Semco Company’s Innovative Management Approaches

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The majority of people are of the opinion that “organizations are too large and/or too bureaucratic to change” (Maresco and York 2). Well, perhaps some of them are. But Ricardo Semler, the President and CEO of the Semco company, has proven to the world that even the most radical changes are possible. People consider his company as the most interesting in the world, call it the “insanity that works” and describe with many other different words, and all of them are actually right – Ricardo Semler has managed to do something that seems really impossible (“Semco” par. 1).

Brief Background Information

The story about the Semco company and Ricardo Semler usually starts in the following way. The Semco S.A. is a Brazilian company with the annual income of $210 million, which it regularly gets despite the fact that it operates in one of the most changeable economies in the world (Baumgartner par. 3). Founded in 1953, the organization was firstly guided by Ricardo’s father who made it “hierarchical and patriarchic” with “a rule and a policy for just about everything” (“Lessons from Semco” par. 5). When Ricardo joined Semco at the age of nineteen, he suggested implementing many changes. Among other things, he was convinced that the company was too harsh and rigid. Nevertheless, his father disagreed, and everything just went on as usual. The economic recession that overtook the country in the 1980s became the turning point, and Ricardo insisted on his strategy even threatening to resign in case his father disagreed. That is when Semco S.A. got a new CEO and was on the verge of significant changes.

The Fundamental Differences between the Semco Company and Standard Management Approaches

The first thing Ricardo Semler did after becoming the CEO was the dismissal of two-thirds of managers: he left only three people out of twelve. Many of those managers were his father’s friends (“Lessons from Semco” par. 8). He decided to abolish authoritarianism and hierarchy since he believed those decreased productivity. Presently, the employees in Semco are “self-governing and self-managing” and they “have, in most cases, mastered several jobs” (Maresco and York 4). That runs counter to any classical management approach that implies hierarchy and subordination, among which bureaucracy probably goes first on the list (Mullins 47).

The absence of a clear organizational chart is probably the most fundamental difference between the Semco company and classic management approaches. Still, it is not the only one. There is nothing similar in the workweek, the working environment, scheduling, or salary policy either. Ricardo Semler decided to “throw out all the rules” (Maresco and York 4). Employees set production quotas, wages and working hours on their own. Although they are supposed to come to work between seven and nine in the morning and work for eight hours, there can freely leave the site earlier if the work is done. There are no restrictions for traveling. No dress code exists in the workplace since it generates stereotyping. The working places can be organized by employees in their own fashion. Managers and employees make decisions together, and no one has secretaries or assistants. Although managers still exist in the company, their positions are not secure – they can be fired because of the poor scores just as any other employee (Andrewartha par. 5). In the Semco company, “the standard policy is to have no policy” at all (Maresco and York 4). On the face of it, all of this seems to be a strategy for chaos and disaster. Nevertheless, it works.

The Impact of the Semco Management Model on the Human Resource Management Function in Medium-to-Large Organizations

The Semco management model can offer employees the absence of everything they are so tired of at work. No overloaded schedule and working from nine to five. No five-day workweek and a certain amount of vacation. How many employees hate Sundays evenings only because on Mondays they return to the same routine? Semco S.A. does not have any routine. People work there not because they have to work but because they love what they do. They are provided with flexibility and possibility to innovate. They are treated respectfully. Additionally, they can choose their own salaries, which solves another significant problem of HR management. Therefore, that is not surprising that the Semco management model not only attracts the best candidates but also helps to retain the talents within the organization. According to Maresco and York, the annual turnover in Semco S.A. is less than 1%, which is twenty times less than in other organization in the same industry (2). All of this would be especially useful for medium and large organizations since they usually forget about the interests of their employees and focus on the goals of business only.

Nevertheless, no matter how well it all sounds, it is not so easy to implement. As for Ricardo Semler, those changes cost him huge efforts and even problems with his health. His doctor told him that he had “the highest level of stress the doctor had ever seen in a twenty-five year old” (“Lessons from Semco” par. 11). Besides, to achieve the goal, not only the right leader is necessary but right followers as well. None of the things discussed above is easy to do. But in the case of success, a significant breakthrough will follow.

Works Cited

Andrewartha, Jeanee. Ricardo Semler – Seven Day Weekend. 2012. Web.

Baumgartner, Peter. 4 Reasons You Should Let Your Team Set its Salaries. 2013. Web.

Lessons from Semco on Structure, Growth and Change. 2005. Web.

Maresco, Peter A. and Christopher C. York. Ricardo Semler: Creating Organizational Change Through Employee Empowered Leadership. n.d. Web.

Mullins, Laurie J. Management and Organisational Behaviour. 8th ed. 2007. Harlow, England: Pearson Education. Print.

Semco – Insanity That Works. 2014. Web.

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Semco Company’s Innovative Management Approaches

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