Loyalty is par for the course at the 106-year-old Cleveland-based Lincoln Electric. John Stropki started as an intern on the factory floor. After college he worked his way up to company president. But from the executive suite on down, something else is at work for the welding equipment maker -- a decades-long and almost unheard of promise -- guaranteed employment for life.
According to Stropki, "We have not had a layoff in this company since the early '50s. We can't even track back when, but we know at least we've not had one since 1950." It's a guarantee renewed annually for any employee who's worked three years or more. But that job for life also comes with a twist. Employees can be moved whenever and wherever the company may need them.
Dale Williams, a twenty-nine-year company veteran recalls, "There were several times I got sent to an assembly line, once for a couple of weeks. I got sent to our tool room for about a month, and I was running a machine in the tool room." Adjusting to job change was hard for him at first, but he discovered the upside of security when he was injured and Lincoln Electric found him a place in the human resources department. Still, moving up or down a few rungs means that your paycheck moves with you.
Now a salaried foreman, Bob Knapik has had upwards of 20 jobs in twenty-three years. A slowdown in 1982 meant a change in classification, and big drop in paycheck. "I got put on an hourly job -- it was thirty to forty percent less than I was making in the shop -- and it was a real difficult time to get through." Still, when times are good, there are plenty of opportunities to cash in at Lincoln. Factory floor workers get paid for what they produce. The more they manufacture, the bigger the paycheck.
There is, however, another financial motivation at work. Dating back to the Depression, employees have shared company profits in the form of an annual bonus. As Stropki explains, "It came into practice in 1934. The employees had gone to Mr. Lincoln and said that they needed a raise. During that time, the industrial economy was not very prosperous, and his approach was to sit down with the workers and say, 'Look, there are ways that we could grow efficiencies within the companies.' He would be willing to share part of that efficiency gain with the workers."
And from Knapik's perspective on the floor, it seems like a pretty good deal: "We're going to get paid for what we produce and the bonus is a direct influence in the earnings we make. I think it's the bonus that keeps me here." An employee's bonus is also partly based on a tough rating system. Lincoln has paid bonuses every year for the last 66 years -- even during the recession of '92, when it had to borrow money to do so. Last year, Lincoln electric paid out 58.5 million dollars in bonuses -- an average of 18,000 dollars per worker -- adding up to roughly 46 percent of the employees' total wages.
Year-end bonuses and lifetime employment, however, come with tradeoffs. Health benefits are paid by the employee, not the company. For production and hourly workers, there are no paid sick days or company holidays, and overtime is mandatory. Williams explains that this can affect life outside of work: "I've received criticism all my married life from my wife of 27 years. 'Well I know you're going to go to work anyway. I don't think you should go, I think you should stay home.' And I go anyway. Part of that is, I've probably been Lincolnized."
Stropki feels that being "Lincolnized" has paid off for everyone involved. "The employees feel comfortable in the risk that we're taking and the advantages that they gain from it. So it's a win for everyone all the way around. Our shareholders win, our customers win, and our employees win." So far, so good. The stock price has more than doubled in the past year, and earnings per share are up an average 11 percent annually since 1994. But for the past couple of years, sales have tapered off, as have profits in the past few quarters. It's a slowdown that, according to Stropki, everyone at Lincoln takes in stride, "for those people who accept the challenge and help the company succeed, they share in the rewards."
Regardless of Lincoln's ups and downs, job security is constant, especially, as Knapik says, when compared to other companies. "My father worked at a factory right next door to here and I remember him going on strike constantly. He was picking up part-time jobs. I've never had to do that in my career at Lincoln Electric, and I think that means a lot."