Lincoln Electric Reaction Paper

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I. FACTS OF THE CASE
* Lincoln Electric, an Ohio-based manufacturer of welding products, welding equipment, and electric motors, uses the Lincoln Management System to maximize performance and productivity of workers at all times. * The company has a whooping $1 billion in sales and 6000 workers worldwide; however, the control system was largely used in the United States for the earlier part of the implementation. * The incentive control system is so powerful that other companies use this as benchmarks for their own control systems. * The company’s management system has proved to be very effective in pushing their workers to produce more. * Tasks are specifically defined and staff is expected to comply with these requirements strictly in order to receive excellent extrinsic pay. * Production workers are paid on a piece-rate basis, plus merit pay based on performance. * They are also eligible to receive annual bonuses with rates depending on the company’s profits, plus stock purchase plans that they are also able to enjoy should they be interested. * The bonus is based on four factors: work productivity, work quality, dependability and cooperation with others. * Some factory workers earned as much as $100,000 a year because of this incentive program. * The success of this system can be attributed to the corporate culture based on trust, shared control, and their egalitarian or democratic way of life. The business operation relies on certain values including honesty, loyalty, accountability and cooperativeness and employees are regularly rewarded for manifesting the culture that is being promoted by the company. * Employee Trust was cultivated with the company’s “No layoff policy”. The last time they formally terminated an employee was in 1951. * Respect was established as managers clearly valued the workers’ involvement in the overall business. * Openness was bridged through the Open-door policy for all top executives, middle managers, and production workers. * The employees can challenge their superiors for malpractices or unfair treatment towards them. * The company believes in promotion from within - most of the employees with executive positions started from the bottom and worked their way up in achieving such prestigious ranks. Some of them worked immediately after high school then got them cross trained to different jobs. * Pride of workmanship, empowerment, and esprit de corps are the intrinsic rewards that employees get from being part of Lincoln Electric. * The company emphasizes anticipating and solving customer problems in their day to day production. * The customer focus, driven by the company’s determination to achieve high standards in production process, strict accountability principles, and compliance with formal measurement for productivity, quality, and innovation for all employees, make all employees push for excellence no matter how tough times can be. * The performance management system worked so well in the United States facility so the senior executives decided to extend its application to eleven plants – Japan, South America, and Europe. * The plan was for these states to be managed from the United States utilizing the Lincoln expertise with management control system. * The execution and implementation worked well but the expected results did not materialize. * The managers at international plants failed to meet the production and financial targets every year. * They exaggerated the goals sent to Lincoln’s managers because of greed – they ordered more resources especially during the recession in Europe and South America. * There was no innate desire to produce more quality products as most employees were found unproductive during work hours, plus the fact that there was not...
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