Lincoln Electric's Incentive Plan: Propelling Growth in Demanding Industry - Essay Sample

Introduction

Lincoln Electric managed to grow and become prosperous in the kind of demanding industry due to its groundbreaking incentive plan. This particular system provided an annual bonus to those workers deemed sufficient based on the quality and amount of their piecework-Moreover, the availability of readily available employment systems and policies restricted to the paid benefits of the company. Lincoln Electric upheld the view that with incentives, the workers would more likely be self-motivated and have more content in the positions they hold. They both valued the importance of individuals and the ability they possessed to improve the company, which were all apt to the company objectives. Lincoln Electric also had the power to force out other companies from the industry and proceed with their regular operations since their workers possessed a significant output every hour as compared to their competitors (Frenal, Vignerol, Renault & Vithelingum, 2020).

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Additionally, Lincoln Electric focused on the recruitment of good employees instead of cutting costs and jobs, and it seemingly worked throughout the mid-nineteen eighties. At this juncture, the company had thirty-six percent of the one point five billion dollars market for supplies and welding equipment. It was capitally stable to expand its territories globally.

Despite the prosperity of the Lincoln Electric, they flopped in the late 1980s and the early 1990s because of distinguished factors (Plottier et al., 2019). The fast global growth significantly reduced the equity of stockholders by more than eighty million dollars within two years. Also drastic drop in cash with the increase in long term dues by an incredible two hundred and seventeen dollars, which was primarily the attempt to put to use the standard of America in Australia, France, and Canada.

This type of management culture and style matched not and perpendicularly interfered with the performance of the company. The interference resulted in more distress in the different taskforce; hence the formation of unions was necessary, and the employees were rendered less significant wholesomely. However, the management ceased from giving responses to the incentive plan and placed more emphasis on the fight for holiday compensation and hourly wages. Additionally, the management constituted local employees, inexperienced with distant supervision, and not interacting. However, an additional negative factor then was the international recession, and it was a period of overpriced services and goods despite the adverse effects in their activities (Plottier et al., 2019).

In other nations like Venezuela and Brazil, the company recruited managers without the knowledge and sufficient technological knowledge. They also hired the former distributors who earlier worked for Lincoln Electric. This kind of hiring led to a drop in the performance of the company because of inefficient workers. Moreover, overseas plants remained with their plans; however, the top management did not follow up on current plants to put everything in order. The process of production was as well fragmented with supplies acquisition, which led to tremendous production costs of the company and, lastly, enormous losses. The management thus decided to proceed with full line production of many products in one factory, which was somehow less efficient as compared to the production of a particular lie of goods ensured by the company. This process was meant to increase the quality and efficiency of the goods produced (Frenal et al., 2020).

Consequently, subsidiaries were not correctly utilized for the goodness of financial results at the end of every fiscal year. This did make overseas managers of plants lazy in achieving their production objectives. This particular firm also declined in conducting enough research on the nature of the business that existed in different economies and countries to investigate the wellness of the existing policies of the firm. The management was typically wrong in its assumption that every worker focused on enjoying higher pay and forgotten other life pleasures, this is so as it deals with the preferences between increased leisure time and wages. Some workers preferred spending much time with their family to working overtime for extra wages.

Moreover, some workers preferred having fixed pay and benefits for the for financial planning purposes to the piecewise payment method for workers who depend on the units produced. Hence, the incentive methods which had been established between the 1940s and 1950s but still failed to generate the same results all over overseas plants. The employees were motivated not to work, thus prompting a drastic drop in company sales and production. The firm should have reacted by employing current incentive procedures in individual plants with an observation of their reaction to the performance and production of workers (Frenal et al., 2020).

