Organization and Lincoln Electric free essay sample

Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. Researcher are interested in doing research on the company becauseresearcher wanted to learn more about control system especially managementcompensation, both theoretical and practical. Lincoln Electric Company one of companies has realize the method of control system especially managementcompensation in their company. In the Lincoln Electric Company, researcher get knowledge of control systemespecially management compensation, particularly its association with corporate profits. However, in its application is often the application of compensation hasexperienced various problems and constraints. So also happened in the LincolnElectric Company. Every company absolutely has a strategy to sustainable them company. The top priority of Lincoln is customer. Company always sensitive with consumer needs. Certainly, the firm’s customer wants to get the best price and the best quality. And, product of Lincoln fulfill it. Lincoln also concerns employee and stockholders needs. Management compensation always was determined by a wage survey of similar jobsin Cleveland area where the company do operational process. Lincoln ElectricCompany is a good example for other company which is concern to customer,employee and stockholders. Not all company like Lincoln Electric Company. So, because of that, we choose Lincoln Electric’s Case. 1. 2 Motivation Researcher motivation to conduct research on issues of control systemespecially management compensation in the Lincoln Electric Company because 2 esearcher wanted to know deeper in management compensation and itsimplementation. By studying and researching issues that arise in the company,researcher will get a clearer picture about what action needs to be done when problems arise. 1. 3 Research Question The problems of this case are: 1. How would you characterize Lincoln Electric’s strategy? What is the nature of Lincoln’s business and upon wha t bases does this company compete? 2. What are the most important elements of Lincoln’s overall approach toorganization and control that help explain why this company is so successful? How well do Lincoln’s organization and control mechanisms fit the company’sstrategic requirements? 3. What is the corporate culture like at Lincoln Electric? What type of employeeswould be happy working at Lincoln Electric? 4. What is the applicability of Lincoln’s approach to organization and control toother companies? Why don’t more companies operate like Lincoln? 5. What could cause Lincoln’s strategy implementation approach to break down? What are the threats to Lincoln’s continued success? 6. Would you like to work in an environment like that at Lincoln Electric? 1. 4 The Aim/Objectivity The objectives of this case are: 1. To characterize Lincoln Electric’s strategy. To know the nature of Lincoln’s business and the bases does Lincoln competes. 2. To find the most important elements of Lincoln’s which is because that element,Lincoln can achieve success. And to know Lincoln’s organization and controlmechanism which is fit the company’s strategic requirements. 3. To know the corporate culture like at Lincoln Electric. To know type of employees would be happy working at Lincoln Electric. 3 4. To know the applicability of Lincoln’s approach to organization and control toother companies. To know the reason other companies doesn’t operate likeLincoln. 5. To know the causes of Lincoln’s strategy implementation approach to break down and also the treats from the causes of Lincoln’s strategy implementation. 6. To give our opinion about working at Lincoln Electric Company. The objective of literature, researcher want to explain the theoy about thehierarchical levels of strategy, corporate culture, the system approach to organization,and strategy implementation. 2. 1Hierarchical Levels of Strategy There are two distinct levels of strategy within an organization (Porter, 2000), Corporate Level Strategy : Corporate strategy refers to the overall strategy for adiversified company. It is concerned with the mix of businesses the company shouldcompete in, and the ways in which strategies of individual units should becoordinated and integrated. Business Unit Level Strategy : is concerned more withhow a business competes successfully in a particular market. It concerns strategicdecisions about choice of products, meeting needs of customers, gaining advantageover competitors. Nature of Business: According (Kell, 2000), the nature of business is best understood on the basisof its characteristics or features which are as follows: business is an economicactivity, it includes the activities of production or purchase and distribution, it deals ingoods and services, it implies regularity of transactions, it aims at earning profitsthrough the satisfaction of human wants, it involves risk; it is not certain thatadequate profit will be earned, it creates utilities, and it serves a social purpose byimproving people’s standard of living. The key is to set the right goals from first principle, if you’re only competingon best practice it will be very hard to stay ahead. 4. the ability to develop and deliver new ideas – to innovate. â€Å"Innovation is thesuccessful application of knowledge or techniques in new ways or for new purpose; it is also about creating a business to exploit new opportunities profitably, 2. 4 The Definition of Corporate Culture The term corporate culture is used frequently in business language. Everyorganization have different corporate culture. It can be seen from the activityoperation and to run the strategies. According to (Ojo, 2009), ‘Culture is one of themost precious things a company has, so they must work harder on it than anythingelse,’ says Herb. Various studies indicate that companies with strong cultures aremore likely to be successful, but only under a particular set of conditions. 