Lincoln林肯电气组织行为学案例-英文

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Course: Organizational Behavior

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Homework: Lincoln Electric Co. case

Name: Stella

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I declare that this assignment is my own work, which all sources of reference are acknowledged in full and it has not been submitted for any other course.

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Case Study : Lincoln Electric Co.

Lincoln Electric Co., which was established in 1895 by John Lincoln, has been one of the leading companies which produce arc welding products, and it competes with Miller Electric Manufacturing for the NO.1 position in welding machines. The mother company in US contributed mostly for the succession. However, during the global expansion, some area experienced failure. For example, German operation lost US$1 million every two weeks in1992. After restructuring of international operators, Lincoln is still a profitable company.

What specific factors lead to the success?

What lead to the succession of Lincoln? Two main factors must be concerned. First one is the strategy of high quality. The high quality made some giants such as General electric and Westinghouse exited the industry. Second one is the reward structure, which supports the company’s strategy. “High Quality Strategy”relies on quality controlling, skilled workforce, advance technologies and high work ethic, etc. Here, I am going to analyze how the reward structure worked.

Reward Structure

Firstly, Lincoln set up piecework system in 1914. There are two main issues for this system. First one is the piecework standards. If the standard is unfair, workers will have low work ethic and the company can not make sufficient good quality products. In order to solve this issue, Lincoln established time-study department and employees can challenge

the piecework standards. Second one is how to keep the high quality of the products. Under the piecework system, employees are more tend to produce quickly. In order to solve this issue, Lincoln set up a tracking system that can track back to individuals, and workers must rework faulty pieces in their own time. As a result, the piecework system not only can increase the productivity, but also keep high quality of the products.

Secondly, Lincoln introduced year-end bonus in 1934 and has a stock purchase plan. In order to encourage workers to produce high quality products, one of the four assessing criteria for the production employees is “Quality”, which is evaluated by the quality assurance department basing on the tracking system. Another one criteria of “Ideas and Cooperation” encouraged all the employees, like a brainstorm, to find a way to improve the output of the company. This brainstorm can help the company to increase the productivity and quality of the products. Also, the size of the bonus also depends on the company profits. For the stock, by 1925 Lincoln introduced stock ownership plan. This plan can increase the competitiveness of the company because it is one of the first plans in US. In 1996, more than 60% of the US employees owned shares. Employees feel more related with the company and have higher work ethic to fulfill the strategy of the company. With the piecework and bonus, workers are among the highest-paid workers in the US.

Lastly, other intrinsic rewards also increased the sense of belongingness. First one is the employment guarantee policy. Lincoln secured at least 30 hours of full-time work for the employees with three or more years tenure. Second one is the feedback system. The

president runs the meetings with the Employment Advisory Board to discuss the issues of concern to the employees every two weeks. Third one is the training and promotion system. For the training, Lincoln Electric Welding School was founded in 1916, and employs some production support workers, who are paid on hourly basis. For the promotion, Lincoln followed “promoting form within” policy for decades. Forth one is the no paid holidays and sick days. The company helps employees to access to collective health insurance plans and the sick days are not related to the bonus review. Last one is helping the employees with the ad hoc situation even the he or she is resigned.

All the rewards shown above can help a company success in the market. It is not always suits to different area. For example, in Germany, Lincoln faced the strong unions and illegality of piecework. So Lincoln needs to find another way to solve the issues for different country.

“Lincoln Way” in China

Should Lincoln way be implemented in China? In my opinion, China should implement the Lincoln way. When implement the reward structure, we are facing some issues. However, the advantages overcome the disadvantages.

Firstly, the piecework system, it is obviously can encourage the productivity and quality. In China, many companies already use this system and made a succession. The issue is that the piecework standards should be set up carefully. In China, most of the companies

in this industry are producing low-end products. It is hard to find reference standard in other companies. As a result, we need to spend some time to do the evaluation job.

Secondly, “Bonus System”can “Stock ownership”can wok well in China. A good example is Huawei Technologies Co.Ltd which keeps the employees with high work passion. Also, in China, the policy of employees holding high percentage of the stock is rare. If Lincoln introduces this policy, the competitiveness can be increased.

Lastly, other rewards like employment guarantee policy, feedback system, training and promotion system, and no paid holidays and sick days are all can increase the sense of belongingness. One obstacle is the feedback system. Chinese people are not familiar to give suggestion and judgement as US people. In this case, at the beginning of the bonus assessment, we should lower the requirement level of the “Ideas and Cooperation” criteria. Then we build up an encourage culture and increase the level later.

From the advantages shown above, we should implement the “Lincoln Way” in China.