compensation method. The reward system was premised on the belief that one’s fullest potential can be realized through an effective incentive system that is designed to build teamwork but at the same time encourage individual competition among team members. Through this system, the company is able to build employee loyalty but even more importantly match the HR policy with their overall strategy of high quality products produced at the lowest possible cost to the company. The company endeavors to share in the cost saving by the employee bonus system and low cost of the final products to the customers. This is essentially the hallmark of the competitive advantage of Lincoln Company in the USA. This approach combined with an open door policy...
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...LINCOLN ELECTRIC GROUP ASSIGNMENT Q1. Describe the management philosophy of Lincoln Electric. What are the main components of the compensation system? How much do you think they are influenced by the U.S. national culture? The basic philosophy of Lincoln Electric’s management rooted in James Lincoln’s fervent belief in self-reliance and in the necessity of competition for human progress. He emphasized the importance of incentives management which could bring unlimited progress and profits to the company. From this philosophy Lincoln Electric derived three major components of its compensation system: 1. Wages on a piecework basis 2. A year-end bonus based on a merit-rating procedure 3. Guaranteed employment for workers Although piecework pay system prevails in Western corporations, Lincoln Electric’s bonus rate was one of the highest in the United States, reached approximately 40%~55% of pre-tax at some point. James believed that relating employee’s welfare to corporation’s profits encourages their motivation and dedication to the company. In addition, employment guarantee protected employees’ job security thus ensured efficiency and willingness in production. Nevertheless, another underlying philosophy also contributed to maintain the execution of the compensation system, i.e. James’s belief in the equality of management and employees. The open door policy was practiced under this guideline. Moreover, small numbers of supervisors and equal treatments in parking spaces...
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...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...
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...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...
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...BUSI 1317: Srategic management | Lincoln Electric | The Welding Industry’s Titan | | | | 1st December, 2014 ABSTRACT The purpose of this paper is to analyze Lincoln Electric’s overall strategy and business model and evaluate how generalizable is the company’s business model in other industries, specifically focusing on feasible strategies for one of the fastest developing country, India. | Contents Lincoln Electric’s Background 2 Recent Reporting 2 Main Features of the Lincoln Electric Business Model 2 Company Philosophy 2 Overall Strategy 3 Compensation, Leadership and Communication 3 How generalizable is Lincoln Business Model to other industries? 4 How generalizable is the Lincoln’s approach to India? 5 Employment System 5 Incentive System 6 Conclusion 6 Appendices 7 Exhibit 1: Hofstede's Dimensions Comparison - India & USA 7 Exhibit 2: India and U.S GDP Comparison 7 Bibliography 8 Lincoln Electric’s Background Lincoln Electric Company is the largest manufacturer of welding equipment in the world and has been in existence for over 100 years since 1895. The founder, John C. Lincoln started the business selling his own designed electric motors with the $200 he made from redesigning Herbert Henry Dow’s engine (Paul F. Buller, 2006). The company grew steadily, and in 1906 sales rise to $50,000 a year. John expanded his work force and in 1907, his brother, James F. Lincoln joined the company as a senior manager and introduced...
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...1. Introduction The discussion between promoters of best practice and best fit approaches has sparked widespread controversy in the human resource management (HRM) area. The topic has gained much scholarly attention because it not only addresses a theoretical controversy but also possesses a high degree of practical managerial significance. The essay has the aim to analyse best practice and best fit approaches in HRM of a multinational enterprise. The reader receives insight into Lincoln Electric's organization through a case-study analysis of practical HR approaches serving as a basis for developing practical managerial implications in the last part of the paper. 2. Critical evaluation of "best practice" and "best fit" practices in HRM 2.1 Best practice approach The best practice approach claims that certain bundles of HR activities exist which universally support companies in reaching a competitive advantage regardless of the organizational setting or industry (Redman and Wilkinson 2009). Best practice models imply a close connection between HR practices and organizational performance and are often associated with high commitment management (Paauwe & Boselie 2003). Empirical research in the best-practice field shows similar groups of HR polices which are especially suitable for maximizing performance irrespective of market and product strategies (Peffer 1998, Guest 2000). Best practice bundles of activities are characterized as mutually compatible HR activities...
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...The 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...
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...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...
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...CHAPTER IINTRODUCTION 1.1 Background of Case Study Selection Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees.Researcher are 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...
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...Home Page » Business and Management Lincoln Electric Case Analysis In: Business and Management Lincoln Electric Case Analysis Lincoln Electric case 1. Explain how the human resource (HR) policies of Lincoln Electric are linked to its overall corporate strategy. Would you say that HR is a source of competitive advantage at Lincoln Electric? Lincoln Electric’s competitive advantage is in manufacturing of quality products at a lower cost than their competitors. As stated in the case, their strategy was to concentrate on reducing costs and passing the savings through to the customer by continuously lowering prices. This resulted in expansion of both market share and primary demand for arc welding equipment, primary demand for arc welding equipment and supplies, and encouraged exit of major companies from the industry. The management system also incorporated an incentive compensation method. The reward system was premised on the belief that one’s fullest potential can be realized through an effective incentive system that is designed to build teamwork but at the same time encourage individual competition among team members. Through this system, the company is able to build employee loyalty but even more importantly match the HR policy with their overall strategy of high quality products produced at the lowest possible cost to the company. The company endeavors to share in the cost saving by the employee bonus system and low cost of the final products to the...
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...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...
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