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CASE STUDY: Lincoln Electric

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The Company
 
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.
 
The Lincoln Management System
 
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.
 
Lincoln's Control Approach
 
1. Tasks are precisely defined.
2. Individual employees must exceed strict performance goals in order to achieve top pay.
 
Internal Culture
 
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.

The Lincoln System Overseas
 
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 company. Production and financial goals were not met. The huge losses in the international plants meant that the company would have to borrow money to pay US workers bonuses, or forego bonuses, for the first time, in Lincoln history. Management wondered whether the Lincoln Management System could be transferred to other countries.
 
 

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