Journalist Frank Koller tells the unique, if sometimes unbelievable, story of welding equipment manufacturer Lincoln Electric in his book Spark: How Old-Fashioned Values Drive a Twenty-First Century Corporation. Public Affairs Books have provided a copy for review on Weld My World, as well as five copies that you can win. Read to the end of the book review in order to learn how to get your hands on a copy of this great book about a successful American business.
Would you believe me if I told you that the following could be true about an American manufacturing company:
- This company has remained profitable for nearly its entire existence.
- This company has generously shared its profits since 1934 with its employees.
- This company has a safe and fair workplace without the need for a union.
- This company pays hard-working employees more for their productivity without trying to exploit them.
- This company had not laid off a single worker for an economic reason since 1948.
The company described in this list is welding manufacturer Lincoln Electric.
Since the 1930’s, Lincoln Electric has remained profitable, and since 1948 no worker has been laid off for economic reasons because of a guaranteed continuous employment policy. How is an American welding company able to compete with the rock bottom prices of global competitors and still manage to share large annual bonuses with its employees?
In fact, out of six businesses in Lincoln’s neighborhood in Cleveland, only Lincoln remains.
The element that sets Lincoln apart from the rest, according to Koller, is trust.
Lincoln Electric uses production and management concepts that were quite common in the 1920’s.
For example, Lincoln Electric pays employees by the piece. This “piece work” system was largely eradicated because companies dropped the piece rate as soon as productivity increased. Such changes to the piecework system robbed workers of the compensation that had been promised to them.
Lincoln Electric not only stands by the piece rate promised to their employees, but every level of management has an open door policy that employees can use at any time. In addition, employees are given annual bonuses based on their achievements on the job and the evaluations of their managers—the “merit system.”
If there are ever any concerns about the decisions of management, a committee of employees and management meet regularly in order to iron out any problems. While the management is not bound to adhere to this committee’s recommendations, it’s widely known at Lincoln that all employee recommendations are taken seriously.
Koller presents the good and the bad. No one at Lincoln likes the competitiveness and tension created by the merit system, but most employees acknowledge that it’s the only solution to a tricky problem. In addition, workers acknowledge that the promise of guaranteed employment can bring long stretches of mandatory overtime on the weekends.
Employees who stick with Lincoln for the long haul, and most of them retire after a long career at Lincoln, are grateful to have a minimum number of hours available when the economy slows. While the employees in Koller’s interviews never fail to mention the hard days at Lincoln, they all say they are grateful to have a high-paying, dependable job.
Spark documents a company that started out like any other. One brother invented, another brother managed, and together they created a leading welding company. However, the innovation of James Lincoln over the years ensured that Lincoln Electric would put its employees first and thereby remain one of the leading welding product manufacturers.
Lincoln Electric was the subject of a best-selling case study by Harvard Business School (among others). The summary is available online: http://hbswk.hbs.edu/item/4949.html.
Take Home a Lincoln Product Today
September is Lincoln month at Baker’s Gas and Welding. We’re offering discounts and sales on Lincoln products during September (2011), so act now. Learn more about Baker’s low price and free shipping for the brand new Lincoln 3350 Viking welding helmet that offers all of the top features you need in an auto-darkening helmet, including an especially large viewing area.
Win a Copy of Spark Today
If you want to read the fascinating story of Lincoln Electric in Frank Koller’s book Spark, click on our Facebook link below and “Like” the wall post about Lincoln and the book “Spark”.