Lincoln Electric Company Case

1. Describe the practices that Lincoln Electric uses to motivate employees. What are some of the consequences of these practices for employees and the company? The strategy of Lincoln is to remunerate his employees with their productivity: More they produce, more they are paid, it works with a premiums system. Lincoln offers what some say are the best paid factory jobs in the world. The consequences of these practices for employees is that they have more efficiency, but they don’t have holydays and sick day. They have to pay their own health insurance. For the company, there is less absenteeism so the production is more efficiency, they have more autonomy . They don’t waste their time with the holydays management.

2. Discuss the motivational system at Lincoln Electric, using each of the need theories of motivation. What does each theory say about the motivational practices at Lincoln Electric and which theory works best for explaining employees’ motivation? The first motivation sources fort the employee is to answer of the physiological need. In lincoln Electric, they have a high pay to answer this need. The second step on the maslow pyramid is the safety need. On the company, they have a safe working condition and job security due to the low turn over and the carrier plan. For the social need, we can say that employee have a lot of free time due to the fact that they do just 30h per week. But on the other side, there is no cohesive work group or friendly supervision. For the esteem and self-actualisation need, we can say that they are recognize with the pay but there is no evolution for a employee in the company, there is no feedback from the job itself and less opportunities for creativity. The fact that they are more autonom emplifie their responsibility senses and according to Herzberg, it is improve their motivation. According to the result, the lincoln company is based on essential motivation. They are based on the existence need.

3. Consider the motivational system at Lincoln Electric in terms of the process theories of motivation. What does each theory say about the company’s motivational practices? In other words, can we understand the system and its effectiveness in terms of expectancy theory, equity theory, and goal setting theory? The main motivation for working in lincoln is the pay and the money. All the theory deals with the extent to which persistent effort is directed toward a goal. The motivation depends of each person, we take the capacity to do efforts, persistence, direction, goals…. Herzberg’s theory speak about the motivation with the goal, differents goals… but in Lincoln company you can’t find any theory, i think, because you don’t have any possibility to improve your job and it’s not possible to take some responsability.

3. Some have said that the methods of motivation used at Lincoln Electric should be used by all organizations to motivate their employees. Do you believe this to be true? Explain your reasoning We think this type of method must be good for big industrials companies. Indeed, this type of method of motivation can be applied if the company has ever some money because it’s enough expensive. Smalls companies can’t do that because they don't have money to do it. Moreover, today workers research a good environment to work even if they are not well paid. It’s a good method but it’s not appropriate to all companies. All workers are not looking for a big salary but not socials advantages so you can’t apply it everywhere. We think this method looks a little bit old because it doesn't take in count the person of the employee. It's just a person like an other one.

5. Comment on the cross-cultural limitations of Lincoln Electric’s motivational system. How do the theories of work motivation help us to understand why the company’s incentive program did not work in Germany but does work in North America and Australia? What does this tell us about the cross-cultural limitations of the theories of motivation? They didn’t understand the cultutal specificities in Germany for example, they juste paste their american model to an another country. They didn’t take the time to analyse the social differencies and standard of living between the 2 countries. The CEO of the company even recognize this as he said « In many cases we didn’t truly understand the cultures of those countries we expanded. For example, we had an incentive program that was based on the belief that everybody in the world would be willing to work a little harder to enhance their lives and their families and their incomes. It was an erroneous assumption. It simply didn’t work in Germany, for example. » One of the consequences to that is that their manufacturing operation has been shut down. It’s looks like they want to impose their system… German people have other needs and other motivation that american and australian. Money is not the only motivation of german people for example. This motivation is influence by the culture of the country. As we can see on the Vroom, Porter & Lawler model : Effort – Performance – Reward are differently recognize form one country to another. It’s essentiel to understand cultural differencies ! The company must understand and adapt to the country where they are going to stay, and it’s difficult introduce, your own structures and motivation system to an new country, because from this country could reject this system.

6. What can other organizations learn about motivation from Lincoln Electric? What do you recommend that organizations do to motivate employees based on your knowledge of the Lincoln Electric motivational system and on your understanding of motivation? The motivation system of Lincoln is a system who is working. We can see there is no absenteeism, because people like one thing, the money. People don’t do more than 30 hours a week. They have a good pay, so, the company take care of workers. With 30 hours a week, they have extra time to consider for leasure and family. With a good remuneration and conditions like that, we saw that people do a good job. The results are the best in this industry branch. Other organisations can copy this system, or adapt it to their own firm. Take in consideration the money and human factors is very important. They don’t have a lot of advantages near to these conditions, but we think the money is the main factor.