SPARK - Lincoln Electric, founded in 1895 by John C....

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Lincoln Electric, founded in 1895 by John C. Lincoln, operates on old-fashioned values: trust, flexibility, loyalty and being paid fairly. Sounds pretty common sense. There’s more. This is a company of some 3,000 employees, who can call the CEO when they have an idea or a suggestion or where management doesn’t have special perks–such as parking spaces or a special cafeteria. Hmmmm. Sounds suspicious. Doesn’t management deserve special perks? Or is that what has been ingrained our collective thinking in recent years? And what has happened to those companies that have enthusiastically embraced this mindset? From boom to bust for many of them. Witness the layoff rampage stemming from the Great Recession. John Lincoln was only 29, with a wife and two young kids, when he was turfed from his job of building electric motors in Cleveland, Ohio. A financial panic in 1893 had pulled down the U.S. economy (sound familiar?) leaving millions of Americans out of work. Lincoln struck out on his own, taking the gamble to open the Lincoln Electric Company. Through hard work, constant innovation and good-old American persistence, Lincoln built his company steadily. It was when the gasoline engine surpassed the electric car in the early 1900s that Lincoln realized that the technology he possessed had huge potential. As Frank Koller explains: “The powerful electrical current produced by his motor generator unit could do much more than charge a car battery–it could also create an arc of electricity hot enough to melt steel.” James Lincoln, the younger brother, entered the scene around 1907, becoming general manger in 1914. The two brothers proved to be a dynamo in innovating and in advancing their belief that arc welding was vastly superior to banging rivets through steel. By 1929, Lincoln Electric held 30% of America’s welding market, which was rapidly displacing riveting. Koller shares a powerful story from 1933, when Lincoln Electric had avoided layoffs in Cleveland (a city then with a 50% unemployment rate) by reducing hours and wages. One worker posed the question: “If we did more, tried harder and worked together as a real team, could the company pay is more?” It so happened that James Lincoln had been tuning into President Roosevelt’s radio broadcasts, in which he spoke about American workers deserving a more “abundant life.” Although he wasn’t a FDR supporter Lincoln introduced a one-year trial on profit-sharing which was represented as a bonus.
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James Lincoln first believed that because trust flowed both ways that the bonus was of secondary importance. However over time his view changed, in particular during the 1950s, when he realized that workers worked harder and more creatively. Indeed, the bonus was exceeding in some years 100% of employees’ base wages. He later stated: “Under conditions of maximum desire for efficiency, the bonus should average more than wages.” I love the quotation that Koller provides from 1942 when James Lincoln appeared before
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This note was uploaded on 02/08/2011 for the course COMM COMM 210 taught by Professor Paquin during the Fall '09 term at Concordia Canada.

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SPARK - Lincoln Electric, founded in 1895 by John C....

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