When I took over Semco from my father twelve years ago [writes Richard Semler, CEO of a Brazilian large industrial equipment company], it was a traditional company in every respect, with a pyramidal structure and a rule for every contingency.
One of my first acts was to throw out the rules. We whittled the bureaucracy from twelve layers of management to three and devised a new structure based on fluid concentric circles to replace the traditional rigidly hierarchical corporate pyramid.
[Although in many societies] almost everyone believes people have a right to vote for those who lead them, democracy has yet to penetrate the workplace. [But at Semco,] before people are hired or promoted to leadership positions, they are interviewed and approved by all who will be working for them. And every six months managers are evaluated by those who work under them. The results are posted for all to see. This employee review builds on one of Semco's great strengths, our transparency. At our company people can always say what's on their minds, even to their bosses - even when it's about their bosses. It is instilled in our corporate culture that everyone should be willing to listen, and admit it when they are wrong.
Our people are free to speak their minds, without fear. Two or three times a year we distribute a questionnaire called "What Does the Company Think?" The results are published for all to see. We have people who agree with very little of what we think and are still here, unapologetic and unfettered. A touch of civil disobedience is necessary to alert the organization that all is not right. We do our best to let [such people] speak their minds even though they often become thorns in our sides.
We don't believe in cluttering the payroll with ungratifying, dead-end jobs. Everyone at Semco, even top managers, fetches guests, stands over photocopiers, sends faxes, types letters, and dials the phone. We don't have executive dining rooms, and parking is strictly first-come, first-served.
And we encourage everyone to mix with everyone else, regardless of job. The idea is that we all can learn from one another.
Profit sharing is democratic. We negotiated with our workers over the basic percentage to be distributed - about a quarter of our corporate profits, as it turned out - and they hold assemblies to decide how to split it. It's up to them.
We believe it is essential that all company communications, especially those intended for the workers or the public, be absolutely honest. All financial information at Semco is openly discussed. Indeed, our workers have unlimited access to our books (and we only keep one set). To show we are serious about this, Semco, with the labor unions that represent our workers, developed a course to teach everyone to read balance sheets and cash flow statements.
In restructuring Semco, we've picked the best from many systems. From capitalism we take the ideals of personal freedom, individualism, and competition. From socialism we have learned to control greed and share information and power. The Japanese have taught us the value of flexibility.
Semco has grown sixfold despite withering recessions, staggering inflation, and chaotic national economic policy. Productivity has increased nearly sevenfold. Profits have risen fivefold.
COMMENTARY: Ricardo Semler used his leadership position to help the system he's leading (Semco) self-organize for the benefit of all stakeholders. His step-by-step transformation of power relationships, expectations, corporate structures, cultural assumptions, responsibility, opportunity, conflict, learning and the quality and openness of communication all suggest he has a rare understanding of co-intelligence. His work arose from his respect for people and his belief that their intelligence and motivation would be expressed at the organizational level if they were just set free in an intelligently designed system. He understands the co-intelligent foundation of democracy: that the people who can most effectively shape decisions are those who are affected by those decisions.
For the past 20 years, Brazilian-based
Semco has been
"able to transform itself continuously and organically--
without formulating complicated mission statements and
strategies, announcing a bunch of top-down directives, or
bringing in an army of change-management consultants." How?
By giving employees freedom to choose their projects, their
schedules, their career tracks--even the company's strategic
Sound like a recipe for anarchy? On the contrary, owner
Ricardo Semler believes that this laissez-faire philosophy
has led to Semco's success in adapting to the needs of a
changing business world. Whereas in the early 1990s, the
company manufactured pumps and washing machines, today,
through employee initiatives, almost 75 percent of its
business is in services. Semler anticipates that in 2001,
25 percent of revenues will come from new Internet ventures.
Semler believes that people act in their own best interests.
So, employees can take as much leave time as they want, but
they must reapply for their jobs every six months. They also
choose how they are compensated, based on 11 different
options. These policies encourage self-regulation rather than
top-down enforcement and control.
Semco's unorthodox approach has paid off. In 10 years,
revenues at the $160-million company have quadrupled, and the
staff has grown from 450 to 1,300 employees. The turnover
rate in the past six years has been less than 1 percent.
Source: "How We Went Digital Without a Strategy"
Semler, Harvard Business Review, September-October 2000.
from LEVERAGE POINTS for a New Workplace, New World
September 21, 2000 Issue 4
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