Ricardo Semler’s Grupo Semco: The Democratization of Work

Back in November I blogged about one of my early heroes when I first got interested in business- Ricardo Semler. Now I’m happy to see a wonderful article about Semler and his management style in Strategy+Business (S+B).

Grupo Semco, as I mentioned earlier today, is the company that’s had 14 straight years of double-digit growth.

Semler has literally turned our current understanding of management on its head. He has taken the philosophies of Deming (“management is the problem”) and Drucker (“dedicated employees are the key to success of any corporation”) seriously and implemented them in a way that no one dreamed possible.

Drucker’s main thesis, as the Motley Fool opines, was “that workers were no longer interchangeable units of production. Instead, they needed to have some level of independence, which Drucker deemed critical for a company’s growth. He saw employees as “knowledge workers.” Take that to the extreme, and you get Semco.

Here’s what Charles Handy has to say:
“I just wish that more people believed him,” laments Charles Handy, the British management guru and social philosopher. “Admiring though many are, few have tried to copy him. The way he works — letting his employees choose what they do, where and when they do it, and even how they get paid — is too upside-down for most managers. But it certainly seems to work for Ricardo.”

Also from the S+B article:

“Semco’s 3,000 employees set their own work hours and pay levels. Subordinates hire and review their supervisors. Hammocks are scattered about the grounds for afternoon naps, and employees are encouraged to spend Monday morning at the beach if they spent Saturday afternoon at the office. There are no organization charts, no five-year plans, no corporate values statement, no dress code, and no written rules or policy statements beyond a brief “Survival Manual,” in comic-book form, that introduces new hires to Semco’s unusual ways. The employees elect the corporate leadership and initiate most of Semco’s moves into new businesses and out of old ones. Of the 3,000 votes at the company, Ricardo Semler has just one.
“In Mr. Semler’s mind, such self-governance is not some softhearted form of altruism, but rather the best way to build an organization that is flexible and resilient enough to flourish in turbulent times. He argues that this model enabled Semco to survive not only his own near-death experience, but also the gyrations of Brazil’s tortured politics and twisted economy. During his 23-year tenure, the country’s leadership has swung from right-wing dictators to the current left-wing populists, and its economy has spun from rapid growth to deep recession. Brazilian banks have failed and countless companies have collapsed, but Semco lives on.”

I remember an article by Rajat Gupta years ago in which he wrote about the irony of businesses in democratic countries. They were all run as totalitarian regimes! At the time, I thought- surely there must be companies that run on the principles of democracy (tells you how naive I was). Now Ricardo Semler changes the world of business forever.

I tell you, this is not a flash in the pan. Semler has uncovered the secret to sustainable business, and if you read Maverick : The Success Story Behind the World’s Most Unusual Workplace or The Seven-Day Weekend: Changing the Way Work Works you’ll agree that something more spectacular than futbol has emerged from Brasil, er, Brazil.

Read the S+B article here.

Keep your eyes open- eg. Semco does not, repeat not, have an HR department. Note also Semler’s non-profit work and his eco-resort idea.

More fun:

– the Wikipedia entry on Ricardo Semler and Workplace Democracy

– the official Semco Management Model Manifesto:

1. Be a serious and trusted company
2. Value honesty and transparency over momentary interests
3. Search for the balance between long term and short term profit
4. Offer fair prices for our products and services and be the best in the market
5. Provide diversified services to clients, putting our responsibilities before profit
6. Stimulate creativity, prizing people who take risks
7. Incentivize participation, and question decisions imposed from the top down
8. Preserve an informal environment with professionalism and without preconception
9. Maintain safe working conditions and control the industrial process to protect the environment
10. Be humble and recognize mistakes, knowing that there is always room for improvement

– Chapter one from Semler’s book- The Seven-Day Weekend

– ‘Idleness is good’ in the Guardian

Lessons from Semco on Structure, Growth and Change by Wally Bock

– transcript of a CNN interview with Semler

– a somewhat dusty case study from Thunderbird on Semco

Fun quote:
“Semco has no official structure. It has no organizational chart. There’s no business plan or company strategy, no two-year or five-year plan, no goal or mission statement, no long-term budget. The company often does not have a fixed CEO. There are no vice presidents or chief officers for information technology or operations. There are no standards or practices. There’s no human resources department. There are no career plans, no job descriptions or employee contracts. No one approves reports or expense accounts. Supervision or monitoring of workers is rare indeed… Most important, success is not measured only in profit and growth.” – Ricardo Semler

