The Lincoln Electric Company Case Study

The Lincoln Electric Company

This paper is an examination of the business practices that Lincoln employs to successfully produce quality welding products. We explore some of the key things they do well such as its compensation system and cost management. We will make a few suggestions on what might benefit the company, as well as the workers, if instituted.

Key words: Lincoln Electric, cost controls, piece work

In the assigned case of Lincoln Electric Company, we are asked to examine what examine what 'things' Lincoln engages in that leads to its success in its enterprise. Lincoln, based in Ohio, is a very successful producer of welding related equipment and supplies that has been servicing its customers with high quality goods since 1895. Perhaps the most quality item they produce, however, is the operation that they run, and the employees they utilize in the process. It's over 4000 workers churn out goods at a faster pace, at a higher level of quality than those other manufacturing companies in the Ohio area. So what leads to their high level of production and quality? We will examine these 'things' below.

Advisory board

Throughout this examination, there seems to be a common thread of employee production and productivity. It's interesting to note, however, that much of this production is attained through high levels of access to management and input into the process. In the heavily hierarchical structure at Lincoln, and in a company that is not Union organized, the Advisory Board is an important influence on working conditions and policy (Bayard, A., & Burrell, C. 2012). The board is a valuable lesion with representation for the worker. In the absence of a Union, the board serves as the access to management that the worker on the line needs, by someone who works on the line.

Low employee turnover

Though low employee turnover is perhaps a result of all of the other activities that Lincoln does right, it is noteworthy that it is as low as it is. Less than 4% for those that have been there longer than 18 months is a good sign of employee satisfaction (Gaan, N. 2011). Training new employees is an expensive undertaking and retention of workers is more important than ever. Fox found that 84% of all workers are considering applying for jobs outide their current places of work (2012).

Profit sharing

Perhaps the biggest contributor to Lincoln's productivity success is its reward system. Lincoln rewards its workers primarily with financial incentives rather than other forms such as extra vacation time, company cars, and special parking spaces. Workers that perform, earn more. Lincoln has two distinct financial reward mechanisms: piece work pay and profit sharing.

Their piece work structure