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Homework Assignment

Lincoln Electric’s Incentive Management System

First, watch the Lincoln Electric (LE) video at the following website: https:// www.youtube.com/watch?v=WZRV9Xp9rsI

· Please note: it is an old video (about 25 years ago), but it still accurately discusses their Incentive Management System and depicts their organizational culture; what has changed is (a) there is a different CEO and President of the company; and (b) the company does now contribute to an employee health insurance plan (in the video, they will mention that at that time, the company did not provide any health insurance benefits and that is no longer true).

See also the last few slides of Week 11 Lecture Slides for more information about Lincoln Electric.

Then, answer the following three questions about Lincoln Electric. You can answer the questions directly below in the space provided, then save your work and upload the file into Canvas for Week 11 Homework Assignment.

1. Based on the LE video and textbook, what do you see as advantages and disadvantages to a piece-rate system (or standard hourly plan)? From the video, you should draw some of your own conclusions about advantages and disadvantages of their piece-rate system that goes beyond the textbook.

Answer:

2. In what ways is LE’s profit-sharing program aligned with expectancy theory? That is, explain how LE designed their profit-sharing program to provide expectancy, instrumentality, and valence. Expectancy theory is explained in the Chapter 11 Lecture Slides (see also my Chapter 4 lecture video).

Answer:

3. Of the “common problems of incentive plans” (see week 11 slides), which does Lincoln Electric seem to experience and which has it avoided? Justify your answer.

Answer: