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Business

Saga of Semco continues

I blogged about Semco SA yesterday, but it was a shallow, dull post merely outlining the ways in which the management philosophy has improved operations for the Brazilian manufacturing and environmental/IT services company. Some more interesting details:

  • Due to management style clashes with his father and founder of the company, current CEO Ricardo Semler threatened to leave the company in 1982. Rather than see this happen, Antonio Semler quit as CEO and vested majority ownership in his son. On his first day as CEO, Ricardo fired 60% of all top management.
  • Adopted a lattice organizational structure, which places 6-10 workers in a team responsible for a task and imbues a sense of ownership and financial responsibility within the team.
  • The Brazilian economy tanked in the early 90s, and workers at SEMCO agreed to wage cuts (their share of profits increased to 39%), management salaries were cut by 40% and employees were given the right to approve every item of expenditure. This allowed the company to ride out the recession and resulted in employees learning more about the business and providing useful suggestions to improve operations.

My summary: Ricardo Semler simultaneously worked to enable his employees to give him useful advice while providing them with the incentive to provide that advice enthusiastically.

The former through the openness of the organization which allows workers to learn how it operates in greater detail than in traditional businesses.

The latter not merely through profit sharing, but also by treating their workers with respect and giving them greater responsibility.