Topics: Arc welding, Performance-related pay, Piece work Pages: 3 (606 words) Published: March 6, 2013
Background of the Study
Lincoln Electric Company is a manufacturing company of electric motors and generators founded by John C. Lincoln and his brother James F. Lincoln in 1895. The brothers’ skills and interest were complementary. John was a technical genius while Jame’s skill is in management and administration. The Lincoln Electric company was undeniably built in his image. In 1911, the company introduced its first arc welding machine were in they recognized as an alternative use for the motor generator sets they were already producing to recharge the batteries for electric automobiles. John’s mechanical talents gave the company a head start in welding machines which it never relinquished. He developed a portable welding machine and incorporated a transformer to allow regulation of the current. This functional industrial development gave Lincoln Electric a lead in the field that it has always maintained, although the two giants--- Westinghouse and General Electric--- soon entered market. Lincoln Electric’s strategy was simple and unwavering. The company’s strength was in manufacturing. Management believed that Lincoln could build quality products at a lower cost than their competitors. Their strategy was to concentrate on reducing cost and passing the savings through to the customer by continuously lowering prices. Lincoln Electric’s corporate strategy was rooted in the management philosophy of James F. Lincoln, a rugged individualist who believed that through competition and adequate incentives every person could develop to his or her fullest potential. Compensation policies were the key element of James F. Lincoln’s philosophy of “incentives management.” Lincoln Electric’s compensation system had three components: * Wages based solely on piecework output for most factory jobs. * A year-end bonus which could equal or exceed an individuals full annual regular pay, and * Guaranteed employment for all workers.

Almost all production workers at...
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