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Lincoln Electric
Philosophy of Control Case
Case Overview
Lincoln Electric uses a diverse approach to management. It is committed to a very egalitarian culture that is the product of a strong commitment to its employees. One example of this can be provided to its "no layoff policy" which has been in effect since the 1950s and no employee at Lincoln has been laid off since that time. Furthermore, the company has an open door policy in which employees at any level can talk to anyone else at any level -- and are actually encouraged to do so. Most of the employees start work with the company right out of high school and often stay with the company for their entire career. The Lincoln values include honesty, trustworthiness, openness, self-management, loyalty, accountability, and cooperativeness and these values are heavily embedded into the organizations culture and the management team rewards the employees that best exemplify these values.
All of the employees have a great deal of self-control and the organization's structure is incredibly flat. Some of the supervisors will have about one hundred employees that they are responsible for. The culture includes a pride of workmanship and empowerment that allows for many intrinsic rewards to the employees. The cross-functional...
The sales representatives, as well as the rest of the organization, are taught to be customer focus and be responsive to their needs. The management team and the organization was so successful in their home territory that it decided to expand internationally; however the management team was unable to create the same level of success in international locations such as Japan, South America, and Europe.
Discussion
The nature of organization is a complex and has evolved over the years as societies needs have increased in complexity as well. Cooperative action necessarily involves interdependence between individuals; this interdependence calls for a transaction or exchange in which each individual gives something of value (for example, labor) and receives something of value (for example, money) in return (Ouchi, 1980). Although such a simple framework may necessary to explain the exchanges that take place in organizations, it fails to account for many of the intangible aspects of culture that can make one organization successful while others fail. For example, in the domestic U.S., Lincoln Electric's management team was the envy of the industry. However,…
Organizations that are able to build a culture that will allow it to empower its employees and bypass many of the organizational hierarchies can be elusive for many that attempt to construct these artificially. In fact, giving employees too much "rope" commonly leads to many immoral and sometimes illegal acts; especially in hard times. One survey conducted by Deloitte found that two thirds of executives expected insider crime to rise in the next two years due to the faltering economy (Conlin, 2009). There are many employees that have been caught conducting some of the most incredible and creative acts of corporate theft, this seems to be the kinds of trouble that Lincoln was running into in other countries.
In Lincoln domestic territory, its culture had grown organically over a long period of time. The "no layoff" policy and undoubtedly other tidbits of its unique culture have been evolving since the 1950s. Culture that has matured in this way has embedded in it a certain type of momentum that is hard to replicate; especially artificially. It is hard to impose a new culture on an organization that has been in existence for a long time. Employees in such an operation may have different values than the organizational values of the new company that create a significant level of resistance. In the Lincoln case, it mentions the fact that the company typically hired employees' right out of high school. This was probably one of the greatest assets to its HR strategy because it allowed to them impart their culture and their values upon fresh minds when they are still somewhat malleable.
If the employees' in a different establishment have a certain willingness to learn embodied in the organizational culture, then it is possible to alter the culture. However, these aspects of the organizations culture are commonly overlooked. The ability of employees is somewhat easier to control than organizational culture as employees can be replaced or trained if they do not possess the needed skills. However, even with a highly trained group, organizational culture can often take on develop independently of management's efforts. Therefore, especially in foreign expansions, the culture is one of the most important things to consider before operating international. If the employees receptive to learning new practices then the expansion may be successful. However, if there is a mature culture that doesn't mesh with the parent company then the chances of a successful merger are far less likely.
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