The case study highlights the leadership philosophy of Ricardo Semler ever since he took over then the overall management of Semco Company. It is evident that Ricardo injected an innovative model of leadership that precipitated the growth of the company to international level.
From the outset, it is vivid that Ricardo is well endowed with leadership skills and management etiquette bearing in mind that he jumpstarted the performance of the marine pump business to an extremely high level of success.
For instance, he obviously worked hard at the company by devising new ideas, adopting modern methods of production and embracing continuous change (Bratton, Sawchuk, Forshaw, Callinan & Corbett, 2010). The multi-sector of Semco was largely contributed by Ricardo’s willingness to relinquish control. In addition, the organizational culture at Semco was remarkably transformed.
In order to achieve the latter, he permitted and supported workplace democratization both radically and gradually until employees felt to be part and parcel of the company. The banking, education, hotel and other industries were also managed using the same leadership principles as analyzed in this essay.
When the father of Ricardo Semler left his company in the early 80s, he never imagined that his son would transform Semco to be a leading and one of the best-known companies across the globe. At just 22 years, this young entrepreneur Brazilian took control of the company. To the surprise of many, one of his first actions was to lay off 60 percent of top managers.
This was obviously a bold management step that left his managers in surprise. As a leader, he opted to break the conventional rules of organizational management.
Ricardo Semler began an odyssey that was marked by the complete freedom and autonomy of workers coupled with radical use of the concept of empowerment – and strong involvement of employees in all aspects of the company through a flexible and decentralized corporate structure (Bratton et al., 2010). In fact, this move motivated the employees to a great extent.
According to the content theory of motivation, there are outstanding factors that uplift the morale of employees. As much as most of the motivating factors are intrinsic in nature, it is crucial to mention that motivation can also emanate from external sources.
Hence, when Ricardo decided to allow full employee participation in the management of the firm, he created a viable platform through which employees could demonstrate and exercise their inner abilities or talents (Robbins & Judge, 2015). The hierarchy of needs theory that was advanced by Abraham Maslow states that once basic needs have been met, it is possible to motivate individuals.
Employees who work in a free and democratic environment are in a position to optimize their outputs, quality or quantity of production. This same thing happened shortly after Ricardo took over the leadership of Semco.
The new leadership perspective began to yield results very quickly. Immediately after taking over and despite recession, high inflation and the chaotic state of the Brazilian economy, Semco grew exponentially. Within ten years, the business grew by a margin of 900 percent. It was amazing that this growth was witnessed after Ricardo used unconventional methods in the management of the organization.
Currently, Ricardo Semler is known to have created a unique management style in the world. He is also considered as one of the most influential personalities in the corridors of management. Executives of various companies such as IBM, General Motors, Ford, Kodak, Goodyear, and Pirelli have studied and emulated the revolutionary management style of Semler.
Due to his performance, the Brazilian manager was invited by the prestigious magazine Harvard Business Review to write some articles. “Managing without managers” in 1989, “Why My Former Employees Still Work for Me” in 1994 and the most recent “How We Went Digital Without a Strategy” published in September 2000.
The three exclusive writings have assisted other managers to understand the whole philosophy surrounding this pioneering company. Furthermore, Semler has also published the book “Maverick” which highlights the history of the company (Robbins & Judge, 2015).
Another outstanding feature of this company is the growing diversification of its business area. When Ricardo Semler took over the leadership of Semco, the company was mainly dealing with the manufacture of industrial products such as pumps, mixers and dishwashing machines. During the 1990s, it diversified its work into the service sector (in 1999 about 75% of Semco’s business was concentrated in this sector).
It is currently expanding its business portfolio into the electronic platform. According to the value of diversification and modern portfolio theory, it is crucial for the management teams of companies to clearly stipulate their financial goals and equally outline how to attain the same goals. In fact, Semler had specific monetary objectives in mind that he wanted to attain within a given timeframe (Bratton et al., 2010).
When discussing the elements of a portfolio strategy, two fundamental questions should be contemplated upon. The modern portfolio theory vividly expounds strategies that can be adopted in a firm.
Nevertheless, it is fundamental to note that the theory is overshadowed by imperfect assumptions and mathematical modeling. Therefore, the theory can also be beneficial when diversifying portfolio only if the underlying assumptions are addressed and the mathematical models clearly understood.
How did Semco achieved such amazing results within a very short time?
The freedom that workers have to do what they want has massively contributed towards continuous transformation of Semco. For example, employees have been given the opportunity to come up and share innovative ideas that have gradually reshaped this creative and adaptable company. One such idea is that the company should never cease to be seen as a start-up.
In this case, Semco closes every six months and thereafter resumes its activity. Through a budget system and strict planning, the company requires each of its businesses to judiciously account for profitability at the end of a given trading period. This implies that communication is a key management tool at Semco since both senior and subordinate employees innovate and share ideas freely without feeling intimidated.
Communication competence displayed by Ricardo was one of the most effective leadership tools that jumpstarted the growth of Semco. At any given time, he showed the way and articulated both the short term and long-term needs of the firm. The component model of communication is perhaps the most viable framework for expounding communication competence at workplace.
Motivation, skills and knowledge are contained in this model. In regards to knowledge, Semler clearly knew or understood the best communication behavior that suited each emerging situation.
Second, he had the aptitude and capability to apply desired behaviors such as when there was need to diversify the portfolio of the organization. Finally, Semler also applied a high degree of competence (skills) when passing or sharing vital information with employees of the company (Robbins & Judge, 2015).
An organization should not become a nanny. Ricardo Semler believes that most companies suffer from the “boarding school syndrome”, that is, treating workers as if they are children (Robbins & Judge, 2015). To combat this vice at Semco, there are no set schedules, cabinets and desks with specific users or owners, there are well-established codes of conduct, and no rules or human resource regulations.
Employees have the full mandate to decide when and where to work, when to go for holidays and how long to take rest. Employees are treated in a mature manner. If they do stupid things, they take responsibility. They take care of their jobs because contracts are renewed twice per year. Hence, this means that decision making at Semco is fully within the control of employees.
Motivation to decide, the thinking process and deciding are within the theories about making decisions. If employees are allowed to make decisions on their own, it enhances transparency, accountability and overall productivity at workplace. Unlike other companies that hire people for specific positions, Semco workers choose where they work and what they want to do (Bratton et al., 2010).
There are several forms of payment that workers at Semco have at their disposal. In total there are eleven compensation arrangements such as the fixed salaries, bonuses, profit sharing, commissions through the royalties on sales and profits, bonds or securities options, and ending self-assessment – in which executive compensation is paid for have fulfilled the objectives that he has set.
References
Bratton, J., Sawchuk, P., Forshaw, C., Callinan, M. & Corbett, M.N. (2010). Work and organizational behavior (2nd ed.). Basingstoke: Palgrave Macmillan.
Robbins, S.P. & Judge, A.A. (2015). Organizational Behavior (16th ed). New Jersey: Pearson.