Ricardo Semler & Semco: the Self-Managed Entreprise

Topics: Ricardo Semler, Management, Profit sharing Pages: 16 (3866 words) Published: November 4, 2010

The Good: SEMCO

International Management – MSc


A.Y. 2009 – 2010

Ettore Penazzato


1.SEMCO in brief3

2.Reorganization of the company: context, actions & impacts4

2.1Changing the organizational structure5

2.2Profit-sharing program7

2.3Participatory decision-making7

3.Evaluation based on the course material7

3.1HRM Practices7

3.2Empowerment of the employees8

3.3Intrinsic and extrinsic motivation solved by profit-sharing program8

3.4Self-determined Salaries: Equity theory10

4.Considerations based on 7 S model12

5.Conclusions & Recommendations13



SEMCO in brief

SEMCO Group, originally founded in 1953 in Brazil by an Austrian engineer by the name of Antonio Curt Semler, went into business producing centrifuges for the vegetable oil industry. In the 60’s the company changed course to find success in producing components for the naval industry of Brazil, and over the next 20 years the company, still under control by Antonio Semler, enjoyed outfitting nearly 70% of Brazil’s naval fleet. However, it would not be until the early 80’s when the founder’s son, Ricardo Frank Semler, took the reigns of his father’s company and would forever change the way the world looked at an organization, putting SEMCO on the map. (Corporate Website)

During the start of the 80’s the company began to take shape and set the foundation for years to come. It started with the idea of having differentiated businesses within the company; therefore he started a campaign to acquire manufacturing licenses from companies such as Philadelphia Mixer and Littleford Day. In 1982 SEMCO officially began producing mixers for such industries as: mining, chemical, pharmaceutical, and food. This however was just the beginning and throughout the rest of the 80’s SEMCO continued acquiring other businesses until finally in 1986 Semler labeled everything into four strategic business units in order to comply with the new centralized management system. Divisions were as follows; the Naval Unit, Industrial Equipment Unit, Refrigeration Unit, and the Durable Goods Unit. The 1980’s was a real structural foundation building decade for SEMCO since the new CEO, Ricardo Semler, introduced revolutionary changes. (Corporate Website)

Reorganization of the company: context, actions & impacts

The reorganization of the company was undertaken, by Ricardo Semler, in order to be able to face a negative financial situation during the 1980’s. When Ricardo Semler joined the company in 1980, he made radical actions, by introducing three essential values that are harmoniously synched together and spread out into more than 30 management programs. These actions undertaken were based on three main principles of: democracy, profit sharing, and information. Democracy corresponds to employee involvement and Semler; in order to able to build a real participatory management, had to overcome four main obstacles: size, hierarchy, motivation, and ignorance (Semler, 1989). The main elements of the organizational changes were modifying the structure, introducing new profit-sharing program, and instilling participatory decision-making.

1 Changing the organizational structure

The overall organization was transformed by reducing the company to just three management levels (from existing twelve) and designing an organizational structure with a circular form (Figure 1). The first and innermost circle is composed of 5 top managers, which includes Ricardo Semler, but to Semco these managers are the so-called “counselors”, which in other organizations might be labeled as the board of directors. The second circle is made up of the “partners” that are the heads of the 8 divisions. Finally in the third and outermost circle we find the “associates”, more commonly known as the employees. Among these employees...
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