From the Preface

HOW IS IT THAT what most Americans would call an old-fashioned business in an old-fashioned industry, based in the wounded heartland of the economically beleaguered Midwest, has been able to survive two world wars, the Depression, and other economic crises, expand internationally, and consistently succeed at avoiding the kind of mass layoffs that devastate communities and local economies?

It’s not as if Lincoln Electric operates in secret. In fact, a case study written in 1975 for MBA students at Harvard Business School remains to this day the best-selling case study in Harvard’s history. The case is widely taught, year after year, in almost every business administration school in the United States and in countless others around the world. Yet very few people in the business world have ever heard of Lincoln Electric. More troubling, the very existence of a profitable company that is able to keep a longstanding promise to its employees to guarantee steady work is widely dismissed as, at best, an admirable but probably irrelevant one-of-a-kind oddity.

This recession, and especially Wall Street’s role in creating it, has produced a widespread cynicism about corporate America’s motives that sours almost every public discussion about possible economic recovery strategies. At the same time, deep down, most people in the United States—whether in their roles as citizens, as workers, as managers, as owners of businesses—surely want to believe that the first response of a profitable business when economic troubles loom should not be, and need not be, to start laying off its employees.

The day before the 2008 bonus was announced, I asked John Stropki, Lincoln Electric’s current CEO and a thirty-six-year veteran of the company, why his firm had stuck for so long with a promise to place the interests of its employees on par with those of its customers and its shareholders. “I don’t think of this as a social responsibility,” Stropki answered as we sat in his office overlooking the vast parking lot at the Cleveland factory. “I think my philosophy and that of my predecessors is that we can perform in an economically challenging environment, and we can spread that pain in a way that long term will better represent our shareholders’ interests without crucifying our employee base, and we think it is good business, not bad business, to do that.”

Corporate executives say this kind of thing all the time, of course. What’s different is that for nearly a century, through thick and thin, Stropki, his predecessors, and the company’s employees have been able to sustain their unusual and beneficial relationship. The company’s perennially robust profit margins (driven by consistently innovative technology), the dramatically heightened job security and quality of life enjoyed by its employees, and the benefits that accrue to the local Cleveland economy should give the rest of the American business world pause.

Is Lincoln Electric an anomaly, as its critics contend? An anachronism that has somehow survived from a bygone era? Or are there lessons to be learned from this company’s unique management system—lessons that can help American industry get back on course?