Organizational Culture and Incentives at Lincoln Electric

slick Title Organizational close and motivators at capital of Nebraska Electric Table Of Content Introduction An overview of the case study S. W. O. T Analysts Case Discussion Questions Recommendation 1. Introduction An overview ot the case study capital of Nebraska Electric is a leading manufacturer of welding products, welding equipment, and electrical motors, with more than IJS$I billion in sales and 6,000 engageers worldwide. Although now publically traded, members of the capital of Nebraska family still own more than 60 percent of the stock.capital of Nebraska Electrics customs duty of innovative solutions, echnological leadership and commitment to customers, employees, and sh beholders stems from the vision of its founder, John C. Lincoln and his br opposite, crowd F. Lincoln. Lincoln Electric has a very successful management ashes that other businesses benchmark their own establishments by it. For years, other companies have tried and true to fgure out how managemen t coaxes maximum productivity and flavor from its contributeers, even during awkward financial times. The Lincoln system succeeds largely because of an organizational enculturation establish on openness and trust, shared operate on, and an egalitarian spirit.Although the line between managers and doers is steadfastly drawn, managers consider the expertise of production executeers and value their contributions to mevery formulas of the business. The telephoner has an open-door form _or_ system of politics for all top executives, middle managers, and production workers, and regular face-to-face chat is encouraged. Lincolns system worked so well in the US that management discrete to extend it overseas. Lincoln built or purchased 11 plants in Japan, southeastern America, and Europe with plans to run the plants from the US using Lincolns expertise with management control systems.Managers saw the opportunity o beat local competition by applying manufacturing control incent ive systems to reduce costs and raise production. The results were abysmal and intimately sunk the company. Production and financial goals were not met. The huge losses in the outside(a) 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. 2. S. W. O.T Analysts Strength Organizational Culture Everybody in company treated Equally whereby there is no special car parking area or managers and top management executives ,everybody testament use the same cafeteria for breakfast or lunch and lastly they practicing open-door form _or_ system of government in the organization Any GAINS in Productivity bequeath be shared with Consumers low Price Employee Higher Pay Shareholders High Dividend Incentive Scheme Pay according to number pieces produced and enable the workers to gain more yield than the o ther welding company workers throughout the linked states.In addition, these incentives system indirectly heightened the sense of ownership among the plant workers and its encouraging them to produce more quality product ithin the timeframe. Lincoln main strength is Lowest cost anatomical structure and High level of productivity strategy Weakness Long on the job(p) Hours According to the labor law in US or any other countries ,the acceptable work hours for manufacturing company workers is (35 hours per week ) whereas Lincoln electric practicing (43-58 hours per week ).No Base salary when there is no base salary, most of the workers allow for feel uncomfortable to work in that kind of organization. For instance, if the worker couldnt work for 43 to 58 hours per week, he or she might low rent than others and how that person would manage he cost of living in joined States with that low wage. Opportunity was told by conflicting distributor that American equipment will not sell good in Europe So quite company decides to set up the Wholly owned subsidiaries and acquisition to exonerate the Equipment locally to capture the international market.E. g. Lincoln acquired 7 manufacturer in Europe and Mexico takes 2 years to machine or change the good company workers to follow and adopt the Lincoln organization culture and incentives system in Mexico. Threats Political In many Europe and Asian countries the government considered piecework as Exploitative compensation system which force employers to work harder, and then in Germany the strategy doesnt work well.Society As stated in failing part, the long working hours became threat when Lincoln implement the strategy in Other countries because it is not acceptable since labor law limit the working hours 35 hours per week Technical Managers have no experience of work outside US and the local managers also felt reluctant to implement the culture of Lincoln in the Unit. Legal Due to many suit of clothes against the organizational culture and incentive systems of Lincoln s foreign acquired companies . Case Discussion Questions 1 . What is the source of Lincolns long-standing competitive advantage in the United States market for arc welding equipment?Lincolns Electric long-standing competitive advantage in the United State market achieved by a in high spirits productivity rate per worker and this company success had been on extremely high level of employee productivity. Lincolns Electric apply incentive scheme establish on piecework. The workers receive no based salary but depend on the number of pieces they produce. The piecework rates at the company enable an employee working at a normal pace to arn an income equivalent to the average rage for manufacturing worker in the area where the factory is based.A company faces a quality aspect when it comes to incentive scheme based on piecework. But at Lincoln Electrics the worker must repair or paid back any piecework that have defect. It means the workers must be responsible for their outputs. The work culture in Lincoln Electrics is one of the attributor. The company had a strong respect for the ability of the individual. Moreover, in this company, they practicing open-door policy whereby the communication barriers between Workers and managers were eliminated. All workers are treated equally despite of their position.Since 1934, production workers have been awarded a periodic bonus based on merit ratings. These rating are based on Objective criteria manakin employees level and quality of output. Subjective criteria example employees attitude toward cooperation and his or her dependability. This semiannual bonus motivates workers to perform better and work harder, resulting boost in productivity. Despite high employee compensation, the worker so amentiferous than Lincoln has a lower cost than its competitors. 2. Why didLincoln enter foreign markets through acquisitions and Greenfield ventures, rather than through expor ting? The Lincoln Electrics did consider expanding into international market by exporting, but was told by foreign distributor that American equipment would not sell well in Europe. So instead the company decides to set up wholly owned subsidiaries and acquisitions to make the equipment locally. Through acquisition, it was a quick way to execute. The company can rapidly build its movement in this targeted foreign market. Lincoln acquired seven arc welding manufacturers in Europe and one in Mexico.