Managing process
Introduction Ricardo Semler took control of South American based Semco, at the age of 24. His father, both founder and manager of Semco until this point, had been an autocratic leader, with a set of rules and contingencies for every occasion. The company employed a pyramidal structure and a truly tayloristic view of management. Employee motivation took the form of money, and or threats where required. Semler perceived, “a sense of lifelessness at Semco, a general lack of enthusiasm, and a general dissatisfaction among the workforce”, he knew the survival of the company was dependant on change, and during the years that followed he dismantled the rigid and somewhat exploitative structures that had been imposed by his father, in favour of a highly people oriented management style. Semler’s belief that all people desire to achieve excellence, led to the core objectives of the organization. 1. Employee participation: He felt that traditional management styles thwarted people’s creativity and motivation. 2. Profit Sharing: Via a democratic committee, one quarter of the businesses net profits were returned to the employees, in an attempt to improve both the communities, and lives of the workforce. 3. Free Flow of Information: Nothing is hidden from the employees. Change During the 1990’s hyperinflation in the Brazilian economy resulted in severe recession causing many companies to file for bankruptcy. Semco’s employees introduced radical cost cutting measures, from missing breaks, to cancelling any un-necessary expenditure. However as the recession dragged on the only feasible solution was a choice between layoffs and salary cut. The shop floor committee accepted a salary cut under the following three conditions. 1. An increase in profit sharing to 39% of net income, until pre-recession salaries could be reinstated. 2. A 40% salary cut for management. 3. The right to approve all expenditure by Semco in order to ensure the workers sacrifice was not in vain. These negotiations marked the beginning of the shift toward democratic worker management, i.e. worker participation in planning, decision making, and implementation. During these difficult times, the workers enthusiasm and willingness to perform multiple duties produced a highly cross trained and knowledgeable staff. Armed with this comprehensive knowledge, the employees began to devise more efficient ways of organizing work. In one factory workers split themselves into three manufacturing units of 150 members, each unit took responsibility for marketing, sales, financial management, and human resources.