Lincoln Electric Case Study Essay

3631 Words Nov 5th, 2012 15 Pages
Lincoln Electric Case Analysis
The Lincoln Electric Company is a successful business. They boast record profits, have remarkably low employee turnover, and have created an organizational structure that is both researched and respected. The have managed to do these things by focusing on key elements of their business: valuing their employees, having an open door policy, and creating employee ownership.
Valuing Employees
Lincoln Electric values its employees. They value their opinions and look out for their best interests. Not a lot of companies can say that. Not a lot of companies can say that they have an advisory board made up of workers who meet with executives biweekly to discuss employee matters. Lincoln Electric can. Not a lot of
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Instead of laying off workers, they retrained them to work in different parts of the company, thus ensuring their loyalty to the company and keeping employee turnover low.
Lincoln Electric also pays their employees a very generous salary, which Spears (2012) pointed out was another key element in feeling valued at work. The company determined salary by comparing jobs to similar ones in the local area and Lincoln Electric’s surpassed its competition by nearly twice as much as other factory workers in the area. These reasons explain why Lincoln Electric’s employees feel valued at work and also why employee turnover is so low, which is a huge cost savings for the company. The cost of employees on payroll is significantly less than the cost of recruiting and initially training new employees (O’Connell & Kung, 2007). O’Connell & Kung (2007) break down the cost of employee turnover into three components: the company must spend the same amount of money recruiting and hiring a new employee as they did recruiting and hiring the previous employee; there is a period of time before the new employee is hired where the company loses money in productivity; the company invested time and money to get the original employee to 100 percent productivity which is a loss when the employee leaves. Lincoln Electric is

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