SEMCO SA - Organization Working On Participatory Management Model

SEMCO SA is a company being managed by the son of the founder Antonio Semler, Ricardo Semler. The article examines how SEMCO SA is different from all other organizations. This organization works on a participatory management model. This model has been inspired from the B. L. Gore leadership example. Though this model is highly successful, empowering and famous; no other organization till date has been able to replicate this model successfully. The model has various key points, and specific reasons why no organization has been able to succeed in implementing it and making it work for them.

SEMCO S.A.

Semco SA was originally a shipbuilding company that now produces more than 2000 products like dishwashers, digital scanners, banking and environmental services, managing non-core businesses of MNCs like Wal Mart, Carrefour, etc.

Semco employs over 3000 employees with a turnover of just 1%. Workers set their own salaries, share company profits and hire and fire their own managers. The employees say, that their philosophy is built on participation and involvement. They never settle down. They give opinions, seek opportunities and advancement, and say what they think. They never think of themselves as just one more person in the company.

Today, SEMCO is one of the most interesting companies in the world. It has no job titles, no written policies, no HR department, and actually no headquarters either. Half a dozen senior executives pass on the title of the CEO every six months. There are no seniors and no juniors, everybody is associates. Employees decide their own working hours. Every employee is aware of what each other person is doing at SEMCO, and everyone receives a copy of the financial statements, to understand which, they can take classes if they want to. Subordinates choose their managers by vote, and evaluate them with publicly posted results. All meetings are voluntary and the first two who turn up get a seat on the board.

SEMCO today adopts the idea of autonomous teams throughout the organization. Here the employees hire and fire the workers as well as the supervisors through voting. The entire SEMCO has no any policy documents at all. The only manual that it has, is 20 pages long and is full of cartoons.

INSIGHTS

Ricardo Semler, one of the six counsellors and the founder’s son at SEMCO, firmly says that the purpose of work is not to make money. The purpose of work is to make workers feel good about their lives. The organization has seen all its people in power give up their controls, and yet, SEMCO has seen people controlling themselves and working in a creative and productive manner. The only thing that the employees at SEMCO are obliged to do, is to meet the commitments that they make to themselves and to their fellow associates.

This model of participatory management is inspired by the Bill gore leadership example, the founder of W L Gore and Associates, who is regarded as the first person who experimented with giving freedom in the workplace.

At SEMCO, the responsibility of reviewing themselves and setting targets is entirely on the employees, and nobody else at all.

Here are some principles, drawn from the SEMCO model of participatory management, and Maverick and The seven day weekend, both written by Ricardo Semler –

