Spark

by Frank Koller

While factories across the Midwest shutter their doors, Cleveland-based manufacturer Lincoln Electric has thrived for more than a century. In addition to being profitable and technologically innovative, through good times and bad, the company has fulfilled its unique promise of “guaranteed continuous employment.” Workers are viewed as assets-not liabilities. Through flexible hours and job assignments, as well as a merit-based bonus system, Lincoln Electric’s employment policies have proven healthy for the company’s bottom line its employees and its shareholders.In Spark, veteran journalist Frank Koller tells the story of how this unusual and profitable Fortune 1000 multinational company challenges the conventional wisdom shaping modern management’s view of the workplace. Through insightful storytelling and extensive interviews with executives, workers, and leading business thinkers, Koller uses the Lincoln Electric example to illustrate how job security can inspire powerful growth and prosperity in our communities.

Genres: Nonfiction, Business

276 pages, Kindle Edition

First published January 26, 2010

Reviews

[Bobby Johansen · Rating 3 out of 5]

Little repetitive. Would have been nice as an article, but I couldn't keep going after about half of the book. Work a quick skim if you're interested in unique businesses, but I wouldn't plan on reading the whole thing.

[Dan · Rating 5 out of 5]

Crucial reading for any current or aspiring CEO who takes seriously their responsibility to treat employees as the "most valuable resource" that they espouse, not just disposable assets during tough times.

[Paul, · Rating 2 out of 5]

Spark is a business case study based on Lincoln Electric, an industrial welding firm that has been around for more than a hundred years. The interesting feature of Lincoln Electric is its incredible commitment to worker empowerment. The story is, roughly, as follows: At the turn of the century, the rise of organized labor was finally starting to get what it wanted from businesses. The brothers who founded Lincoln Electric were both confessing Christians who believed that employees deserved a fair shot and that unions placed employers and employees in an adversarial relationship that was detrimental to both parties. So they began taking steps to ensure the good will of their employees. Most notably, the instituted a generous profit sharing policy (32% of profits go to the workers) and a no-layoff policy. They combined these two social policies with strict requirement for performance and incentives to work hard and well (the oft-maligned piece work system). These strategies have been very successful for Lincoln Electric and it is the opinion of the author that the world would do well to emulate them.

Unfortunately, the author contradicts himself quite regularly. For instance, Lincoln Electric's policy of guaranteed employment is unknown, yet it is part of the best-selling case study produced by the Harvard Business School and has been studied by every student passing through those halls in the last 25 years.

I think that Koller has done a great job of showing the advantages of retaining employees for a long time, like a knowledge base, experience, perspective, and a feeling of community. He also does a great job of advocating for trust in the workplace (which can't be had if your employees think you'll fire them at the drop of a hat) and a flat management style. In my view, he correctly critiques Wall Street's emphasis on short-term quarterly earnings at the expense of the long-term. I personally appreciate the emphasis on hard work and community. I also appreciate his willingness to talk about alternatives to mass layoffs. Some of those ideas (sabbatical year, switching positions within the firm, voluntary retirement) seem pretty good.

On the other hand, I find it hard to agree with many of his views. The idea of a company guaranteeing employment, and working at the same shop our parents and grandparents do, so that employees can feel safe is blatantly paternalistic. I'm not at all convinced that this method would work in many industries. How can you be competitive in a global market paying a factory worker $80,000/year + bonus? What happens when those jobs are roboticized? What happens if everybody does that ... do we just stop forming new companies? How does it work globally given the difference in purchasing power?

Everyone is looking for a safety net right now. It used to be the family, then families broke up. It was the church for a long time, but the church is mired in a physical/spiritual individualistic dichotomy. It has been the government, and is again. Koller just wants to add corporations to the mix. Why not add the stores we buy from next ... don't they owe us something for all of our years of faithful consuming? In the end, how many organizations do we need to take care of us?

[Mano · Rating 5 out of 5]

A thoughtful and nuanced treatment of one of America's oldest and most inspiring companies. Koller does justice to a company that stands in stark contrast to the know-nothing layoff culture rife in corporate America more interested in personal outcomes and appeasing analysts than providing real leadership and thinking independently of the herd. To his credit, Koller manages to praise Lincoln without being uncritical.

Founded in 1895, Lincoln Electric is the world's largest manufacturer of welding machines and has not laid off a single worker since 1948. This is neither coincidence nor altruism; Lincoln's guarantee of lifelong employment is woven deeply into a culture that rewards employees before absentee shareholders. Lincoln asks much of its employees, including strict productivity targets and overtime on demand, but also rewards them handsomely. Almost a third of its profits is disbursed to employees, and for some employees the bonus exceeds their salary.

In the average public company in America, the CEO earns 344 times the average worker; in Lincoln, that ratio is a mere 65 times. And when times are tough, senior management has been known to cut its own salary between 20 and 45 percent. James Lincoln, the company's co-founder, has been called both a pure capitalist and a near communist.

It is no surprise that Lincoln Electric has been the subject of Harvard Business School's best-selling case. Companies such as Lincoln (Electrotherm and Xilinx are mentioned in the book) are few and far in between, but provide an alternative model for rebuilding the American economy and the American middle class after the financial excesses of the nineties and noughties. It is past time to move past the infantile, adversarial tone that plagues labour-management relations in America and realise a better future for all involved.

[bookreader]

A post-recession jeremiad exploring the mechanics of Lincoln Electric's legendary no-layoffs policy while wistfully musing whether guaranteed employment programs could be rolled out more broadly throughout corporate America. Flawed by the author's utter neglect of the "Kurzarbeit" programs that stabilized the German labor market in the aftermath of the Global Financial Crisis.

[David · Rating 3 out of 5]

An intriguing study of a profitable manufacturing company in Cleveland that has had a no-lay off policy since 1958 and its resulting impact on maintaining a multi-generational community fabric. Worth a read as a business study and a bit of unexplored sociological territory.

[Bryan · Rating 4 out of 5]

Interesting look at a unique business philosophy. It made me question why such practices aren't more widespread.

[Raisaroo · Rating 3 out of 5]

Interesting look into alternatives ways to treat and compensate unions.

[Brad · Rating 4 out of 5]

Great history of Cleveland-based welding manufacturer Lincoln Electric and its unique management practices that include guaranteed employment and annual bonuses.