Lincoln Electric Case Study

The Lincoln Electric Company (LEC) was incorporated in 1895 and since that time has been one of the most, if not the most successful and largest

manufacturer of welding machines and associated consumables. It is generally accepted that the reason that LEC has been so successful over it’s 121

year history is due to the company’s culture.

The founder of LEC, John C. Lincoln was an engineer and inventor and he steered the company through it’s first 25 years of existence. 1907 saw

John’s bother, James F. Lincoln join LEC and it was him who was to have the most dramatic affect on the company. One of J.F. Lincoln’s first

cultural changes was to create an Employee Advisory Board whose sole purpose was to provide him with advice on better ways to run the company.

Meeting twice a month the board

This basic premise is still easily identifiable today. The products are

little changed, they are incredibly reliable and the most cost effective products on the market. The resulting products, market share, employee loyalty

and profitability of the company all stem from Lincoln’s founding principles which basically amount to fairness.

One of the core benefits that employees receive is an extremely generous incentive program which is directly proportional to their accomplishments:

“If money is to be used as an incentive, the program must provide that what is paid to the worker is what he has earned. The earnings of each must be

in accordance with accomplishments,” J.F. Franklin from Sharplin (1989 p4) The incentive plan is intrinsically linked to the company’s twice annual

performance evaluation. The score received during the evaluation, a merit rating, is then used as a multiplier to determine what percentage of the

employees annual wage (as a percentage of total company profits) they will receive that December. According to Sharp; “The average bonus for