Spark

How old-fashioned values drive a twenty-first century corporation: Lessons from Lincoln Electric’s unique guaranteed employment program

by Frank Koller

AN ECONOMIC NEWS VETERAN TAKES A COMPREHENSIVE, TIMELY LOOK AT LINCOLN ELECTRIC, A SUCCESSFUL INTERNATIONAL COMPANY THAT PROMISED THAT IT WILL NEVER LAY OFF EMPLOYEES, REGARDLESS OF THE ECONOMIC CLIMATE

The best-selling Harvard Business School case study of all time is not about Coca-Cola or Microsoft, but the Cleveland-based arc welding manufacturer Lincoln Electric. The company has survived two World Wars, a Great Depression, globalization, the decline of industrial America and the recent credit crash—and yielded impressive profits throughout. While factories in the Midwest are shuttering their doors, Lincoln Electric remains a rare success story.

Lincoln Electric operates on a solid foundation of old-fashioned values: loyalty, trust, flexibility, and a fair reward for a job well done. At Lincoln, any of the 3,000 employees can approach the CEO with a problem—or an idea. There are no designated parking spots; everyone enters and exits through the same front doors and eats in the same drab cafeteria. Any employee with over three years of tenure, and who meets the firm’s performance benchmarks, is part of Lincoln’s “Guaranteed Continuous Employment” policy, a promise that the company will do anything—and everything—it can to avoid layoffs for economic reasons.

The effect of this program on both the employee’s well-being and the company’s bottom line are remarkable. Veteran workers stick around, preserving generations of knowledge and know-how. New workers, attracted by the company’s reputation and its merit-based compensation system, bring fresh ideas and energy. Spared the unnecessary costs of cyclically hiring in the good times and firing whenever the economy stumbles, Lincoln Electric draws strength from its most valuable resource: its employees. And the employees know that as long as they work hard for Lincoln Electric, their employer will work hard for them.

In this insightful and spirited investigation, journalist Frank Koller digs deep into Lincoln Electric’s inner workings—revealing surprising lessons about what happens when managers view their employees as resources rather than costs.

PRAISE FOR SPARK

“In a time of recession, massive layoffs, and Wall Street bailouts, Spark tells the remarkable story of the better side of American capitalism: Lincoln Electric, the billion-dollar manufacturer that succeeds by treating its employees the right way. This book should be required reading for everyone who wants to make the economy work for us all, from the president and his economic advisors to business leaders and employees everywhere.”  — RICHARD B. FREEMAN, Professor of Economics at Harvard University and author of America Works and What Workers Want

“A timely book, well-researched and well-written. Business, labor, and government leaders would do well to read Spark as they search for more equitable and sustainable principles for rebuilding trust in management, and getting compensation once again growing in tandem with productivity and profits.”  — THOMAS A. KOCHAN, George M. Bunker Professor of Management and co-director, MIT Institute for Work and Employment Research

“Frank Koller has done a remarkable job of presenting both an economic and a moral argument for the value to society of the unusual policies followed with great success by Lincoln Electric for over a hundred years. The book is excellent in both the historical overview and the numerous interviews with current and past employees. There is much that modern management can learn about the benefits to employees, customers, shareholders, and communities by examining the role of the ‘old fashioned’ culture of Lincoln Electric.”  — NORMAN A. BERG, Professor Emeritus, Harvard Business School

“A fascinating glimpse into this remarkable yet, in many ways, ordinary organization, which survives, even thrives, in a sunset industry where overseas outsourcing is the norm... Instructive and heartening, this book offers a proven model for companies that not only want healthy bottom lines but also satisfied, dedicated employees.”  — PUBLISHERS WEEKLY

“Not only an engrossing look at a different corporate model… but also a useful public policy book”  — THE GLOBE AND MAIL

“A fascinating depiction of a rare human resource practice in a company with a long and hearty track record… food for thought for the rest of us.”  — HARVARD BUSINESS REVIEW

Read an excerpt

70,000 words hardcover

RIGHTS SOLD

World rights: Public Affairs, Feb 2010

ABOUT FRANK KOLLER

(Photo: Couvrette/Ottawa)

Frank Koller covers the workplace for the Canadian Broadcasting Corporation. Over a twenty-seven-year career with CBC, he has worked and lived around the world as a foreign correspondent, including seven years in the United States. He holds a master’s degree in engineering from the Massachusetts Institute of Technology. He lives in Ottawa.