LINCOLN ELECTRIC COMPANY CASE

1. LINCOLN ELECTRIC COMPANY CASE

2. 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? • Incentive methodology: • - Evaluation of the employees by the direct supervisor (quality & cooperation) • - Yearly bonus: average of 45 000$ up to 85 000$ (60 to 150% of the regularly salary) • Consequence: • - work is limited to 30 hours/week • - No paid sick days, no paid holidays. Employees have to pay their own health insurance • - Overtime work and unexpected job reassignments are mandatory. • - Performance *2 compared to other manufacturing workers • => Bonus= Motivation based on the employees performance

3. 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? • Achievement: self-job, perform challenging & yearly bonuses • Affiliation: social work, interpersonal relationships • Need for power: friendly

4. 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 motivation relies on the employees’ performance. • Expectancy theory from Vroom, Porter & Lawler. A process theory stating that motivation is determined by the outcomes that people expect to occur as a result of their action on the job. • EFFORT => PERFORMANCE => REWARD

5. 4. 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. • The motivation method of Lincoln electric company is difficult to implement in other countries. • In America, this type of motivation can be used because money has an important value to them and the money is more important than the social gains. • However, in Europe, this method will not work because Europe is in a socialized economy.  • Thus this method does not work in other countries such as the French law is framed and social achievements are very important. For example, in France it seems difficult to reduce the salary without reasons.

6. 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? • The motivational system limits : • - Put in the light the salaries and not the life quality (E.g. Germany) • => According to the corporate or country culture, the employees motivations are different.

7. 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? • According to us the evaluation of the employees seems to be a good method: allows employees to improve themselves and increase performance. • Other organizations could use the Lincoln bonus system and less the social aspect • Recommendations: • - Reduce the supervising proportions • - Let the employees choices in between their bonuses types • - Adapt the working time to the activity and number of employees to don’t fire people