Natalie Burrell

Professor Pendel
Lincoln Electric Case Study
November 22, 2013
Lincoln Electric: 117 Years of Excellence
In 1895, John C. Lincoln founded the Lincoln Electric Company.
He started out with an investment of no more than $200.00 in his
pocket. The first product that the company started out developing was
electric motors that Lincoln had designed himself. By 1919, Lincolns
younger brother James had joined forces and they had successfully
expanded their line to include battery chargers for electric cars and the
first variable voltage, single operator, portable welding machine. In the
years that followed, Lincoln Electric offered its employees piecework
pay, group life insurance, and even founded its own school, The
Lincoln Electric Welding School. It is safe to say that Lincoln Electric
has remained one of the forerunners for companies that are considered
to be an employer of choice(Company History).
Lincoln Electrics mission statement says, We are a global
manufacturer and the market leader of the highest quality welding,
cutting and joining products. Our enduring passion for the
development and application of our technologies allows us to create
complete solutions that make our customers more productive and
successful. We will distinguish ourselves through an unwavering

commitment to our employees and a relentless drive to maximize

shareholder value. Their vision is to be the international leader in
quality welding and cutting products as measured by innovative
technology for new products and services, global sales volume, and
shareholder value. They also have many core values, including quick
response to their customers needs regarding quality and value, the
fact that they recognize their customer and their most valuable asset,
their practicing to be responsible for financial management as well as
the environment, and many others (Company History).
Today, John M. Stropki fronts Lincoln Electric Company as the
Chairman, President, and Chief Executive Officer. He stated this about
the successful businesss operating philosophy regarding their
customer in an interview, We help our customers succeed by offering
them superior products and a value-added approach, along with the
expertise that comes from being the worldwide sales and technology
leader in the welding industry. When it comes to job security,
employees do not seem to be concerned with losing their job. One
employee, Rob Fulmer, stated this in an interview, I dont know all
their ins and outs, but I know this: I feel solid and confident that this
place will be here, and that Im going to have a job til I retire (Jones).
When this company first started out and the Great Depression hit,
Lincoln Electric was affected just like everyone else. The workers were
desperate to keep their jobs, so they brought a proposal to James: if

the employees worked harder and improved productivity within the

company, would he share the benefits at the end of the year evenly
within the company. Lincoln agreed, and ever since 1934 profit sharing
has continued to this day. Phil Jones said this about the companys
policies, Under the guaranteed employment policy, no one at Lincoln
has been laid off for economic reasons for more than 60 years (Jones).
The reason that Lincoln Electric Company has survived the last
hundred years is because of a well thought out four-pronged policy. The
policy has four key elements that include an open-door policy, use of
piecework pay, merit-based bonuses, and the unbelievable promise of
guaranteed employment. There is also an Advisory Board in place that
meets with the president every two weeks. This has been in place ever
since James Lincoln realized his employees knew more about welding
than he did. After the Advisory Board started, many helpful and
progressive policies were put into place. These policies included group
life insurance, and employees association, paid vacations, employee
stock ownership, annual cash bonuses, annuities for retired employees,
merit-rating systems, and guaranteed employment. Business Book
Notes wrote an article on the company and stated, In some parts of
the company, 50-hour weeks are the norm. However, when business
starts to slow, the company can reduce work weeks back to 40 hours
for most employees, having the same effect as if they had laid off 11
percent of their workforce (Business Book Notes). Recently, the

company has been setting aside 32% of their annual profits to pay for
things such as debt, corporate taxes, and bonuses. When there is no
profit, there are no bonuses (Business Book Notes). When it comes
to human resources, their success is credited to the bi-weekly
meetings, the employee bonuses that increase productivity and
loyalty, and their main focus on company improvement.
In conclusion, the Lincoln Electric Company is in a league of their
own when it comes to their business tactics. The promise of
guaranteed employment generated a trusting relationship between
management and workers that instilled a strong sense of loyalty rarely
seen today in modern enterprises. That commitment came to
transform the culture of the organization (Jones). With sales of $2.7
billion in 2011 being the highest in the companys history, with their
outstanding, deep-rooted company policies, Lincoln Electric Companys
will surely continue to be number one in the world for welding needs.

Sources
"Business Book Notes." Business Book Notes. N.p., 17 Aug. 2011.
Web. 21 Nov.

2013.

"Company History." Company History. Lincolnelectric.com., n.d.

Web. 21 Nov.

2013.

Jones, Phil. "Lincoln Electric." PBS. PBS, 09 July 2010. Web. 21

Nov. 2013.