• Hard work by itself is never enough. A successful business doesn’t mean the employees have to come early and stay late. Sweat is never obligatory for any employee to move closer to a financial heaven. Effort and result are thus, never directly proportional.
• The quantity of work can never be held at a higher priority than quality of work. An employee who judges himself by the quantity of work that he puts in, will often be left out for promotion or a pay-hike, or getting a bonus, no matter is he spends 16-18 hours at work.
• No change, be it a switch at the top, be it re-structuring or be it simple renovation, can be used as an excuse for effective time management.
• Never have the fear of delegation, you can never do everything by yourself. Learn to give away power, in order to get more power. Never have the fear of being replaced, each employee is unique, and so far as he effectively proves his worth in his work and in the eyes of his associates, he can never be replaced.
• All the employees are a part of a big, large family. Cutting vacation time if someone comes to office ten minutes late, or frisking the workers on their way home or verifying the expenses of a person who has been with the company all along, is a recipe that lacks trust. Trust is a fundamental for any strong relationship and that is what most organizations lack. Do we search our relatives for if they are stealing something from us, when they leave our homes after dinner? There are always people who will take undue advantage of the trust put in them. But they are few, and because of them, you can’t mistrust everyone else.
• Barriers need to be broken. Employees should have the freedom to walk into any associate’s room anytime, wear what they want to, eavesdrop a conversation that has nothing to do with them, anything! It is a family after all.
• If employees are a part of the committee they should be made to believe that they will not be fired for what they say sitting in front of their bosses, while they are on the committee or even after that. And the company should stick to what it says. Otherwise, how will honest ideas and opinions come, if the people who really have them are living in fear?
• A boss should be treated no different than the subordinate, either by the boss or by the subordinate. Everyone is equal. Everyone is friends and family.
• Rules make adaptability and creativity go for a toss. And no organization can actually live without that. It may be able to survive without that, but it can’t live for sure. Go for strategic alignment, not a bible full of policies and rules. What do you want, employees to work for the betterment of the company or for the survival of the company. If it is the latter you are looking for, get robots, not humans.
• In order for profit sharing to succeed, employee involvement is a prerequisite.
• Job rotation benefits everyone if done properly. They come to know what things happen on the other side of the desk, and how we react to it, when we are the opposite end of the desk. It depersonalizes the organization and encourages diversity and unity.
• When people are allowed to choose their own bosses, they don’t select the congenial ones. This is because choosing one can ensure short term gain, but eventually it is the performance of the team that ensures them a paycheck or a profit.
• Replace the organization pyramid with a circle. Pyramids are rigid and constraining. Let freedom reign. Go for a round pyramid. Semco has three circles – the inner circle of the counsellors, the middle circle of the partners and the outer circle of the associates.
• In these circles, have triangles for different business units or teams.
• As far as meetings are concerned, start on time, with whoever has come, and decide with what time to stop at. Go over the agenda with everyone with no secrets held and if something could drag the meeting delegate it out. No meeting should go beyond 2 hours, avoid charts, tables and transparencies. Never turn the lights off. As far as possible, make as many meetings possible as simple telephone calls, or a conversation in the corridor. Avoid the conference hall as much as possible.

All this might look far, far away from conventional models of an organization. It may also look like a perfect recipe for disaster. However, this model has worked, and indeed produced excellent results. The revenue of SEMCO has gone up manifold. The employees are immensely happy with their jobs. Not only the employees themselves, but their family members are noticing the positive change in them as well. The stress levels and frustration quotients have nose-dived. People love coming to office each morning.

One of the quotes that Ricardo Semler likes to share in this regard, is that – “Not long ago, the wife of one of our workers came to see a member of our human resource staff. She was puzzled about her husband’s behaviour. He no longer yelled at the kids, she said, and he asked everyone what they wanted to do on the weekends. He wasn’t the usual grumpy, autocratic self he had always been. The woman was worried. She wondered what we were doing to her husband. We realized that as SEMCO had changed for the better, so had he too.”

Interesting is, that if this model is so successful and yields such excellent results, why don’t all organizations have it?

The reason for it could be many. But there are two main reasons that shall always remain common. One, the fear of change. Many managers consider the changes that SEMCO went through as a bit too extreme and even unnecessary in the light of concurrent global environment. Many argue that such drastic measures were unnecessary to achieve the same level of success. And secondly, the reluctance of people in power to give away power. Freedom and lack of autocracy are the principal features of SEMCO. Here, there are no conventional divisions and boundaries of a boss and a subordinate, all are associates. For most bosses, it is very important to be the BOSS. In order to adopt this participatory model, it is essential that the people in power let go of their power, and give freedom to the employees. This letting go, is something no other organization has been able to do effectively though many have tried. Even if they do, at some point of time or other, the BOSS behaviour takes over and the model goes out the window. People need to realize that it takes time. Even SEMCO wasn’t able to come up with it, implement it, and prove itself overnight.

Ricardo Semler has successfully created this model in all organizations that today are part of the SEMCO group. He has replicated it in all of them and they are functioning very successfully. The only fear that Semler currently has is that the model might break if the company grows too fast or makes too much of money.

CONCLUSION

All in all, SEMCO has done something and proved its worth, which nobody has ever been able to copy or replicate. Today SEMCO is a case study for all of us, but nobody has been able to materialize it. It would indeed be nice, if some organization could actually make this model work for them.

This article has been authored by Bhavi Patel from IRMA.

Views expressed in the article are personal. The articles are for educational & academic purpose only, and have been uploaded by the MBA Skool Team.

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