Introduction to the organization
The organization chosen for the analysis is Lincoln Electric situated in Cleveland situated in the city of OHIO. It is listed among fortune 1000 companies. They are the leading supplier of arc welding machines and equipment’s (Lincoln Electric, 2017). There attractive incentive pay system and reward practices have been widely recognized and are studied in various business schools such as Harvard. Though they are famous for implementing effective HR policies and practices to improve employee’s motivation and their performance, but still there are some existing HR issues that are needed to be solved and managed in order to increase the productivity of the employees and organizational growth (Hastings, 1999).
Problems existing in the organization
No Fixed Basic Pay: At Lincoln Electric the employees working in the factories do not have a fixed pay. They are paid for the work done by them. It is known as piece work system. In order to work more and earn more, they often forget to take lunch breaks and do lunch simultaneously while working.
No paid sick days: Lincoln Electric has no policy regarding providing paid sick days. Employees avoid taking any leaves as they will not be paid for them and their wages will get affected. Though it is considered to be an effective method to increase the output of the organization but it also affects the productivity of the workers.
No unions: Lincoln Electric do not have any worker unions. Though the workers do not complain about not having a union at the workplace but still it is often recommended due to many reasons which will be discussed below.
Performance appraisal: Performance appraisal in the forms of rewards and incentive given on the basis of a competitive grading system is another issue in the organization. The aim of the grading system should be to acknowledge the performance of best individual working in the factory and to motivate the other individuals to reach the position of the best performer but the grading system creates an unhealthy competition between individuals working (Youtube, 2017).
Workplace stress: There are many factors that has led to increase in the workplace stress among employees. Factors such as economic recession and reduced work pay have caused a matter of concern for many employees and has directly impacted the performance and productivity of the employees (Youtube, 2017)
Analysis of the problems
The first problem that has been mentioned is no fixed basic wages. They are paid strictly on the basis of the piece per rate which means the income keeps on fluctuating and the scenario is very bad when there are price cuts which will directly be reflected into the employee’s wages. Though the company follow a no layoffs policy still in the competitive world, retaining the employees without a fixed basis basic pay is very tough. Another problem that has been identifier at Lincoln Electric is that they do not provide any paid sick days. As discussed above employees are reluctant to take any leaves because it directly affects their wage structure. It can lead to a situation where the employees have to choose between their job and health.
If the employees choose their job, they are neglecting their health which may create many safety obligation in the future and if individual choose their health, they will lose their wages. There are no labor unions also. The factory workers were seen interacting with the then CEO Don Hastings still the presence of a union leader is a must when it comes to listening and communicating the problems to the management. A union is also responsible in helping the management to take decisions which will serve in the best interest of the society.
At Lincoln Electric the performance appraisal in the form of yearly bonus depends on the total profits earned by the firm and grades which are given twice yearly as compared to the other factory system. Low grades automatically results into low bonus amount and this creates a situation of unhealthy competition as everyone think that they deserve better grades than others. Lastly the employees can be seen as stress because the economic growth of the country is low and in order to keep up with foreign competition, Lincoln Electric have lowered down the piece rate of the workers.
It was clearly evident that at Lincoln Electric, workers are paid on the basis of the piece or output produced by them. During times of economic recession in order to support their family a fixed pay is very important. The company should think of providing them fixed fair wages long with an incentive structure purely based on the performance of the individuals. This will not only help the organization to retain its workers but also gives them workplace satisfaction along with increased productivity.
The paid sick leaves is the right of every individual who are working in the organization. This enables them to balance their work life along with their personal life. If their employer provides them with the paid sick leaves they feel valued and satisfied in their organization which directly affects their productivity and output capacity. Along with this the company should focus on program such as workplace wellness programs in which the physical and mental health of the individual is monitored on the regular basis. Company should also organize offsite employee activities such as outdoor visits and group activity can help the employees to stay motivated (Rogers, 2016).
A leader should be appointed among the factory workers with their mutual consent can be very effective as the other factory workers will be able to connect with the leader and communicate all their issues and queries to them. It will also help to create a relationship of trust and loyalty between the management and the workers. For the performance appraisals the individuals should be judged on the basis of their own productivity and efficiency in producing the output rather than comparing them with the other fellow workers. Grades should be given unbiasedly on individuals performance so that there can be a healthy competition to improve the performance to be qualified for the yearly bonus and rewards (Brown & Reily, 2009).
Rogers, K., 2016, How important is paid sick leave? Listen to Obama, Available from https://www.cnbc.com/2016/01/13/how-important-is-paid-sick-leave-listen-to-obama.html Accessed: 15 May 2017.
Lincoln Electric, 2017, Company History, Available from https://www.lincolnelectric.com/en-us/company/Pages/company-history.aspx Accessed: 15 May 2017.
Hastings, D.F., 1999, Lincoln Electric’s Harsh Lessons from International Expansion, Available from https://hbr.org/1999/05/lincoln-electrics-harsh-lessons-from-international-expansion, Accessed: 15 May 2017.
Brown, D. & Reily, P., 2009, Measuring the effectiveness of pay and reward practices How do we achieve more evidence-based reward management? Available from https://www.employment-studies.co.uk/system/files/resources/files/mp84.pdf Accessed: 15 May 2017
Youtube, 2017, Lincoln Case - Part One, [Online Video], 5 August 2007, Available from: https://www.youtube.com/watch?v=EftYWQOs_cU&feature=youtu.be, Accessed: 15 May 2017
Youtube, 2017, Lincoln Case - Part two, [Online Video], 5 August 2007, Available from: https://www.youtube.com/watch?v=H8gioKjrFwk&feature=youtu.be, Accessed: 15 May 2017.