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Lincoln Electric Case Study

1006 Words5 Pages

The largest manufacturer of welding machines and electrodes is the Lincoln Electric
Company. Founded in 1895, it employed in 1989, 2400 employees and had 40% of the market share.
This company is successful and has an incentive management plan which is considered “a model for achieving high worker productivity” (Sharplin, 1989, 1). I will be analyzing the case study by
Sharplin in this essay.
John C. Lincoln, inventor and engineer, set the foundation for this company, but it was his younger brother James F. Lincoln who improved its financial condition. In 1914, James became the
General Manager and Vice-President, while John held the position of President with little interest in management. The Advisory Board, which is formed of representatives …show more content…

(Sharplin, 1989, 2).
The organizational culture at Lincoln Electric is a combination of several cultures especially the people-oriented, team-oriented, and the outcome-oriented cultures. The people oriented–culture which puts emphasis on fairness, supportiveness, and the respect of individual rights, is clearly reflected on page 4 (Sharplin, 1989, 4)., (i.e.: “There must be complete honesty and understanding between the hourly worker and management if high efficiency is to be obtained.”) The outcome oriented culture appears clearly in the bonus plan and the team-oriented culture appears clearly in the piece rate plan.
The continuing influence of the founders of the company:
The founders’ influence is reflected in the company’s motto: “The actual is limited, the possible is immense.” (Sharplin, 1989, 3). James’ beliefs and values impacted the company, its culture, and its philosophy. James believed that management’s authority should be protected; he limited therefore employees’ participation in decision-making. (Sharplin, 1989, 9). He believed that the best way to retain employees, to educate them, and to make them care for the company, is …show more content…

It is reflected in Lincoln’s Electric goal: “to build a better and better product at a lower and lower price.” (Sharplin, 1989, 3). The founders believed that customers’ needs in term of quality and low price should be the first goal of the industry. (Sharplin, 1989, 3).
The Incentive Management Plan and the Bonus Plan:
Decisions taken by the founders of this company impacted the way business is done and created the company’s culture. In fact, decisions in use as of 1915 impacted the future of the Lincoln
Electric Company:
- Working hours were reduced to 50 hours.
- A paid-up life insurance policy was created.
- A welding school was formed.
- To provide employees with health benefits and social activities, the employees’ association was formed (Sharplin, 1989, 2).
- Then a piecework pay system was created.
- Two weeks paid annual leaves were put in place, in addition to wages that were adjusted for changes in the Consumer Price Index.
- A stock purchase plan that allowed employees to buy the company’s stock began in 1925.
- As of 1929, a suggestion system was created, and additional “points” related to

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