LINCOLN ELECTRIC COMPANY

LINCOLN ELECTRIC COMPANY: A COMPARISON OF ITS APPROACH TO MANAGEMENT WITH THAT OF OTHER

AMERICAN COMPANIES AND JAPANESE COMPANIES

This research compares the approach to management of the Lincoln Electric Company with that of other American companies and with that of Japanese companies. Lincoln Electric was founded by John Lincoln during the economic depression of the late1890s. It was John Lincoln's younger brother James, who joined the firm in 1907, however, who was to shape the company into the organization that it was to become and remains in the early1990.

James Lincoln was a pioneer in participative management. He formed employee committees in 1914, the purpose of which was to advise company management on operations. He was also a pioneer in the development of employee benefits and support programs. The profitsharing plan developed at Lincoln Electric in the 1930s remains a model of effectiveness and efficiency in the early1990s.

Lincoln Electric's commitment to its employees is matched only by its commitment to its customers. These policies have made the company the largest manufacturer in the world of welding machines and electrodes (Standard & Poor's, 1991, pp. 4215). Although James Lincoln died in 1965, his accomplishments at Lincoln Electric may be measured in the continued success of the company subsequent to his departure. The firm has operated at a profit each year since 1965, and profit growth occurred in all but the 19821983 period of severe e

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ployees. At non employee owned/controlled firms, workers tend to distrust piece rate pay systems, while at the employee owned/controlled Lincoln Electric, the workers accept such a system. It must be recognized that employee acceptance of a piece rate pay system might well result in improved productivity in other firms. At Lincoln Electric, also, all employees with seniority of at least twoyears are guaranteed against layoff, and are guaranteed at minimum of 30 hours work per week. The firm's employee controlled management provides such a guarantee, while managements in most nonemployee owned/controlled companies are loath to grant such guarantees. The provision of such guarantees, however, might well improve productivity in other firms. Lincoln Electric functions in a socioeconomic sector of American industry where management and labor are typically viewed as adversaries. This situation does not prevail at Lincoln Electric, where the corporate culture is one in which management and production personnel are viewed as equals, albeit with different organizational functions and responsibilities. Strategy at Lincoln Electric is developed and implemented by company management, with the consent of the board of directors

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