Lincoln Electric Case Study

Topics: Open Door Policy, Employment, John Hay Pages: 10 (3639 words) Published: November 13, 2012
Lincoln Electric Case Analysis
The Lincoln Electric Company is a successful business. They boast record profits, have remarkably low employee turnover, and have created an organizational structure that is both researched and respected. The have managed to do these things by focusing on key elements of their business: valuing their employees, having an open door policy, and creating employee ownership. Valuing Employees

Lincoln Electric values its employees. They value their opinions and look out for their best interests. Not a lot of companies can say that. Not a lot of companies can say that they have an advisory board made up of workers who meet with executives biweekly to discuss employee matters. Lincoln Electric can. Not a lot of companies can say that they shut down operations four weeks a year for employees to take vacation. Lincoln Electric can. Not a lot of companies can say that they pay their employees very competitive salaries in addition to bonuses, or treat their executives just like all employees, or put their employees’ needs before their shareholders’ needs. Lincoln Electric can. These are just some of the reasons that Lincoln Electric can boast a virtually nonexistent employee turnover rate. They value their employees and when employees feel valued, it is reflected in their job performance. According to research, fifty percent of employees who do not feel valued in their jobs say that they plan on changing jobs within the year (Spears, 2012). That same research showed that the employees who did feel valued at work had higher levels of satisfaction and were more engaged and motivated to do their best possible work (Spears, 2012). George Willis, former CEO of Lincoln Electric, agrees with this research as he stated that employees are the company’s most valuable asset. Shenhar (1993) agrees with that statement, stating that: The success of modern organizations depends a great deal on the satisfaction employees derive from their job, and on their perception of how management and the company at large value them as human beings. Successful companies make people feel that they are part of a team, or a family, and they practice open communication with their employees, informing their people of new developments and encouraging them to offer suggestions and air their grievances. (p. 8) Spears (2012) also found that there were many factors that led employees to feel undervalued at work, such as feeling as though they had little involvement in decision making, feeling as though there was no potential for advancement and growth, feeling like they were not receiving an adequate salary, and feeling a lack of nonmonetary rewards. Lincoln Electric is fulfilling their employees’ needs in most of those categories. In 1914 James Lincoln set up a committee of elected employees to act as an advisory board between the workers and executives. He realized that employee participation in decision making is important to be successful in business. This helped employees have their voices heard and made them feel as though they did have involvement in decision making, which Spears (2012) points out as one of the key factors for employees to feel valued at work. Spears (2012) also mentioned that employees feel less valued when there is no growth potential. Lincoln Electric has this covered as well. They post every job opening internally. They only hire externally for entry level positions. This helps employees feel like they always have a place in the company. They are not in competition with outsiders trying to take their job or their promotion. The outsiders who do make it in have to earn their place by starting in an entry level position. Employees also do not have to worry about job security. Since 1958 Lincoln Electric has had a guaranteed continuous employment policy. They guarantee their workers at least 30 hours per week and have had no layoffs since World War II. Even when sales plummeted during the early 1980’s recession,...
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