Organizational Culture and Incentives at Lincoln Electric

Case Title: Organizational Culture and Incentives at Lincoln Electric

International Business

Table Of Content

Introduction: An overview of the case study

S.W.O.T Analysis

Case Discussion Questions

Recommendation

1. Introduction: An overview of the case study

Lincoln Electric is a leading manufacturer of welding products, welding equipment, and electric motors, with more than US$1 billion in sales and 6,000 workers worldwide. Although now publicly traded, members of the Lincoln family still own more than 60 percent of the stock. 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. Lincoln Electric has a very successful management system that other businesses benchmark their own systems by it. For years, other companies have tried to figure out how management coaxes maximum productivity and quality from its workers, even during difficult financial times.

The Lincoln system succeeds largely because of an organizational culture based on openness and trust, shared control, and an egalitarian spirit. Although the line between managers and workers is firmly drawn, managers respect the expertise of production workers and value their contributions to many aspects of the business.

The company has an open-door policy for all top executives, middle managers, and production workers, and regular face-to-face communication is encouraged. Lincoln's system worked so well in the US that management decided to extend it overseas. Lincoln built or purchased 11 plants in Japan, South America, and Europe with plans to run the plants from the US using Lincoln's expertise with management control systems. Managers saw the opportunity to beat local competition by applying manufacturing control incentive systems to reduce costs and raise production. The results were abysmal and nearly sunk the...