2. 5 An Approach to organization and control According to (Gaiennie,2006) that are an approach to organization control :1. The content of and relationship between the positions in a firm (job structure)2. The make-up of relationship between the job incumbents (personal structure) 2. 6 Strategy Implementation To be the winner in the business competition, organization must be precise toimplement the strategy because strategy implementation is an important thing in theorganization to run the business. Strategy implementation is the process of allocatingresources to support the chosen strategies. This process includes the variousmanagement activities that are necessary to put strategy in motion, institute strategiccontrols that monitor progress, and ultimately achieve organizational goals (Cyert andCohen,2007). The implementation of organization strategy involves the application of themanagement process to obtain the desired results. Particularly, strategyimplementation includes designing the organizations structure, allocating resources,developing information and decision process, and managing human resources,including such areas as the reward system, approacches to leadership, and staffing. 6 2. 7 Disadvantages of an informal organizationThe following are the disadvantages informal organization (James,2008) : 1. Resistance to change: an informal organization is bound by customs,conventions and culture. 2. Role conflict and sub-optimization: in an informal organization, everyoneworks towards the same objectives. Members put their own grup objectivesahead of organization’s objectives. Hence, the organization suffers. 3. Rumour: an informal organization sometimes functions as a carrier of rumour. 4. Group think philosophy: workers become loyal to their groups. 2. 8 Disadvantages of Labor Unions The following are the disadvantages of labor unions ( Martin,2008) :There are also disadvantages to labor unions, both to the employees and theemployers. First, employees lose their individual voices. Employees give up their right to negotiate for themselves or to have their individual concerns and benefitsrecognized. There is no incentive for employees to work harder to gain promotions or pay increases. unions typically demand much higher pay rates, sometimes increasingat a rate higher than inflation. Reduced productivity, loss of ability to be competitiveand higher pay rates can lead to layoffs or even cause the company to go out of business. 7 CHAPTER IIICASE ANALYSIS3. 1 Background Case Lincoln Electric Company The Lincoln Electric Company was the world’s largest manufacturer which is produce arc-welding and a leading producer of industrial electric motors. John C. Lincoln is the founder of Lincoln Electric, which opened in 1895. In 1906 Johnincorporated his business and moved it from a fourth floor room in a factory he wasin, to a newly constructed three-story factory. He then expanded his work force andthe sales grew to over $50,000 a year. Over the next few years the product line wasexpanded to include battery chargers for electric cars, and in 1909 the first weldingset was produced. Then in 1911 the company introduced a variable voltage, singleoperator, portable welding machine, and the very first in the world. Now LincolnElectric employs around 4000 people not including the 200 or so in the sales force, inits U. S. factories and in factories and sub companies all over the world, includinglocations in France, Canada, China, Australia, Indonesia, South Africa, Brazil, Polandand others. Employees today enjoy pension plans, opportunities of promotion fromwithin, and continuous employment. Lincoln has around a 40 percent U. S. marketshare for its arc welding products. Worker Performance and Attitudes In Lincoln Electric Company, each worker do them job with focus and most workerstook no coffee breaks. The manufacturing procedures appeared to be efficient. That’smean no unnecessary steps, no wasted motions and no wasted materials. Organizational Structure Lincoln never allowed development of a formal organization chart. The objective wasto ensure maximum flexibility. An open-door policy was practiced throughout thecompany, and workers were encouraged to take problems to the persons most capableof resolving them. Hiring and Compensation 8 Every job opening was advertised internally on company bulletin boards, and anyemployee could apply that job. External hiring was permitted only for entry-level positions. Selection for these jobs was done on the basis of personal interviews andthere was no aptitude or psychological testing. In the other hand, all productionworkers and many other workers were paid by piece rate. The piece rate were never changed unless a substantive change in the way a job was done resulted from a sourceother than the worker doing the job. 3. 2Case Analyis1a. Characterize Lincoln Electric’s strategy. The level strategy of Lincoln Electric Company is corporate level strategy because Lincoln Electric Company do diversification. Corporate level strategy We can see the diversified from Lincoln Electric Company’s product. Products of Lincoln Electric Company: Arc-welding equipments, electric motors, plasma and oxy-fuel cutting equipment, robotic welding systems, welding power sources, wire feeding systems, fume extraction equipment, and consumable metalelectrodes and fluxes. Subsidiary: Products of The Harris Group Manufacturer of:welding consumables, gas apparatus, and other specialty products. Low Cost Oriented Lincoln Electric Company has other strategy that strategy is related with cost. Theother strategy is low cost oriented.