The globalization strategy by Massaro has the likelihood of becoming successful as compared to past offshore initiatives. For several decades, the company's success relied on the employees' productivity, which attributed to the incentive plans of the company that had motivated the workers to be more productive. At this juncture, the firm focused not any nature of global expansion while the CEO emphasized more on the acquisition quality of the manufacturing facilities of the company. In contrast, the system of incentive failed since it was not customized for various global expansion of the company's facilities. The move by the chief executive officer to implement the incentive of Lincoln and systems of manufacturing that was used in Cleveland shown that there was insufficient research conducted in comprehending the locals of various States. Tony Massaro only established some elements of the incentive system of Lincoln. He contributed towards the development of a current bonus system in the facilities of Europe, which permitted increased cooperation of workers and led to an improvement of performance facilities in the global markets (Plottier et al., 2019).

Besides, after the managers were shown the procedure of implementing incentives and systems of manufacturing, no additional management consulting and effort was conducted on how to operate the company. There was a lack of global experience in managers employed to deal with the global facilities; hence this initiated the problems of fragmented production, which significantly contributed to the financial crisis of the company due to the high costs of production. The idea of Massaro to close some of the global facilities was so tragic. Still, it was justified due to the continuous fragmented production, which caused some of the manufacturing facilities, especially those in Europe, to begin competing with each other. However, the past regime had majored on onion use to prevent any union meeting though it becomes a big deal as the unions defied fundamental implementation transformation to the global facilities. I contrast, the past management on issues relating to global management had placed more emphasis on individualism in which house workers got a promotion to handle global facilities without any experience. Hence, they were not capable of coping with the changes and demands. However, to advance the performance of global facilities, the managers who were unable to perform got eliminated as Massaro replaced them with those with global experience in business (Lincoln Electric: Venturing Abroad Essay. 2016, May 24).

Indeed, Lincoln Electric ought to proceed with the investigation over Indonesia due to several reasons. First, Indonesia offers a vast market for Lincoln's products, and several potential customers utilize handheld stick welders contrary to semiautomatic or complete automatic machines. The completion in the market of Indonesia is minimal as two multinational companies in similar businesses are reported to show specific distributor problems. Still, the Lincoln firm can exploit this opportunity to introduce their products at competitive charges that may lure several customers to their products. Also, the regulatory setting in Indonesia has been growing recently with joint ventures among local and foreign companies, as has been the previous norm. Hence, the firm can gain full profits.

The restrictions on repatriations of conversation and profits of the rupiah have also been eliminated by the government. As a beginning strategy, the company should create a collective venture to have essential opportunities for establishing a factory; hence this may give Lincoln Electric a chance to lucrative government contracts and business that shall be of significance in the factory set up. Moreover, the company can offer some insights into the demands of the customers from the Indonesian market, thus making it easy for Lincoln Electric to distribute its products to the population of Indonesia. Also, a collective venture might offer crucial information concerning resource locations, which might prove to be more valuable to the firm since it devises to be utilizing local materials (WowEssays.2020, February 09).

The implementation of the piecework system of the compensation would be highly recommended since it could benefit and encourage employees to perform and improve the out of their productions. Indonesia being one of the developing countries, the employees would accept the chance of having a basic salary that is slightly higher than that recommended by the Indonesian labor laws which only increases the quantity of non-performing persons who only targets higher pay without any significant effort worth it (Vedder, Guynes & Parrish, 2019).

References

Frenal, A., Vignerol, S., Renault, T., & Vithelingum, K. (2020). U.S. Patent No. 10,543,559. Washington, DC: U.S. Patent and Trademark Office. https://patents.google.com/patent/US10543559B2/en

Lincoln Electric: Venturing Abroad Essay. (2016, May 24). Retrieved from https://graduateway.com/lincoln-electric-venturing-abroad

Plottier, G., Chevalier, R., & Januard, F. (2019). U.S. Patent No. 10,201,870. Washington, DC: U.S. Patent and Trademark Office.https://patents.google.com/patent/US10201870B2/en

Vedder, R., Guynes, S., & Parrish, J. (2019). Botsourcing's impact on society. ACM SIGCAS Computers and Society, 48(2), 10-13. doi.org/10.1145/3307622.3307623

WowEssays. (2020, February, 09) Lincoln Electric: Venturing Abroad Case Study Sample. Retrieved March 31, 2020, from https://www.wowessays.com/free-samples/lincoln-electric-venturing-abroad-case-study-sample/