Disorganization at Semco: Human Resource Practices as a Strategic Advantage

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"There is no contest between the company that buys the grudging compliance of its workforce and the company that enjoys the enterprising participation of its employees". ¹

- Ricardo Semler, CEO, Semco, in 1989.

"For the past thirty years, this company owner has essentially blocked a "real" CEO from ruining his company by holding the position himself, and refusing to rule. Instead, his employees rule, in what is one of the few truly democratic workplaces in all the world" ²

- Ted Coine, Author and Speaker, in May 2011.

Semco, based in Sao Paolo, Brazil, was considered by experts as one of the most innovative democratic workplaces in the world. Ricardo Semler (Semler), the majority stockholder of the privately-owned company, had essentially handed over total control of the company to the company's workforce. The company actively promoted the principles of democracy, transparent communications, constructive dissent, creativity, and employee growth.3 The outcome was noteworthy - Semco's revenue, margins, employee strength, and business segments had expanded significantly.4 The fact that the company had an inspired workforce was reflected in its low attrition rates.

As of 2003, Semco's businesses comprised the production of industrial mixers, manufacturing of cooling towers for commercial estates, property and facility management services, environmental consulting, e-businesses, and inventory management. In 2007, Semco was also getting its hospitality business started and was dabbling in hospital and airport ventures.⁵ Several observers were especially startled by the cultural metamorphosis that Semco had achieved, given the fact that, to begin with, it was a top-down driven autocratic set-up. But experts wondered if the transformations at Semco would work in organizations.

Background Note - Next Pages >>

1] Ricardo Semler, "Managing without Managers," Harvard Business Review, September-October 1989.
2] Ted Coine, "The UnCEO: 6 Unconventional Leaders to Know," http://sustainablebusinessforum.com, May 16, 2011.
3] Gary A. Yukl and Wendy S. Becker, "Effective Empowerment in Organizations," Organization Management Journal, Vol. 3, No.3, 210-231, 2006.
4] "How Mavericks Manage in the Downturn," www.ariadne-associates.co.uk, January 11, 2011.
5] Dominique Haijtema, "The Boss who Breaks All the Rules," http://odewire.com, January 21, 2007.

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