(Retyped for clarity - Taken from Report on Business Magazine December 1993)
Richard Semler, 34, was given control of the Brazilian conglomerate Semco by his Austrian-born father 13 years ago. Since that time, sales have increased six fold and profits have jumped by 500%. Semler expects that in 1993, Semco, which is debt free, will earn about $4 million on sales of some $40 million. The firm has nearly 300 workers, with another 200 or so running "satellite" businesses that operate as subcontractors to Semco, and were set with its help. The Portuguese-language edition of Maverick, Semler’s account of the unorthodox management practices he has experimented with at Semco, has sold almost half a million copies. The English-language edition, from which this article is adapted, is published this fall by Warner Books.
Finally, a firm where the boss has taken a back seat and lets workers make the big decisions. Can the managerial experiment of a maverick Brazilian conglomerate serve as a model of genuine empowerment in northern climes?
Every Wednesday Afternoon, dozens of men and women file through the front gate on their way to a third floor meeting room at Semco, the company I lead in Sao Paulo, Brazil. The guard at the entrance has been expecting them. For years now, executives form some of the biggest and best-known companies in the world, IBM, Siemens, Mercedes-Benz and Yahsica among them, have been making an unlikely pilgrimage to our non-descript industrial complex on the outskirts of the city. Semco manufacturers an impressively varied roster of products, including pumps that can empty an oil tanker in a night, dishwashers capable of scrubbing 4100 plates an hour, mixer that blends everything from fuel to bubble gum, and entire biscuit factories, with 6000 separate components and 36 kilometers of wiring. But it’s not what Semco makes that has executives and management experts the world over waiting months for a chance to tour our plants and offices. It’s the way the people of Semco make it.
When I took over Semco from my father 13 years ago, it was a traditional company in every respect, with a pyramidal structure and a rule for every contingency. But today, our factory workers sometimes set their own production quotas and even come in on their own time to meet them, without prodding from management or overtime pay. They help redesign the products they make and formulate the marketing plan. Their bosses can run their business units with extraordinary freedom, determining business strategy without interference from the brass. They even set their own salaries, with no strings. Then again everyone will know what they are, since all financial information at Semco is openly discussed. To show we are serious about this, Semco, with the labour unions that represent our workers, developed a course to teach everyone, even messengers and cleaning people, to read balance sheets and cash flow statements.
For truly big decisions, such as buying another company, everyone at Semco gets a vote. A few years ago, when we wanted to relocate a factory, we closed down for a day and everyone piled into buses to inspect three possible new sites. Then the workers decided. Their choice hardly thrilled us, since it was next to a company that was frequently on strike. But while no one in management wanted front-row seats to a labour-management war, we moved in anyway. In the lobby of our headquarters, a standard-issue office building with four floors of steel and glass, there is a reception desk but no receptionist. We don’t think one is necessary, despite all our visitors. We don’t have secretaries either, or personal assistants. We don’t believe in cluttering the payroll with ungratifying, dead-end jobs. Everyone at Semco, even top management, fetches guests, stands over photocopiers, sends faxes, types letters and dials the phone. We don’t have executive dining rooms, and parking is strictly first-come,...
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