Lincoln Electric´s Incentive Based System Discussion Questions

How and why does Lincoln’s approach to motivating people work? Pay based on individual productivity: –Employees are encouraged to buy stock at book value at current rates, though it is a requirement to sell it back at book value when they leave the company. This encourages employees to increase their stock value so that they do not incur personal financial losses. –There is no minimum guarantee of pay. Wages can be raised or lowered depending on individual performance. This means that employees are much more likely to be motivated and productive so that their wages never decrease.

What problems does this system create for management and the employees? There is too much competition among the employees. This can lead to bad relationships due to competition for higher wages. There is too much pressure (inefficiency and quality are harder to produce). It is difficult for management to be fair with the point based system because only a certain number of points are allocated to each devision or department. This means that if one employee has incredibly high performance and quality he is receiving a large proportion of the points. This means that employees that have good quality and efficiency are being penalized because there are not enough points to go around for good quality work.

What types of employees would be happy working at Lincoln? Competitive people that thrive in a competitive environment. Those who are efficient and good at time management. People who do not desire friends in their workplace (constant competition can prevent friendships) Self-motivated people that will get their work done in a timely and efficient manner. Those who can produce quality products.