Essay On The Lincoln Electric Company

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The Lincoln Electric Company is an extremely successful company that primarily manufactures and sells arc-welding products. In order to understand that success, one must understand Lincoln’s unique organizational culture.
Lincoln is a customer oriented company. They strive for customer satisfaction above everything, including the interest of the stockholders. They are aware that if the company draws customers, stockholders will naturally follow. Lincoln believes in delivering to its customers quality products that are superior to its competitors at a lower price. They manage to accomplish this while maintaining ethical practices and utilizing a variety of strategies that increase the company’s overall productivity.
Lincoln understands that in order to have a productive company, they must have motivated employees, and they have implemented many plans which do just that. Early on, the company reduced workers’ hours, and they are union tolerant. Lincoln’s employees receive medical and life insurance benefits, a bonus plan of up to 25% their annual income, on-site welding education, reduced cost lunches in the company cafeteria and company shares. In addition, Lincoln’s employees have job stability in the form of tenure after the first year of employment, which secures their jobs except in cases of behavioral transgression. Bi-annual evalutations determine the pay for employees, which on average is double what their competitors pay, and employees with exceptional reviews are considered for promotions. All positions, with the exception of entry level jobs, are filled internally. So there is plenty of room for growth within the company for those who are willing to work for it. Entry level jobs are naturally filled externally. However, even Lincoln’s hiring process is unique. They emphasize skills and talent over level of education for their factory workers. Sales personnel are all engineering graduates who know the technical ins and outs of the products. The reason for this is that the sales personnel are customer facing and must be able to answer technical questions about the products as well as recommend appropriate products for specific customer neeeds. In addition to their formal education, sales personnel are also trained on the job for Lincoln specific products. Lincoln has a “suggestion box” where factory level employees can share their ideas with executive level employees, and ideas are encoraged. Employees who contribute ideas are awarded points which increase their annual bonus. All of these incentives ensure that there is a very low turnover rate. A low turnover rate means more highly skilled workers
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An advisory board meets with the chairman and president twice each month to fine tune operations, and Lincoln trusts its workers and does not micromanage them. Managers oversee around 100 workers each, so the factory employees operate with very little supervision. Although the managers have authoritarian power, there is an open-door policy which allows workers to reach specialized personnel without running through a chain of command.
One might think that with all the perks received by the employees Lincoln could not possibly be profitable. On the contrary, Lincoln spends less on advertising, research and development than its competitors, yet they supply 30-40% of all the sales for products of their type in a very competitive market, and although the workers are paid more, high productivity means the company pays just 23¢ for each dollar earned in sales (Sharplin,

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