Lincoln

Case 41 The capital of Nebraska galvanising Company, 1996* It was February 29,1996. The Lincoln voltaic Company, a leading producer of arc welding products, had just cele- brated its centennial year by reporting record 1995 sales of oer $1 billion, record profits of $61.5 million, and record employee bonuses of $66 million. This performance followed 2 years of losses-the only losses in the companys long history-stemming from a seemingly dis- astrous foray into Europe, Asia, and Latin America. (Exhibits I and 2 arrange operating results and ratios for recent years.) Headquartered in the Cleveland suburb of Euclid, Ohio, Lincoln Electric was widely known for its Incentive worry System. According to the New York Times, thousands of managers visited Lincolns headquarters each year for free seminars on the system, which guaranteed lifetime employment, paying its production people only for each piece produced, and remunerative profit-sharing bonuses which had averaged 90 percent of annual wages or salary for the 60 years from 1934 to 1994.1 James Lincoln, the main architect of the Incentive Management System, had been dead 30 years by 1995, but he remained a dominant influence on the companys policies and culture. Record sales and profits, however, were not of them- selves cause for complacence.

Lincoln Electric had gone public during 1995 in order to reduce the substantial debts it had run up during its two losing years; now the company was subject to public scrutiny and much(prenominal) publications as the New York Times and Business Week questioned whether the renowned Incentive Management System was consistent with the firms obligations to its public stockholders. Divi- dends for 1995 amounted to $9.1 million, opus bonuses had totalled $66 million. Even at $66 million, however, bonuses equalled only 56 percent of employees annual pay. Some workers complained loudly that the average $21,000 payment in declination was far short of what it should have been.... If you want to get a full essay, order it on our website: Orderessay

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