Action Control at the Lincoln Electric Company
Content
Action Control at The Lincoln Electric Company
built quality product at lower cost by focusing on reducing cost:
1. during slack periods, manufacture to build up inventory
2. develop new machines and methods of manufacturing (plans should be waiting on the
shelf)
3. reduce prices by getting lower costs
4. explore markets passed over when times are good
5. hours of work can be reduced if the workers is agreeable
6. develop new products
sold the stock to the employee and associates
the promotion system acoording to employee's contribution to the company
there was compensation system :
1. wages based solely on piecework output for most factory jobs (no base salary)
2. a yearend bonus which could equal or exceed an individual's full annual regular pay
3. guaranted employment for all workers
employee could challenge the price of piecework if they felt it was unfair
each job in the company was rated according to skill, required effort, responsibility, etc
and a base wage rate for the job was assigned
the employee were not paid for defective work until it had been repaired on their own
time
wage were adjusted annually on the basis of department of labor statistics and quarterly
to reflect changes in the cost of living
there were merit rating system (from 45 to 160) to calculate the individual share of bonus.
if there were employee who has rating above 100, he could be rewarded from a special
corporate pool of bonus points. to determine employee's merit rating, four factors were
evaluated separately:
1. dependability (assistant foremen)
2. quality (the inspection department)
3. output (the production control department)
4. ideas and cooperation (the methods departement)
the rating and pay system completed with a guaranteed continuous employment plan (for
2 years-full time employee was guaranteed employment for at least 75% of the standard
40-hours week)
the board meet twice a month, providing a forum in which employee could bring issue of
concern to top management attention, question company policies, and make suggestion
for their improvement. (Advisory Board)
$1000 reward for information leading to the arrest and conviction of person stealing from
the lincoln electric parking lot
the boss arrange the design of the office rooms to encourage the employee. example :
most of departments were large open rooms with closely spaced desks (to smoothing the
flow of communication and paperwork)
the policy of promoting is from within company
all changes in the status of employee, even at the lowest levels, had to be approved by
Willis. if the salaried employees wefe involved, Irrgang also had to give his approval.
have an innovative plant layout (crowded with materials and equipment but few
workers):
1. raw materials entered one side, and finished goods came out the other side
2. there was no central stockroom for materials or WIP
3. many of the operations in the plant were automated
4. the company had modified machines built by others to run two or three times faster
than original
built quality product at lower cost by focusing on reducing cost:
1. during slack periods, manufacture to build up inventory
2. develop new machines and methods of manufacturing (plans should be waiting on the
shelf)
3. reduce prices by getting lower costs
4. explore markets passed over when times are good
5. hours of work can be reduced if the workers is agreeable
6. develop new products
sold the stock to the employee and associates
the promotion system acoording to employee's contribution to the company
there was compensation system :
1. wages based solely on piecework output for most factory jobs (no base salary)
2. a yearend bonus which could equal or exceed an individual's full annual regular pay
3. guaranted employment for all workers
employee could challenge the price of piecework if they felt it was unfair
each job in the company was rated according to skill, required effort, responsibility, etc
and a base wage rate for the job was assigned
the employee were not paid for defective work until it had been repaired on their own
time
wage were adjusted annually on the basis of department of labor statistics and quarterly
to reflect changes in the cost of living
there were merit rating system (from 45 to 160) to calculate the individual share of bonus.
if there were employee who has rating above 100, he could be rewarded from a special
corporate pool of bonus points. to determine employee's merit rating, four factors were
evaluated separately:
1. dependability (assistant foremen)
2. quality (the inspection department)
3. output (the production control department)
4. ideas and cooperation (the methods departement)
the rating and pay system completed with a guaranteed continuous employment plan (for
2 years-full time employee was guaranteed employment for at least 75% of the standard
40-hours week)
the board meet twice a month, providing a forum in which employee could bring issue of
concern to top management attention, question company policies, and make suggestion
for their improvement. (Advisory Board)
$1000 reward for information leading to the arrest and conviction of person stealing from
the lincoln electric parking lot
the boss arrange the design of the office rooms to encourage the employee. example :
most of departments were large open rooms with closely spaced desks (to smoothing the
flow of communication and paperwork)
the policy of promoting is from within company
all changes in the status of employee, even at the lowest levels, had to be approved by
Willis. if the salaried employees wefe involved, Irrgang also had to give his approval.
have an innovative plant layout (crowded with materials and equipment but few
workers):
1. raw materials entered one side, and finished goods came out the other side
2. there was no central stockroom for materials or WIP
3. many of the operations in the plant were automated
4. the company had modified machines built by others to run two or three times faster
than original
