Challenges in Global HRM at Lincoln Electric

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