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The spark when workers come first

‘Job security" is such a quaint expression. America's 21st century workplaces operate more like sweepstakes. You win Instagram's dream, landing in the money before the training wheels are off your company's idea. Or you live Katniss Everdeen's nightmare in The Hunger Games, trying to stay alive while those around you are slowly picked off. A few win big, more get downsized and everyone's scared.

This isn't good for the American psyche. A work environment where a relatively few people do astoundingly well while everyone else worries that their economic lifeline can be pulled away at the next downturn is not a solid foundation for long-term, broadly shared prosperity or human fulfillment. We can do better than that, by returning to some old-fashioned corporate values and norms.

I cringe when mass layoffs announcements are accompanied by CEO claims that their people are their most important asset. Clearly, they're not. But there is still one company in America that says it and means it. The Ohio-based Lincoln Electric Co. — a place where executives understand that being loyal to workers redounds to the bottom line.

Lincoln Electric is a publicly traded global company and the world's leading manufacturer of electric welding machinery — much of it produced at factories in the United States. This alone makes it special, but what makes Lincoln Electric oh-so-rare is that its U.S. workforce of about 3,000 employees enjoy guaranteed employment. Lincoln Electric promises that its permanent American employees who pass a three-year probation will not face layoffs due to a lack of work.

This corporate story is so remarkable it inspired a book: Spark. How Old-Fashioned Values Drive a Twenty-First-Century Corporation: Lessons from Lincoln Electric's Unique Guaranteed Employment Program. Author Frank Koller, an economics journalist, describes how Lincoln Electric seems to break every rule of modern corporate management and yet remains desirable to Wall Street investors in a fiercely competitive global marketplace. In 2008, the company that makes welding machinery — the very type of Rust Belt industry that trade experts say America can't do competitively anymore — had one of its best years in its 113-year history as gross sales topped $2.5 billion worldwide.

The firm was founded by innovator John Lincoln in 1895 and managed by his brother James, who, Koller writes, had immense respect for average people who worked hard. James Lincoln sought to allay what he saw as every worker's greatest fear, that "when business was slack, he was tossed out on the street, often with no more thought for his future than was given to any other worthless scrap." James' philosophy was to save for economic crises and don't sacrifice your employees.

In 1958, the company's board formally adopted the promise of guaranteed employment. And so far, it's held. During inevitable recessions and slowdowns, the company will cut workers' hours up to eight a week and retrain employees for different jobs. But it won't resort to layoffs.

Lincoln Electric's factory workers are paid piecemeal along with large annual bonuses for production quality, dependability and other factors. This merit-rated bonus motivates employees toward something other than speed, even as piece-rate pushes the other way.

Bonuses average 77 percent of base pay, according to Koller, with the company setting aside 32 percent of its profits to share with employees. In 2008, an assembly line worker earning $50,000 in base wages would have received an average bonus of nearly $30,500, for a total pay of $80,500. Company spokesman Roy Morrow says the company has paid workers a bonus every year since 1934.

The story is astounding: Nonunion industrial workers making good wages without having to worry their jobs will be shipped overseas to fatten top executive bonuses and investor dividends in the short term. These are managers who view worker job security as good for business.

There's not much appetite for this Lincoln Electric model, even if it demonstrates that productivity soars, turnover plummets and a sense of teamwork pervades. Corporate executives want the freedom to treat people as just another expense, easily expendable. They like America's version of The Hunger Games and the sweepstakes quality of work. Their advice to average people trying for a semblance of financial security: "May the odds be ever in your favor."

The spark when workers come first 04/14/12 [Last modified: Thursday, April 19, 2012 10:43pm]

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