CASE STUDY – CHAPTER 15
Lincoln Electric is an American multinational and a leading global manufacturer of welding products, arc welding equipment, welding consumables, plasma and oxy-fuel cutting equipment and robotic welding systems.
Headquartered in Cleveland, Ohio, Lincoln Electric has more than 40 manufacturing locations, including operations and joint ventures in 20 countries and a worldwide network of distributors and sales offices covering more than 160 countries.
117 Years of Excellence
Lincoln Electric’s Tradition of innovative solutions, technological leadership and commitment to customers, employees, and shareholders stems from the vision of its founder, John C. Lincoln and his brother, James F. Lincoln
* 1895-John C. Lincoln founded the LEC.
* 1900-1919 – James F. Lincoln joined the company and implemented the “piece-work system”. * 1920-1939 - Lincoln Electric introduced the Fleetweld® 5 coated electrode, * Lincoln Electric employees earned paid vacations, among the first in the nation * 1940 – 1949 - World War II brought a dramatic expansion of Lincoln Electric's business * 1950 – 1969- James F. Lincoln continued to enhance Incentive Management promote “formal merit rating
George E. Willis was named chairman and Donald F. Hastings became president. Mr. Willis pursued an energetic course of foreign expansion; eventually, Lincoln Electric obtained a controlling interest in manufacturing operations located in 16 countries.
* 1998 was a year of expansion, acquisition and product development for Lincoln Electric. * 2001-The Company expands its operations in South America with the acquisition of Messer Soldaduras de Venezuela, the country’s leading manufacturer of consumable welding products. * 2011- Sales of $2.7 billion in 2011 were the highest in Lincoln’s history, resulting from higher global demand as well as growth through acquisitions.
How Lincoln successfully transplanted its DNA to Mexico
Policies to be implemented from LEC
1. Piece work (action taken)
2. Merit ratings (action taken)
3. Bonus Plan (action taken)
Problem that was encountered
Mexico was a highly unionized nation (action taken)
Difficulties in Implementing Lincoln System in some foreign operations 1. Germany (problem)
2. Brazil (problem)
3. Venezuela (problem)
“Cultural Differences, Lincoln tried to do, too much, too fast. Lincoln forgot to consider the different cultures, laws, attitudes of variance nations.”
“Changing of Management, acquiring senior executives from outside (or from the nation where they put their plant).”
A large portion of Lincoln Electric's success can be credited to this distinctive and efficient management style which ultimately leads to a competitive advantage. Structurally, Lincoln Electric aims to flatten the hierarchical structure and eliminate nonfunctional middle management positions. To do this, Lincoln Electric has promoted an "open-door" policy between production workers and executives as well as created an Advisory Board that has representatives of the workers who meet with executives twice a month. James Lincoln though of a plan on how to get the employees motivated. And then Incentive Management System came, this system offers to motivate all employees through bonuses that redistribute a large portion of the corporation's yearly profits.
This new system results into two things; first there is a sharp sense of ownership in the company from top to bottom because if the company as a whole does well, everyone is compensated for it respectively. And secondly, there is increased personal performance. This performance boost is the result of a sort of quiet competition within each work group.
Incentive system played a large role in productivity, workers had...
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