Lincoln Electric Company

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Case Study
Lincoln Electric Company

Case Study
January 17th, 2008


Lincol Electric Company is a very successful company on the market. It has a good market share due to its productivity. Productivity is the key element of a firm to be successful. Lincoln Electric created a system to pressure employees for a higher productivity. The pressure that this company uses is not psychological, it is the motivational one. The management motivates its workers with several bonus opportunities for either good work or good productivity. The same works also the opposite way as the penalization. Of course not everyone would be willing to work in such environment, there are also people who are paid by regularly, instead of according to number of products produced. There is also a doubt whether such a system would work in different types of businesses as there as different conditions. But nomatter what, there are some parts or elements of this effective system that can be used also in other types of businesses. How is labor standards used to establish an incentive system such as this?

Labor is the most important part of every organization. Qualified, good organized, loyal and productive labor is a huge benefit for the firm. It can bring the company to positive numbers, in harder times it can support the company and make it able to survive and in good times it can bring even more and more profits. It is the management´s duty to create such an incentive system. If the labor system does not work, it is all failure of the management. The basic is the communication between management and representatives of labor force. They need to find out what are the motivation instruments that force workers for higher productivity, better quality. It is also the duty of human resources department to find worker, who are able to cooperate and help each other for common success. Last but not least important factor is to set the actual reward that will be used as the motivation.

How and why does Lincoln’s approach to motivating people work?

Because they can influence their wage. In a common labour system are employees paid on a monthly basis. That mean that they are sure, that they will get exact sume of money every month. So why they would bother to work on 100%? Of course they realise, that they need to work to dont get fired, but they dont have to put an extra afford while doing their job. Lincoln system is differnt. It provides them with more opportunity to higher their income, but on the other hand it makes employes more uncertain. They surly will ask them selves questions as for example: will I work enought to earn money I need? It means that they are not sure about their wage, unlike the people who work on regular monthly basis. I asumme, that Lincoln is adventageous for employers. By introduction this kind of system, they will certainly increase productivity of their company as the Lincoln system motivate employes to work more and efficiently. For employes is adventage that they can directly influence their income but in the same time there is a great dissadventage that they will probably work under the stress.

What types of employees would be happy working at Lincoln?

For this system would appriciate to work employe who is manualy skilled, laborious, competitive, intensive. Employe who needs to be rightly recognized for his job. In a company with common system would be all workers at the same level get the same wage. But is it right for all employes? No. For example, one will produce 100 pieces of product per day, other one will produce only 47 pieces, but they both will earn same amonth of money. So of course Lincoln system would suite the first worker, but not the other one.

Why has Lincoln Electric been so successful? What are the key elements in their HR system? How do they support Lincoln's overall strategy?

Well, this question is not easy to answer. Successful can be...
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