The Motley Fool has just released its first annual ranking of The 25 Best Public Companies in America.
“For the past several months, we have been compiling data and analyzing more than 1,700 public companies to discover the 25 best public companies in America, measured by their success in serving investors, customers, employees, and the world at large. We’re delighted to finally be able to share our findings.”
Lincoln Electric was ranked as # 8.
Have a read .. it’s a fascinating list.
Many of you may remember my blog on HuffingtonPost last April about a Massachusetts company that makes big profits by targeting the hiring of older workers – as in much older! – because of their superior track records on loyalty, output and dependability. I had just read Caitrin Lynch’s book Retirement on the Line: Age, Work and Value in an American Factory.,
Paul Solman at PBS-TV’s Nightly News ran a wonderful piece last night about this story … INVESTMENT IN OLDER WORKERS TURNS A BIG PROFIT ….. , with fascinating interviews with workers (ages 94, 100 … ), the owner of the firm (emphasizing the consistent profits which the company makes – and then shares!) and Lynch, an anthropologist at the Olin School of Engineering. WATCH IT … it’s a great 10 minutes.
Once again, as with Lincoln Electric, the important point to consider is not whether this is just an exception, an oddity …. that’s just an easy excuse to avoid change.
The key point is to ponder why our economic system seems so reluctant to explore alternative work environments that fulfill the profit mandate while being so much more creative in respecting the needs of workers and society at large.
I shared the 2012 results with Paul Solman, who over the past 20 years has done two excellent programs on Lincoln Electric for PBS Television’s Nightly New Hour.
Paul looked back at his 2011 documentary and also posted my comments about Lincoln, Marvin Windows and the New York Times: “Yes to Profit Making, No to Layoffs for 64 Years In A Row.“
TheMotleyFool.com (popular US investing website) asked me to write a piece on Lincoln Electric’s 2012 bonus and no-layoff stats – with attitude! Writing just before Christmas, I tapped into my inner-Scrooge: “A Shocking and Shameful Lack of Imagination.” – delivered with attitude, as ordered.
Meanwhile, the New York Times ran a piece on Dec. 21st titled: “No-Layoff Company Now Writes Profit Sharing Checks.”
I chuckled when I read the story about Marvin Windows (an excellent company, good employer, no question), revealing what the Times considers to be “impressive performance.” Have a look at a graphical comparison.
| MARVIN WINDOWS | LINCOLN ELECTRIC | |
| US Employees | 2,573 | 2,900 |
| Sales 2012 (apprx.) | $ 1 Billion | $ 3 Billion |
| Total Profit Shared | $ 800 Thousand | $ 99.3 Million |
| Average Employee Bonus | $ 311 | $ 33,915 |
| Years Bonus Paid | 1 of last 4 years | 79 uninterrupted |
| No Lay-off Record | 1960’s | Since 1948 (possibly 1925) |
Happy New Year
Frank
It may be a globalized world, but far too often, we don’t tap into the fountains of knowledge bubbling up far from our own shores.
It was a pleasure this week to come across the work of Diane Coyle, a British economist and consultant who has for some time been writing and speaking about the need for a rethink in the world of business education. ( Listen to an interview with her on voxeu.com ) Diane has written a number of books in recent years about changing the conventional paradigms of economics which place an unrestrained pursuit of profit above all else. Have a look at some of her books and her vast experience in economics.
It’s a concern I share and wrote about in SPARK, particularly concerning the general indifference – and at times outright condescension – towards Lincoln Electric’s no-layoff policy that one finds all too often in MBA programs in North America.
I shared with Diane some comments about Lincoln’s recently-released 2012 bonus numbers (more about that in a post I’ll put up in a day or so) and the fact that Lincoln Electric’s CEO John Stropki has yet to hear from anyone at his level of the American business community asking “how do you do that?”
Diane posted her comments on that sad situation on her blog here.
A Harvard PhD, Diane is also a Trustee of the BBC and a former economics editor of The Independent.
Originally Posted on The Huffington Post
Paid Work – Long Past 65 – Can Benefit Everyone
Thoughts on a wonderful new book, Retirement on the Line, by Caitrin Lynch, an anthropologist who spent 5 years exploring a small – and very profitable – manufacturing company in Boston which hires most of its workers when they’re over 65. Some of those working on the production lines are in their 80s and 90s. It’s a fascinating read which asks some very tough questions about the relationship between work, aging and social values. This is an issue which we avoid at our peril.
A new and fascinating look at exactly how a business’s interior culture can drive corporate success has just been published by Gerald Klein, a management professor at Rider University in Organizational Dynamics, one of the leading academic journals on management.
Creating Cultures That Lead to Success: Lincoln Electric, Southwest Airlines, and SAS Institute goes inside these three firms – all consistently-profitable leaders in their sectors of the economy over the long-term – to compare how their relationships with employees serve to maximize the benefits for their customers, shareholders and the workers themselves.
Prof. Klein and I spoke a few months ago about various issues I had written about in SPARK. I find the overall similarities between the three firm’s commitment to maintaining a long-term focus to be powerful evidence that the pursuit of profit simply does not have to be built on the backs of employees who are forced to share all the downside risks.
His analysis also, once again, provides convincing evidence that Lincoln Electric is not an outlier in the economy for its embrace of a no-layoff promise – because Southwest and SAS have had similar policies in play for many years. This is all about good leadership, not black magic.
Have a read.
