Friday, December 17, 2010

JAMES F. LINCOLN

"The Christian ethic should control our acts. If it did control our acts, the savings in the cost of distribution would be tremendous…Competition, then, would be in improving the quality of products and increasing efficiency in producing and distributing them; not in deception, as is now too customary."
James F. Lincoln


Between 1914 and 1965 James F. Lincoln authored an outstanding story of business ethics, productivity growth and industry leadership at the Lincoln Electric Company. 


Some of the things that he pioneered and what makes him important to Leadership and Management:

  • Created piecework pay and a employee advisory board in 1914
  • Established group life insurance polices for employees in 1915.
  • Implemented paid vacation in 1923.
  • Developed employee stock ownership plan in 1925.


James was born in Painesville, Ohio in May of 1883. His father was a congregational minister and was the one credited with convincing James that Christian ethics had a place in business.


At the age of 20 he entered Ohio State University to study Electrical Engineering. He played football for Ohio State and was the team's captain his senior year. It is said that his football experiences instilled in him the view that it takes the entire team to get the job done. That view was to show up prominently in his later approach to management. He studied there until 1907 when he was forced to drop out in his senior year due to contracting Typhoid fever. He would later be awarded a degree in 1926.


These years of study in Electrical Engineering would prove valuable to his work in his older brothers company at the Lincoln Electrical Company. 


Once he recovered from his illness he went to work full time for his brother as the company's only salesman. In 1914 James older brother John promoted him to be the General Manager of the company. His decision was based on the fact that he felt his brothers temperament and ethics where more suited to running a large company. 


It was here that James developed his Management Philosophy of continuously improve product quality while continuously  reducing unit costs of production and distribution therefore passing the cost of savings on to the customer. James felt that encouraging employees to give their best efforts would be the best way to achieve this. After much thought, he decided the best way to implement this was to combine the following best practices:
  1. Job Security
  2. Open communication
  3. Mutual respect
  4. Sense of ownership
  5. Pay based on performance
Knowing that the shareholders would be concerned with this thought process he went on to explain that if the employees and customers where happy, then over the long run the shareholders best interest would be served. 


Finally, James decided the other way to best make a profit was to specialize in a narrow product and service niche and outperform the competition. His brother John's development of the first electric welding machine in 1911 served to catapult this into reality.


Part 2












Information for this post was referenced from http://www.anbhf.org/laureates/lincoln.html


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