8 Replies to “Ricardo Semler’s Grupo Semco: The Democratization of Work”

  1. Ricardo Semler: The Maverick 11 Years Later

    Another great leader. I remember reading Maverick back in ’94 and handing a copy to Riley Bechtel, the CEO of the company I used to work for when I started my career. I’ve never forgotten Semler, and it’s great to…

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    Burson-Marsteller and the Economist Intelligence Unit (EIU) report on the “most admired” CEOs for 2005. The 2005 CEO Capital™ study asked more than 600 global business influentials in 65 countries to write in which CEO or chairman they admire most…

  3. Most Admired CEOs for 2005

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  4. I’m a great fan of Ricardo Semler and think he is defining what the future of work will be. I am interested in finding more examples of companies or organizaitons who are using his model. Do you know of any?

  5. I am also looking for examples of nonprofit organizations using the Semler model. Anyone out there?

  6. Dear Sir or Madam,
    Warm and Respectful greetings to you. I appreciated if you send your answer for my 4 questions quickly specially on Thurseday Dec,10,2009. hope 100% and I am waiting to hear from you eagerly.
    Kind Regards,
    Thank you!
    The all questions refer to the Harvard Business Review article Managing without Managers by Ricardo Semler.
    Please Answer all questions and should be no longer than one page (Double spaced). Do not say everything you know about a question, but select carefully what you choose to emphasize. Make all key assumptions explicit, clear and plausible and etc
    This questions is very important to my future career so , I am waiting eagerly to see your answer to my e-mail address: negussmengistu@yahoo.com and thank you for willing to give your answer before Thursday Dec 10, 2009.I really thank you for your trying to answer my 4 questions. Really thank you again and here below the questions.
    1.Describe the leadership style of Ricardo Semler in terms of (a) employee motivation, (b) employee empowerment and growth, and (c) corporate productivity. In your opinion, is this leadership style effective? Why?
    2.Briefly describe the organizational structure of Semco. How does this structure influence (a) corporate communication (both formal and informal), (b) group and individual decision making, and (c) corporate culture? In your opinion, is this organization’s structure effective? Why?
    3.What type of human resource management is practiced at semco? What policies (both formal and informal) are used for (a) staffing, (b) compensation, and (c) goal setting? In your opinion, is semco’s HRM effective? Why?
    4.Refering to your response above, does semco (a) possess the potential for continued Innovation and growth and (b) would it provide you as a manger with potential for innovation and growth? If not, what managerial principles would be, in your opinion, most effective? Why?

  7. Anyone out there –
    MBA student in UK looking for Recruitment and Selection Policy of Semco. I am interested in doing a report on Semco much more interesting than doing the normal companies. This is the work place of the future I think.

  8. Creio ser difícil fazer empresas pensarem – realmente – de maneira democrática. E não falo do bar da esquina nem mesmo da padaria do Zé, porque essas até Antonio Gransci iria desconsiderar. Acredito que nunca a estrutura dos grandes grupos foi tão marcante como hoje, com uma hierariquia que parece seguir um roteiro e cada vez mais, mais controles recheiam o interior desses grupos, pois é preciso controlar as compras (ah, antes o pedido), fazer funcionar o processo no estágio 1, no estágio 2 e assim por diante. E não é possível fazer funcionar isso tudo sem um tipo de controle, specialmente as gentes que estão dentro do processo. Por isso me atrevo a dizer que seres criativos são inibidos pelo ‘sistema’ e estão numa camisa de força porque, afinal, pessoas verdadeiramente criativas não se dão bem em ambientes que primam pelo controle. E me refiro a regra, portanto, é difícil ver gente dando piteco ali e acolá porque essa gente primeiro pensa em trabalhar e fazer juz ao salário e sabe que não ganha pela criatividade. Em países desestruturados, empresas inovadoras contam-se nos dedos, mesmo que haja algumas tentando fazer algo parecido, algo ‘fashion’ apenas para ganhar o ‘rótulo’, de resto a coisa segue de cima para baixo sem perder o conservadorismo #alguns não tão rígidos é verdade#. Aliás, Thorstein Veblen de alguma maneira já identificava isto ao dizer ‘que os pobres são conservadores por não gastarem suas energias que não o de pensar o dia de amanhã e os ricos também são conservadores pelo fato de não se importarem com a situação presente’.

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