The management style that Ricardo Semler evolved through decades of experimentation at Brazilian firm Semco proved to be massively successful. The company defied gravity with the rate of its growth, even when the rest of the country was suffering savage recession. And yet, for all that, it is an example that few have attempted to follow. Why? Because it mostly revolves around management giving up control.
Semco was founded by Ricardo’s father, Curt Semler. At first, the son hadn’t been interested in being the next in line for control of the family business. He wanted to play guitar in rock bands. However, when that avenue proved somewhat fruitless, he reluctantly joined the company.
Soon, he was frustrated with the lack of influence he had with the old-style senior directors. The company was doing badly. Semco was involved with the shipping industry, which was in deep decline at that time. But the older executives wouldn’t consider entering a new line of business.
Ricardo decided he would walk away, only for his father to surprise everyone by making him company president at the age of 21. Curt left and told his son to “do what you need to do.” When they wouldn’t fall into line, that turned out to be firing 60% of the company’s top management in one afternoon.
His early efforts in pushing the company into new growth areas were successful, but his approach was otherwise very traditional. Eventually, with worsening employee relations and his own health suffering from over-work, he had to re-evaluate how to move things forward.
He saw that, although it seemed well-managed by all the standard criteria, Semco’s people weren’t performing well enough and they weren’t happy. He brought in a new head of HR who was strongly committed to a more participatory style, Clóvis da Silva Bojikian. Together they began to experiment.
The first big issue to address was working hours. Employees were subjected daily to the standard required hours, and that meant spending a lot of time caught up in the chronic traffic jams of Sao Paulo. They decided to let employees set their own hours so they could travel at non-peak times. In the face of some scepticism, it worked. People put in the time to work out how to make the system effective.
Next, they let employees set their own salary. This was a much bigger deal, and became a complicated process, involving benchmarking pay levels across different companies. But eventually, everyone’s salaries were agreed and were published for all to see.
It wasn’t all plain sailing. Once people started to get used to the idea that the company would act on what employees wanted, lots of dominoes began to fall, some of them quite uncomfortably. But it also provided real strength. When the country went into a deep depression in 1990, it became clear that the company couldn’t continue without laying some people off. Because the books were open, everyone accepted the situation for what it was, and the employees themselves came up with the names to cut. This degree of solidarity gave the company a huge advantage while competitors were falling around them.
It was a long process, but Semco eventually became the most radically different company probably in the world for its size. It doesn’t have a mission statement, a rulebook, nor any written policies. It doesn’t have an organisation chart. Subordinates choose their managers. All information is made public.
There is a long line of people wanting to join the company to work. Turnover is very small.
Ricardo Semler himself long since became redundant when it came to making decisions at Semco. It was the nature of his revolution that the company even held a party to celebrate the tenth anniversary of the last time he made a decision about anything.
Summarising his position, Semler says: “We’ll send our sons anywhere in the world to die for democracy, but don’t seem to apply the concept to the workplace.”
You have to be all in on this journey, he insists. Some other companies in Brazil and elsewhere have tried to cherry-pick the parts they feel able to do, but these attempts have never come to anything.
I read Semler’s hugely influential book ‘Maverick’ back in 1995. I was persuaded that the trick was to put problem-solving decisions in the hands of employees. But also can attest that trying to do that with teams within larger organisations that run otherwise conventionally is almost impossible to make work. It has to be a determined drive organisation-wide. It took Semco five years to really get it established.
We need such inspirational examples to shock us into asking very basic questions about whether the way we’re used to doing things has to be the way they are done.