The SEMCO Inc Company is a Brazilian company based in Sao Paulo. The company is one of the leading manufacturers of industrial equipment and unique indoor environment products. Semler was the integral founder of the company and “Under the leadership of Ricardo Semler, revenue grew from $4 million in 1982 to $212 million in the 2000s, an annual growth rate of up to 40% a year. Semler has attracted worldwide interest for his innovative business management policies and philosophy” (‘Smart working How smart is UK PLC? Findings from organizational practice’).
The original organizational structure at the company was that of a functional structure which resulted in a long time of decision making and segmentation of management and decision-making which reduced the efficiency and the effectiveness of the management. As a result in the days following the crash of the Brazilian economy, Semler formed three main values which pertained to employee participation, profit sharing, and free flow of information to support the growth, efficiency, and effectiveness of the company (‘Semco & Freys: A multiple-case study of workplace democracy’, 2005). The structure of the company now is very unique as Semco Inc. does not have any formal organizational architecture or structure. This makes it sound haphazard and a mismanaged company, but it is actually a very well-managed enterprise. The company has no business plans, no company strategy and there is no long-term planning conducted. The company does not even support a mission statement of a long-term budget for that matter. The key managerial positions of the CEO, the Vice-Presidents, and the chief officers are also missing from the company (‘Semco & Freys: A multiple-case study of workplace democracy’, 2005). Standards and practices for operating the company and the business practices are also not common on standardized. Instead, the company is managed in a decentralized manner which employs a 100 percent participatory style of management.
The main reason behind the unique style of management and the structure of the company lies in its history. In the 1990s, Brazil faced a severe recession which impacted the corporate and the industrial sectors. Many companies went bankrupt and shut down operations. However, Semler came up with the idea of decentralized management and the concept of the ‘SEMCO Way’ which is everyone managing their own selves and their own roles in the company. “Workers at Semco agreed to wage cuts, taking instead a 39% share of profits. Management salaries were cut by 40% and employees were given the right to approve every item of expenditure. Performing multiple roles during the crisis gave workers greater knowledge of the operations and more ideas about how to improve the business. Reforms implemented during that time led to a 65% reduction in inventories, a marked reduction in product delivery times, and a product defects rate that fell to less than 1%. As the business climate improved, Semco’s revenue and profitability improved dramatically. ‘The Semco Way: it is not by chance that unconventional ideas are created at this company. They are created and managed within an open management model, different from conventional models” (‘Smart working How smart is UK PLC? Findings from organizational practice’).
In terms of job design and HR management, there are no career plans or job descriptions depicted in the employee contracts. The expense records are not approved by anyone and the supervision and monitoring of the workers are also very rare, with the success of the company not being measured in terms of the profitability and the growth of the company. This has resulted in low employee turnover, high motivation amongst the workers, and rising markets to which innovative products are provided.
Semco Inc effectively used delegation to introduce a revolutionary style of management at the company delegation is the main form of management that does take place as the workers and the employees of the company are provided the authority to manage and run the operations as they see fit. “Semco Corporation, delegated management power to the front line, also without any employee request or agreement to do so. In this non-union environment, employees were offered the opportunity to share profits, to set salaries, to be involved in recruiting their managers and front-line staff, and to control financial resources.” (Glor, 2005) This has resulted in a highly effective form of management which provides the company with flexibility inflow of fresh and innovative ideas as well as a pool of motivated and dedicated employees who have a share in the growth and the development of the company.
References
- ‘Semco & Freys: A multiple-case study of workplace democracy’, 2005.
- ‘Smart working How smart is UK PLC? Findings from organisational practice’.
- Glor, E.D., ‘About Empowerment’, The Innovation Journal: The Public Sector Innovation Journal, Volume 10 (1), 2005.