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The founder of Lincoln electric, John, was more concerned with the engineering and innovation more than the management so, James Lincoln took the reins and moved forward with the creation of an Advisory Board that would report to the CEO every two weeks regarding the operations of the company. James Lincoln was also the first to establish innovative personnel policies. Courtesy of the Advisory Board, the working hours were reduced from 55 hours to 50 hours a week. The company was also able to offer each employee paid-up life insurance policy and a medical plan along with etirement.
In 191 9, the Lincoln Electric Employee’s Association was developed and provided employees with health benefits and social activities. By 1923, a piecework pay system was established. The piecework system let employees earn money by completing products. Employees could make many products by working efficiently. Although the incentive to be more productive exists within a piecework, system there also exists the potential for employees to reduce the quality of the product in favor of completing more products for more pay. 925 saw the start of a stock purchase plan for all employees. In 1929, the board of directors began a suggestion system that awarded points to employee’s year-end bonuses. In 1 934, the favored bonus plan started and prospered. The first annual bonus started at 25% of wages and was received every year after that. In 1944, a pension plan was developed, a policy of promotion from within, and continuous employment. All of these introductions, developments, policies and improvements helped foster a culture of caring for Lincoln employees and customers.
Over the course of the years, Lincoln made significant changes in the way it handled its employees nd made a difference by showing employees how much the company values their worth. In addition to extreme employee respect, customers were also highly valued. Employee performance and productivity were measures used to ensure customer satisfaction. Performance and productivity were key contributors to keeping customers satisfied. James Lincoln’s Christian background was evident in the companys philosophy.
Pricing, competition, customer satisfaction, advertising, quality, distribution, production and other processes were all embarked upon with good intentions and true effort. It as this company philosophy that laid down a strong foundation upon which to establish Lincoln’s cornerstone bonus, increase of $20 million in sales over the course of seven years, the well-known incentive management system, and the high stock dividends. Raison d’©tre is a French term meaning, “the most important reason or purpose for someone or something’s existence. James always put the customer needs first, even before that of the stockholders. The constant goal was “to build a better and better product at a lower and lower price. ” The Lincoln policy was “at all times price on the basis of cost and t all times keep pressure on our cost. ” In contrast to the generous and high priority attitude toward consumers, the attitude toward stockholders was very low priority, “The last group to be considered is stockholders… because they think it will be more profitable than investing money in any other way. ” The market was highly price-competitive.
Prices only varied from one to two percent. The products at Lincoln were sold both directly from the special engineering-oriented sales forces and indirectly through a distributor. A rather larger amount was Spent On while less than 0. 75% of sales were pent on advertising. The manufacturing process was similar to GE but the factories were not even comparable. The GE factory was brightly light and brand new while the Lincoln factory 33 years old. Despite the tinged look the Lincoln factory held, Lincoln was able to maintain quality products, merge design with production, and connect better with customers.
The main plant was in Euclid, Ohio. Materials were kept nearby workstations and the administrative offices were functional and located on the factory floor. The structure and organization of Lincoln’s factories enabled a smooth operating rocess and earned Lincoln a spot as one of Fortune’s America’s 10 best- managed factories. In comparison to the arc welding section, the electrode section was very capital-intensive and highly guarded as it represented future innovation with much of the R&D money. Worker performance and attitudes were notable at Lincoln.
Little time was spent chitchatting with coworkers. Workers were extremely motivated earning twice as much as other factory workers in the area. Focused workers increased productivity, however, there was no mention of quality or how quality was controlled when workers were producing at high speeds. There should be form of measure implemented for quality check. Operating was efficient but how effective was quality? The flexible organizational structure at Lincoln enables workers to develop relationships with upper management and opened up communication between various levels of workers.
Those at the lower level of the pyramid- staff assistants were encouraged to seek assistance and ask questions of VPs. There was no organizational chart for it was seen as a disruption. The ability Of any level worker to engage with upper level management is beneficial to the entire company because communication is key in any business. Better communication will enable Lincoln to constantly know its strengths and weaknesses. The recruitment and selection of potential employees was very restricted to internal and currently employed Lincoln employees.
Only entry- level positions were filled with external candidates. Well, this seemed to have worked for Lincoln. This could potentially hinder to the company as they will miss out on the opportunity of hiring external talent who are just as qualified as current Lincoln employees. In addition, the lack of outside perspective, knowledge, and skills will hurt the R&D process. Job security is another area acking. Having employees too comfortable is not beneficial to the employee or the company for one major reason- lack of drive to perform better.
Knowing their job will always be there provides a level of comfort that could hinder employee performance and take a stab at effort. Workers may be more inclined to hold back and not exert that extra effort because they know they are safe in their position and will not be fired or laid-off. Supervisors used merit Rating Cards twice a year to evaluate lower level workers. Evaluation on quality, dependability, ideas & cooperation, and output were all he performance criteria that were emphasized. These cards are good to ensure a check on all employees and to see that everyone is still doing their jobs; there may be some bias though.
Nowhere does it provide against biased opinions/scores in the merit rating card systems. Compensation for production workers are on a piece rate system. It should be noted that piece rates were never changed unless a change in the way an item was to be produced resulted. Vacation time was guaranteed at Lincoln. The company shut down for a total of four weeks during the year, two weeks in August and another two weeks in December. Vacation time is critically important, especially in the US, where it is severely limited and looked down upon.
Boosting employee moral with a little vacation time not only benefits the employees but Lincoln as well because employees will return refreshed and ready to get back to work. As a result of the recession during the 80s, factory workers joined the sales team to volunteer and a new product was developed along with an increase in sales at Sl O million. Allowing factory works to volunteer and step outside of their comfort zone enabled them with a better understanding of what is done in other areas of Lincoln and served for a ore cohesive workforce.
Usually management assigned workers to assignments and transfer people between overtime and short time. The regulation held by management could hurt workers who do not want to work overtime or work on specific parts. Management should consider what the worker wants before making them commit to something they may not enjoy. Employee satisfaction is another important factor that contributes to the success of the company. Upper management wants employees at all level to “participate” but not “participate” too much i. e. be involved outside of their areas Of expertise and be decision makers.
It is important to provide employees with a sense of responsibility in order to gain an insider perspective and allow further development of ideas presented by employees. upper management treatment was nothing special. There were no special benefits such as designated parking spaces, no executive washrooms or lunchrooms. Having the equal treatment of upper level management and lower level management really sets Lincoln apart other companies because Lincoln employees know upper management is not perceived as being any more “special” to the company than they are.