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Just when you think you’ve heard everything, along comes another surprise. Then again, you probably hadn’t heard of Grupo Semco in Brazil.
I never was a big fan of self-organizing systems and chaos theory when it comes to running a business. Not that I could ever be accused of being a faithful follower of Machiavelli. It’s just that even those of us who fancy ourselves a bit over the edge when it comes to employee involvement can find ourselves feeling uncomfortable when we discover someone who has taken things a step farther than we ever dreamed. Grupo Semco is one of these companies.
Some have told me my thoughts about employees choosing their bosses and organizations being run by a team of leaders qualify for the radical label. Well, for you dyed-in-the-wool autocrats, hold onto your seats.
Semco is a Sao Paulo business run by Ricardo Semler, a bright Harvard MBA (at age 20) who took the reins when his father transferred ownership and management to his son. Ricardo’s story is not about a miraculous transformation that occurred overnight. Rather, his success is the result of a whole lot of mistakes in fifteen years of hard work to get to what some have labeled an entrepreneurial democracy. Ultimately, he created an organization that takes seriously the notion that all people want to succeed and merely need the means and space to do so.
At Semco, employees can organize themselves any way they wish. Most operate in self-directed work groups responsible for setting budget and production goals. Workers can work where they wish as long as there is an opening, they qualify, and they are accepted by the team.
Salaries tied to results, and profit sharing, keep employees focused on organization objectives. Employees can set their own salaries, but if they set them too high they hurt the team who will likely vote them out of the company. It helps that everyone’s salary, including those of senior management, are posted for all to see. Interestingly, employees have decided that the highest paid executive cannot receive more than ten times the salary of the lowest paid employee.
Like salary information, manager evaluations completed by employees are posted publicly. Manager’s who score less than the minimum on evaluations can be booted out by the team.
Employees at Semco are trained in any area of the business they wish and all are given substantial education in reading and understanding company financial reports. Company performance results are shared openly in true open book style. Top leader meetings are open to any employee who wants to attend and those who do are given an equal vote in decisions.
Policy manuals, as well as vision, values and mission statements, are essentially non-existent. Semler feels that more than policies employees need to understand the fundamental principles by which the organization operates. He believes vision and values statements are too static and that core employees will ultimately determine the consciousness of the business.
Of course, we wouldn’t be discussing Semco if it wasn’t a highly successful business. Despite all of the difficulties doing business in a country with major economic disruptions and challenges, Grupo Semco has seen its productivity and profits skyrocket. Entrepreneurial employees creating satellite businesses have added a variety of new and successful products that keep the business growing by leaps and bounds.
When he started out, Ricardo Semler’s goal was to create an organization of creative and motivated employees by giving the workforce the capability and responsibility for deciding what the organization needed to do to succeed. He made changes based on his belief that people would do their best if they were taught and provided the necessary tools.
It appears that he was right.
Trying it on for fit: Take a look at the principles Ricardo Semler applied in his organization. They are the same ones that show up in other high performance businesses. Consider how you might apply them in your position, department, or organization as a whole:
Free flow of information - No secrets, open sharing of data and knowledge
Democratic process and decision making - Employees involved in all decision levels
Total cross-training - Continuous and broad learning and skill development
Self-management and direction - Accountable groups determine their strategy, direction, and results
True equality of status - All employees treated as equals
Open book management - Company financials and performance data displayed and understood
Open meetings - Any employee welcomed and invited to participate
Send an e-mail and let me know what you learn from your experiences. I would love to hear from you!
For information on purchasing reprints of this article, contact sales. Copyright 2013 CyberTech, Inc.
You left one thing out of this very interesting discussion: When Mr Semlar was recruiting people, he tried to make very sure that he recruited ladies and gentlemen who fit into the scheme you reviewed. That by itself excludes the majority of the human race. For instance, remembering some of my experiences in the US Army, I doubt whether I could have become one of Mr Semlers colleagues, and if by some miracle I did I wouldn't have lasted long.
And I wouldn't have been the only employee that security would have escorted down to the main lobby. This business of managers (and perhaps even foot soldiers) being 'evaluated' by the 'team' was featured in Enron's SOP if I remember correctly, and I also remember being told that sooner or later it was a procedure you didn't want to have any part of.
J.Fredrik Bok 9.19.06
Brazil the country that is (was) called by the locals the best of the universe, “Melhor do Universo” your article fit perfectly in this context. I wonder however how much of this greatness is linked to the local culture? As I recall my engineering time in Rio de Janeiro in the mid seventies already then, creativity was a local strength but for many foreigners a loose cannon. Your article just confirmed to me that over the years the Brazilians were able to control their emotional strength as part of their creativity.
Kevin Herring 9.19.06
Actually, Mr. Semler began, as most do, with an existing workforce, in this case hired by his autocratic father. Many of us suggest that if we had the best employees we would be the best managers. I suppose this is as true as the statement that if we had the best customers we could be the best suppliers. The responsibility for making things work is not with everyone else, but with us.
Change in organizations is not easy, nor does it occur overnight. However, managers that lead instead of manage and enable contribution and commitment instead of enforce accountability, will find that core workers will respond in enough mass to create a workplace of meaning and purpose.
It was once thought that such organizations were better suited to Asian cultures due to the success of Japan, Inc. Our example occured in Brazil. Most of our work transforming organizations occurs in the U.S. suggesting to us that the culture of workplace meaning and purpose is universal.
The problem with the Enron's of the world is that they are not founded on mutually agreed-upon principles of trust, transparency and authenticity. Absent that, much of what line workers experience is merely manipulation and window dressing, not genuine commitment-enabling behavior. Unfortunately, most management teams are preoccupied with the notion that the problem is with everyone else who they must manipulate into behaving in a particular manner instead of confronting their own inabilities as leaders.
