Lincoln Electric Case Study Essay

Lincoln Electric Case Study Essay-78
The company has an open-door policy for all top executives, middle managers, and production workers, and regular face-to-face communication is encouraged.Workers are expected to challenge management if they believe practices or compensation rates are unfair.

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An advantage of a joint venture is that it will allow LECO to experiment with the incentives program on a smaller scale before full implementation.

According to feedback from local sources it seems that the incentives will have to move in the direction of more valued, indirect, compensation.

According to (Daft, 2010) open-book management is used in decentralized organizations to share the financial condition of a company with all employees. Based on what you’ve just read, what do you think makes the Lincoln System so successful in the United States? Tasks are precisely defined, and individual employees must exceed strict performance goals to achieve top pay. Production workers are paid on a piece-rate basis, plus merit pay based on performance.

Open-book management encourages active participation in achieving organizational goals, helps the employee understand how his or her job affects the financial success of the organization, and allows employees to see the interdependence and importance of each business function (Daft, p. Employees are also eligible for annual bonuses, which fluctuate according to the company’s profits, and they participate in stock purchase plans.

Many overseas managers had no desire to increase sales, and workers were found sleeping on benches because not enough work was available.

The European labor culture was hostile to the piecework and bonus control system. At this point, it makes the most sense to penetrate Asian markets through a joint venture with both Tira and SSHJ.LECO must capture the advantage both partnerships; Tira would be a valuable partner because it is an Indonesian firm with invaluable connections/customers.The high levels of productivity common to LECO employees can be attributed to motivation and job satisfaction:*Guaranteed employment: no lay offs since 1948, instead LECO rotates through co.(skill variety).*Equity: employees earn comparable, sometimes higher, wages than other manufacturing companies.Specific to human behavior, LECO neglected the transferability of the incentive system to other countries and the utilization of management controls to monitor it.*External: It was unreasonable to expect, considering the extensive experience with the US labor markets and the period of time required to customize the incentive system to fit a very specific culture, that it could be instantaneously transferred to a different business environment.It is clear that the rewards offered through the incentive plan did not have the same valance for the international labor forces as it did in the US.Management was not properly trained and/or experienced with the markets they were entering, thus, not able to adjust the incentive program to suit the priorities of employees.Additionally, no structure was in place to properly administer the new operations because the internal focus of the firm remained on Cleveland.However, the best incentive system is currently indeterminate because LECO's knowledge of this particular labor force is very preliminary.It would be best to draw on their partner's experience and adopt their incentive policies, at least for the meantime.


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