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Lincoln Electric Holdings in takes the recognition and compensation idea about as far as it can go. Sales and earnings were sharply lower in the first quarter than in the previous year, and things looked grim for the second quarter as well. At most companies, that would be a recipe for job cuts.
Not here. The Cleveland-based maker of arc welding and cutting products has a no-layoff policy. And it has stuck to that policy in part because it holds to another unusual policy: no base salary for its 1,700 USA production workers.The 62-year-old nonunion company, with $1 billion in sales and $ 78 million in income last year, has paid its manufacturing employees solely on the basis of how much each person produces, plus a profit-sharing bonus.
In good times employees are required to work overtime (within reason: and in 62 years Lincoln learned what that means), which saves having to hire. In bad times, instead of laying people off, the company cuts out overtime and if necessary shortens the regular workweek as well.
During the boom times, the long hours predictably generate negative feelings from employees. But in a difficult economy the employees see other employers laying off people, and they understand that they have a job and will continue to have one.