For The 63rd Straight Year (At Least), This Remarkable Company Says “No” to Layoffs
from The Motley Fool and AOL Daily Finance (13/12/2011), written by Brian Richards:
Yesterday, Jefferies (NYSE: JEF ) announced that it is cutting 11% of its workforce amid fears that it cannot exist as an independent investment bank, Fox Business reported.
Jefferies’ management is doing a painful yet prudent thing here — in the face of uncertainty it is slashing expenses. But in an era of near-9% unemployment, it’s worth noting that there’s another way…beyond the layoff lever.
The Lincoln model
In June, I highlighted Cleveland-based Lincoln Electric (Nasdaq: LECO ) , an industrial equipment manufacturing company. Lincoln designs and develops arc-welding products and systems and remains the world’s technological leader in its industrial sector.
You can read the full story of Lincoln, but the short story is this: The company hasn’t laid anyone off for lack of work since at least the 1940s, and it offers employees generous pay and an open-door management policy. It’s not idyllic, but the Lincoln culture of trust really does work.
Frank Koller is an expert on the company, having profiled it in his excellent book Spark: How Old-Fashioned Values Drive a Twenty-First Century Corporation (which I’d recommend). Last week, Lincoln Electric had its annual bonus distribution ceremony in the cafeteria of its Cleveland headquarters.
Koller told me via email that:
And perhaps most impressively, no worker who met the firm’s performance standards was laid off for lack of work in 2011 — meaning Lincoln’s no-layoff policy has been intact since at least 1948.
The next time you find yourself nodding your head about the necessity of layoffs, think about Lincoln Electric: a rule-breaking company that’s managed to retain its workers and stay profitable over the very long run.
ORIGINALLY POSTED ON HUFFINGTONPOST.COM
We all know that layoffs are terribly costly, both financially and spiritually, to workers who lose their jobs, their families and their communities.
But how much do layoffs cost the companies who let workers go and then, when the economy improves, hire replacements? (Sad but true, things are so bad now that many firms aren’t rehiring.)
Most employers simply can’t answer that question with anything near the precision they bring to other important decisions. “They just don’t have a systemic way to assess what is the net present value of the decision whether or not to lay people off,” Peter Cappelli from the Wharton School at the University of Pennsylvania told me a couple of years ago. Too often, layoffs are an act of desperation, not rigorous analysis.
Here’s help — an interesting new web-based calculator which allows an employer to plug in a few readily-available numbers and estimate what it can cost to lay off a worker and then replace her down the road.
The Employee Turnover Calculator is an easy-to-use online tool from the Center for Economic and Policy Research (CEPR) and the Center for Law and Social Policy (CLASP) in Washington.
Using some reasonable numbers — you can plug in different figures of your own — the calculator suggests that letting go and then replacing someone who makes $25,000 a year can cost a company $2,746 once the expenses of recruiting, hiring and training a new employee are factored in.
Admittedly, that’s an absolute minimum; a very conservative estimate.
The $2,746 does not include the cost of any severance pay, processing termination paperwork or shifting someone else into the now-vacant position until a new employee is hired.
And it does not include the cost to an employer of a smart worker being shown the door, who then takes her valuable hard-earned intellectual capital with her to a competitor down the street or across the country.
Factor those elements in and the cost of that layoff will be significantly higher.
Here’s something else employers should think about: the emotional trauma of layoffs on those who survive a cut is often so painful that more workers decide to leave voluntarily before the axe falls on them.
Research suggests that in some workplaces, for every worker formally laid off, up to five more quit within the next year.
That means a layoff can actually leave your company understaffed, forcing you to quickly start hiring — and the cost of that could easily wipe out any expected savings from the initial decision to let workers go.
For too many CEOs, pulling the layoff lever seems so straightforward, but as this new calculator helps make clear, too often, it’s exactly the wrong thing to do.
ORIGINALLY POSTED ON HUFFINGTONPOST.COM
In a better world, words and facts would be the only things that matter in a serious discussion about the future of the country.
Sadly, in this world, the facts are that the current crop of Republican presidential candidates (backed by their senior advisors and supporters) is so dramatically distorting the meaning of two words in the English language that the future is in serious jeopardy.
Ponzi Scheme happily rolls off the tongues of Rick Perry, former Minnesota Governor Tim Pawlenty, Rush Limbaugh, University of Maryland economist Peter Morici and many others.
(I guess I should bang my head against a wall for deluding myself that they really don’t know what a Ponzi Scheme is. Of course they do.)
But let’s refresh. Here is the standard definition of this phrase in the English language.
Ponzi Scheme: “a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.” (For you keeners, here’s the SEC definition.)
The crucial word here is “fraud.” So just to be clear, let’s review what fraud means.
Fraud: “A wrongful or criminal deception intended to result in financial or personal gain.”
Now, let’s take this a little further, sticking with facts.
The Social Security Act was approved by the Congress of the United States and then signed into law by President Roosevelt on August 14, 1935. It has never been overturned by the US Supreme Court in the 76 years since then.
Who — exactly — over the past three-quarters of a century has criminally benefited from Social Security?
Social Security’s serious challenges — and there are many — derive from huge changes in the demographic makeup of the country, startling shifts in the ratio of workers to recipients, dramatic differences in the structure of the country’s economy since the 1930s, questions of appropriate contribution rates and debates over rising administration costs, among other factors.
Crime, however, ain’t one of the problems facing the system.
The real “deception” here is the craven mislabeling of Social Security as a Ponzi Scheme by so many Republicans. Their blatant distortions about Social Security are clearly — and only! — designed to result in “personal gain” for themselves during this election cycle.
Gee, doesn’t that sound like fraud?