The miracle of profit-sharing: Year 65 and still no layoffs
When Canadian journalist and friend of Making Sense Frank Koller published his book “Spark”, about the profit-sharing model pioneered at Cleveland’s Lincoln Electric, it encouraged Making Sense to return to the manufacturer after first reporting on them back in 1992. You can watch our update from 2011 above. (And here is a response to those who thought we were too easy on Lincoln.) Two years later, Koller now updates us on yet another profitable year for Lincoln.
Frank Koller: The annual profit-sharing bonus ceremony was held Friday in Lincoln Electric’s Cleveland cafeteria, which Making Sen$e has covered extensively over the years on the NewsHour and on the Business Desk. Here are the latest numbers for the Ohio-based multinational welding manufacturer, now 118 years old. 80: uninterrupted years of paying an employee bonus (i.e. profitable every year since 1934)
$33,029: average 2013 bonus per U.S. employee (roughly 3,000 employees)
$81,366: average 2013 total earnings per U.S. employee (wages or salary + bonus)
$100.7 million: total pre-tax profit shared with employees, Lincoln’s largest bonus pool ever
0: number of layoffs in 2013 (that makes 65 years without any layoffs)
#1: Lincoln Electric remains number one in the global marketplace in its industry. (As “LECO” on the Nasdaq exchange, its stock is currently at an all-time high.)
These figures once again provide convincing and reassuring evidence that with an unwavering commitment to respecting employees by offering the opportunity to significantly share in the profits of the firm, while demanding their very best, it is possible to run a very profitable, very large, technologically superior multinational business based in North America while also honoring a firm’s obligations to its customers, investors and society at large. Business need not be a zero-sum game, a delusion embraced by far too many, especially in the past few years.
Lincoln Electric has roughly 3,000 employees in the U.S., 264 in Canada and 7,500 more around the world. The firm remains in 2013, as it has since the 1930s, the dominant player in the global electric welding industry and yet, it refuses to lay off its employees in tough times.
The Guaranteed Continuous Employment Policy remains unbroken since at least 1948. That’s 65 years! (The no-layoff track record may in fact go as far back as 1925, but the records before 1948 are less reliable than those since.) No one was laid off for lack of work through the Great Depression, wars and now the Great Recession.
This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions