Challenges in Global HRM at Lincoln Electric

This report discusses the challenges faced by Lincoln Electric in global HRM, including talent acquisition, management structure, and international performance management. It provides recommendations for addressing these issues and highlights the importance of strategic planning and goal setting.

Executive Summary:
More than 100 years of successful operation in the US market and with several off-shore
establishments Lincoln electric is a well known brand serving their customers into stick, semi-
automated and fully automated arc wielding product. In their 100 year of journey they have also
seen the down of the market, but the strong culture of their company, their relentless efforts to
redesign their product to serve the market and the acknowledgement of their failure in judging
overseas market allowed them to bounce back with the better team and precise execution of their
strategy.
It’s already two decade that they have entered the Chinese market and has been successful from
the first year, but the in the recent years new challenges has emerged in the form of
organizational structure, talent acquisition and adopting international performance management,
the details of which would be discussed in the report. It’s important that the organization revisit
these issues with the recommendation that I have provided as a consultant.
Lincoln Electric already has the experience, knowledge and resources to implement these
recommendations at its earliest, so that any fallout from this recommendation can be countered
with the counter strategies.

Introduction:
Internationalization of the business in the foreign market is a tricky affair and requires
assessment of the environment and various other challenges that can be the factor for the
decision making of the manager. The study and research of the other players in the international
market and the fast changing dynamics of the competition gives an in-depth knowledge and
reason for the decision making of a manager. The case study of Lincoln Electric exemplifies
certain issues that affect the international human resource practices. Doing business in China has
its own challenges and this report would try to assess those unique challenges to be dealt with as
a part of the strategy. The report here would try to assess the issue of sourcing and selecting
talent, the type of management structure that are required for operating in china, and the factors
related to the adjustment of expatriate in the new cultural settings, their job responsibilities, the
package associated with the given role and the host environmental factors. The problem solving
approach will be part of this report that would address the issue in question.
History of Lincoln Group and where it currently stands:
More than 100 years of service in arc wielding equipment in US is now a formidable player in
the international stage as of now. It was the year of 1914 that James Lincoln took over the
leadership and came up with the vision and philosophy to govern the Lincoln group. It is in this
context that he coined the idea of piece rate in the Lincoln group that would become a part of
Lincoln group style of governance. He also bought many other changes but the idea of piece rate
and bonuses formed the basis of success for the Lincoln group in Cleveland. This worked well
for the company until they realized that this would not work in every set up as has been the case
in Germany, where the firm has to end its operation given the unionization and legal issues

connected to the piece rate work. It was Anthony Massaro who took the operational charge of the
company and restructured the process that enabled the company to become profitable again.
Mossaro under its leadership was responsible for several international presence of Lincoln group
and in this sequence he believed that Asian presence of Lincoln is necessary for the future and
sustainability of the company.It was the vision of Mossaro that resulted in the entry of Lincoln
into China (Shanghai) through the investment in 68% of the stake by Lincoln electric and four
8% of the stake by distributors of Lincoln in Asia. It was the appointment of Julius Wu in 1997,
a manager and key player who helped Lincoln electric to establish itself in China. He had a
considerable experience in this field and ensured that right person who understands the working
of Lincoln electric be the part of the team. His understanding of the Chinese culture and
Weilding business, his commitment and the ability to speak English made him perfect fit for the
organization so much so that the company made profit in the first year of its operation. The
company as of now is trying to implement the piece rate and bonus scheme in the china
operation plant but is in a confused state whether they should implement this competitive scheme
in China. How the employees react to this new scheme? What would be the government response
to this scheme? If decided when they should implement given the organization is in learning
stage and requires more time to adopt this scheme? It is in the course of these assessment that I
find that the assessment of the three major issues that needs to be addressed on the priority basis.

Three global HR issues/problem/ Challenges:
First global issue:
Sourcing human resources for the global market-staffing, recruiting and selection:
Finding right fit for the global market is one of the greatest challenges that Lincoln group may
find. The success and the failure of any organization depend on the ability, capacity, skills and
commitment of the employees towards the organization. Building the right team is key to the
success. In the global context the key issues are the sourcing of the best fit for the organization
and building the high performance team requires the organization to assess several aspects that
relates to sourcing. The question that may arise in the context of sourcing will be where to source
the right talent or best fit for the organization in the light of global market? What skills,
qualification, exposure (experience), technical knowhow, languages are required for the off-
shore projects or jobs? What is the understanding of the potential candidate as in regard to the
cultural aspects of the organization? Decision as to source the local candidate to perform the job
or is it necessary to bring expatriate on the job so that the HO can have control on the operation
of the organization. What will be the mode of selection i.e. weather the interview will be
conducted; written test will be added along with the interview or by selecting through on the job
performance?
It is the assessment of these issues that allows the manager HR to frame the HR policy that aligns
with the overall goals and objective of the organization. The other key assessment requires the
PESTAL analysis of the nation where the new operation would take place. It is in the given
context that we can relate the issue with the Lincoln Electric (Shanghai) where Mr. Julius Wu
had to struggle initially to find the right candidate for the job. For instance, the operator that were

chosen initially left after few days of training and it was then only that he decided to give time to
the sourcing issue and bought candidates who is not only trained beforehand but does have the
understanding of Lincoln electric and its culture. It is for this purpose he personally took the
interview of all the employees, watch them on the floor weather the employees have gained the
operational understanding. It was in the words of Julius Wu that he doesn’t want the employees
leave after joining. He meant that its always better to be patient and select then to select and then
regret. The cultural understanding of both organizations as in regard to place where it is working
example If a company has operational plant in China then the company as well as the candidate
both should have the understanding of each other to make the better fit.
Solution:
The Planning goes a long way in answering to many of the issues. A better strategic plan as to
various option that an organization would avail in dealing with the problem faced by the
organization in regard to the sourcing issues are the method through which talent would be
sourced. For example, Career section in the website of a company can be used for the open
position through which various candidate can apply for the open position, some of the job
requires highly skilled talent and in order to source such talent requires access to the services of
the job-portal like indeed.com, monsters jobs.com where there is huge pool of global talent that
can actually match the requirement of your job. Linked could be used as a platform that can
allow you to fill senior professional through networking. Similarly for the apprentice jobs the
company can make tie-ups with the placement cells of the company so as to hire fresh blood into
the organization. The issues of judging the skills and talent of the candidate, their attitude etc. all
can be done through interviewing the candidates on various attributes i.e. Adaptability, their past
experiences and performances, achievements, confidence and energy level. They can also be

judged on the interpersonal skills, communication skills etc. as per the requirement of the job.
Some jobs requires the candidate to be judged technically and in that scenario the candidate
should be judged on the basis of recommendation given by the department head weather he can
be better fit for the job or not. After the selection of a candidate, the probationary period can be
part of the contract which can further allow the HR of the company to better judge the candidate
if he fits into the organization culture. Different methods can be adopted to the challenges of the
sourcing so as to find the right mix of talent that are fundamental to the success of an
organization.
Global HR Issue 2:
The issue of management structure required for international growth, types of control and co-
ordination mechanism including cultural control:
The issue in the Lincoln Electric is in the form of the kind of management structures that can
address the need for better communication in a well defined hierarchy so as to build a unified
message for the company. If the organization does not have an efficient organizational structure
it can lead to the internal conflict and loss of productivity. The other issues has affected the
Lincoln organization is the polarization between the management and the productivity staff as is
evident from the issue that cropped up in Germany plant where there has been conflict between
labor union and the company management (Jane, 2019). This shows the issue of the management
structure that failed in the effective communication in delivering the issues that cropped up in
Germany and has resulted in the issues to escalate. Since, Lincoln Electric is expanding its
businesses all over the world what degree of control would be required so as to ensure the trust
and commitment of the employee remains intact? The control is the process of checks and

balances that the organization adopts so that the organization is in right path to achieve its
objective. In case of MNC like Lincoln electric needs to control the subsidiary so that overall
organizational objective are met.
Recommendation:
Subsidiaries can be controlled at the three levels. Strategic, organizational and
operational .corporate strategy, organizational structure and control system work in an integrated
framework. John electric approach to the globalization should be ethnocentric, polycentric or
geocentric which will decide the need for coordination amongst the smaller units and in turn the
amount of control or customization required in the product and its operation The small Business
Unit structure and the product division structure helps in decentralized decision making. Apart
from that, international division and the functional structure helps in centralized decision making
and in turn control of the product and process.
Global issue 3:
The other major issues that the globalization throws as a challenge is in the form of international
performance management- factors that affect the expatriate, environmental factors and cultural
adjustment:
International assignments are part of the Lincoln electric. The globalization effect of 21 century
has drawn the focus on the post assignment performance related issues. Performance
management can be understood as the process that enables the global enterprises to continuously
evaluate and facilitate improvement in of individuals, expatriate, subsidiary unit and the
corporate performance against the clearly defined goals and long term and short term target. The
focus in this report is the assessment of the expatriate performance. In the global context there

are several steps to assess the performance of the expatriate these includes connecting it to the
organizational strategy, setting of long term and short term goals, variables that may have an
effect on the performance, appraisal of performance, feedback generation, providing opportunity
to improve and linking result with incentives. The purpose of the performance management is
not only to enhance performance of the employees but also to find the employees with high
potential. All these inputs require the Lincoln electric to develop strategy in light of the given
context.
Recommendation:
Setting clearly defined goals: It is important for the international company to have a clearly
defined goals and objective that can be linked to the individual or team performance. The goals
defined must be measurable, specific, realistic and timely. The clearly defined goal allows the
employees to be focused on exactly what needs to be done and how it is to be achieved which
results in improving or peaking their performance. The study has a finding that individual with
the challenging target consistently perform those who have easy or unspecified target. In the
meanwhile the quantitative goals are easily measurable and the linkage of timeliness and
measurability enhance performance of an individual. Performance of the expatriate is decided by
the various variables such as condition apart from the job intrinsic and job extrinsic factors.
Living in a home country and working for the company is a different as compared to the working
in an alien land and culture. It is essential for the expatriate to live comfortably and adjust to the
host culture, language, diplomacy, attitude and emotional stability. This forms the basis of
linking compensatory benefit weather the employee is a local or a expatriate. This is followed by
the appraisal of performance. Then comes the feedback about the work behavior and its outcome.
The feedback process allows the employee to know the area where they need to improve and

finally the expatriate performance management relates to establishing linkage between
performance and compensation (Sarkar, 2018).
Most pertinent issues of global HRM in Lincoln Electric: (Conclusion)
The most pertinent issues of the global HRM as in regard to Lincoln Electric is acquiring talent
for the organization. Employees are the foundation stone of the success of the company.
Acquiring talent in the different country with the different cultural settings can be a serious
challenging task. It is not only about recruiting people to do the job but the purpose of
recruitment is always to find the right talent whom the company can nurture, groom and develop
them as an assets who remains their not only for the short term realization of the goal but also be
the part of the long term vision of the organization. It is in this context that the organization
stresses on the retention of the employees. The organization with very high attrition rate is
destined to be doomed. It is in this regard that the recruitment process has a set of standard
procedure that judges every aspect of the employees skills, talent, communication ability etc. We
should remember that it was the talent of the Lincoln himself, Mossaro, Gillespie, Julius Liu that
made transformational changes in the Lincoln Electric that lead the organization to be the leader
in what they are doing, without having such talent and the support of all the other staff it was
impossible for the Lincoln Electric to be a key player in manufacturing wielding equipment.

Recommendation:
 Framing of the HR policies that align with the corporate goals and clear schedule as to
when and how it will be achieved, compliance to the health and safety regulation, non-
discrimination at work places i.e. the legal aspects of the recruitment.
 Selection of expatriate on the basis of his cross cultural understanding, different language
ability, and ability to adapt and adjust should be the key factor in selecting the expatriate
staff.
 Sourcing by using various medium eg. Job portal, consultant etc.
 Short listing candidate with resume match.
 Preparing Job-analysis, job-description and the skill set requirement to match the actual
skills displayed by the candidate during their technical test or at the time of interview.
 Types of test: Written, technical, Oral interview etc.
 Final selection of the candidate after having a match of the required skills with that of the
acquired skills of the candidate.
 Induction program
 Probationary period (6 month-1 year)
Time-Table: The whole recruitment process will be completed by the 3rd quarter of 2019.
Possible Fallout:
 Rising competition from the other player in the similar industry and the competitive
package that they are providing may result in the higher attrition rate for the organization
this in turn may lessen the morale of the other employees.

 Sourcing candidate for the R&D department of Lincoln Electric can be a big challenge
and limited head count in this department can be a big challenge in finding the source for
the competent skills.
Counter Strategy:
 Regular industry survey of the compensation package in the other industry would give an
idea of the completive package that needs to be structured for Lincoln electric.
 Tie-ups with the University having Phd. Courses, and for intern graduates who will be
groomed as the plan for succession in the R& D department.

References:
Sarkar, P. (2018). Step in expatriate performance management (n.d.). Retrieved May 20, 2019,
from https://www.tuturself.com/posts/view?menuId=162&postId=1255
Jane, T.(2019). Organizational structure and communication (n.d.). Retrieved May 20, 2019,
from https://smallbusiness.chron.com/organizational-structure-communication-3815.html
Recruitment process (n.d.). Retrieved May 20, 2019, from https://www.toppr.com/guides/business-
management-and-entrpreneurship/human-resource-management/recruitment-process/
Selection process for expatriates (n.d.). Retrieved May 20, 2019, from
https://www.ukessays.com/dissertation/examples/employment/selection.php
Seven steps to fool proof recruitment process (n.d.). Retrieved May 20, 2019, from
https://www.reedglobal.com/blog/2017/06/7-steps-to-a-foolproof-recruitment-process
Performance management cycle (n.d.). Retrieved May 20, 2019 from
https://www.opm.gov/policy-data-oversight/performance-management/performance-
management-cycle/developing/understanding-performance-management-process-and-practices/