Human resource is one of the major departments in any given company. Its major role is to manage the human capital in order to facilitate effective and timely production for the company and to meet the ever-changing market demands. In efforts for companies to get the best human-resource model to adopt, many models have been developed but a few have been used successfully. Among the many models that have been in use, Lincoln Electric Company is one company that used one of the models and the results of this company’s application of the model is a subject of discussion in this paper. The discussion is carried out in the form of answering a set of questions as follows.
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Give an Overview of the Key elements of the case
The incentive system based on piece rates “flatten the hierarchical structure and eliminate middle management positions” (Borton, 2011, p. 1). This worked out well by creating an open office where the executives and the workers in the production unit could interact freely and using the executive board that had representatives from the production unit, the needs of the employees could be aired, and solutions sought after before situations got out of hand. This also improved production as ideas were shared on how the best production processes to be adopted.
Maximizing output and reducing cost of production was brought in through annual bonuses. The employees could work hard by utilizing so little resources in order to increase production with the aim of getting a good package of bonus out of the numerous profits made at the end of the year. This created a sense of ownership from the senior most members of staff to the least since the more the company would make the more each individual could take home at the end of the year. This also created competition within workers as the best was getting rewarded for output, quality, dependability and cooperation.
To increase productivity per worker, the company allowed innovation and creativity in the company. This fostered team work and competition where employees had to think about how well they could improve production and do it in time thus bringing out the best quality possible.
Explain why Lincoln Electric is successful in the United States and what role its HRM practices have in this success
The success of the company was majorly before James. F. Lincoln, the vision bearer, died. He embraced the original vision “to continuously improve product quality while continuously reducing unit costs of production and distribution and passing the cost savings on to the customer” (ANBHF, 2011, p. 1). Workers are motivated by the many rewards they get until they own up the company. The encouragement to innovation, making use of the available great brains in production and the bonus policy is one of the aspects that have increased productivity hence bringing so much profit to the company.
The open office management plan and the efforts to have meetings with the representative members of staff has greatly contributed to the sense of job security which in turn contribute to low turnover hence retaining of expertise within the company for a long time. The freedom to alternate working hours from long hours when production is high to short hours when production is low makes it flexible to all employees, including the executives. The employees’ involvement in company policy and goal setting has caused them to work longer hours, since there is ownership of the company and hence collective responsibility for the production.
The HRM practices have played a very great role in getting the company to that level because if it was not for the motivation that came from them, Lincoln Electric workers could not be any different from the employees in other companies. The image of the company could not have got to where it is and the need to participate developed in every employee that has yielded so much could not have been practiced.
Describe the potential problems associated with introducing Lincoln Electric’s HRM practices, including its reward system, into its China operations
To avoid shortfalls in efforts to expand to other parts other than the U. S., proper survey needs to be done especially on the working culture of the people in the newly cited localities. In Germany, the company failed because the Germany people could not work for longer hours for the sake of the annual bonus, they valued holidays more than making more money. The Lincoln Electric plan is well implementable in the context in which it was introduced.
In a China, for the plan to work, major careful analysis and planning have to be put in place. The bonus plan which is based on trust, and loyalty may not work in China since the Chinese workers do not trust people in power (Modesto, 2011). Chances are they may reject the model out of not being sure their hard work will be rewarded, as promised.
In China, the working culture promotes compliance where the worker is to get commands and respond to them. Lincoln Electric system may face challenges because no employee is allowed to voice out what they feel is not working for them without the risk of losing their jobs. The nature of the Asian culture is that of a group and community based, this reduces the chances of an individual laboring for long to raise money for the community. In contrast to China where a lot is spent on food, which needs a regular income, Americans need a bonus to make good salaries to be able to invest and also develop their household for a better life. The Chinese believe in fate and that anything can happen anytime. They base their fate based on the religious beliefs that they have no control over their lives, which can end any time (Modesto, 2011).
Decide whether or not Lincoln Electric should introduce its U.S. HRM practices in China. Include the reasoning behind your decision
I recommend that U.S. HRM practices be introduced in China. However, major adjustments have to be done on the bonuses plan. Due to their need for food which causes them to need a more regular income, bonus should be paid more frequently without fail in order to motivate trust. This will raise trust in the management system from the Chinese employees making it easy for them to believe that they will still get their pay and reward for their hard work. In the implementation of the practices, my recommendation is that the firm should introduce employees with whom the Chinese would identify with.
These workers will thus act as role models for the Chinese employees, and thus they will help to jump-start the bonus project. This will also work in establishing the corporate culture of ownership as more and regular meetings are held to discuss the progress of the company. To encourage innovation and the growth of the plants in China, employees should be rewarded on a regular basis and for an employee who does not meet the demand a small token of appreciation for service should be given in order to foster competition.
ANBHF. (2011). Lincoln Electric Company. ANBHF. Web.
Borton, B. (2011). A Case Study of Lincoln Electric. Ezine Articles. Web.
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Modesto. (2011). Lincoln Electric Case Study 84. Overview of Key Elements of the Case of Lincoln Electric. Man From Modesto. Web.