Organization Culture at Semco
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Ricardo Semler transformed his family's manufacturing company Semco into a radical self-managed organization. He eliminated job titles, hierarchies, and top-down control. Semco empowered employees to set their own schedules and salaries, choose their managers, and start new business units. This created a highly autonomous and democratic culture where people were responsible and accountable for their work. Semler's unconventional approach was very successful and profitable for Semco over several decades.
Organization Culture at Semco
- 2. “At some point, you have to make a decision. Boundaries don’t keep other people out. They fence you in. Life is messy. But that’s how we are made. So, you can waste your lives drawing
- 3. “We’ve all learned to go on to our email on Sunday evening and work from home. But very few of us have learned how to go to the movies on Monday afternoon” -Ricardo Semler
- 4. LETS TAKE A TRIP UP THE MEMORY LANE 1953 ANTIONIO CURT SEMLER FOUNDED 1960-1970’s SEMCO WAS A MAINLY A MANAFACTURER OF MARINE PUMPS 1960’S HIERARCHICAL ORGANIZATION WITH 12 LEVELS OF MANAGEMENT. “FEAR WAS THE GOVERING PRINCIPLE” 1980 ENTER RICARDO HE CHANGED THE ENTIRE STRUCTURE OF THE ORGANIZATION
- 5. CHANGES People set their own working hours Workers choose their managers and evaluate them twice in a year 21 page “Survival Manual” Profit sharing No receptionists, secretaries or personal assistants No headquarters, No job titles No mission statement People set their own salaries
- 7. Manufactures pumps, industrial dish washers, cooling units, industrial machinery Runs office buildings’ data centers Provides consulting services on environmental issues, Creates software for Internet applications, ATM services and Manages human-resources activities for major companies. What Semco does?
- 10. LEADERSHIP STYLE • Democracy in the organisation • Rotating the CEO position KEY STRENGHTS • Recognizing that the people are the most creative and productive when they have a say in the running of the company BEST DECISION • To introduce the boldest experiment in management ever successfully taken.
- 11. Management Style of Semler Participation Ownership Performance Discipline Empowerment Authority Accountability
- 12. ORGANIZATION STRUCTURE "It's a system that puts a lot of weight on leaders because then can no longer simply protect themselves with symbols of power like closed offices or special parking places. They have to rely exclusively on their ability to generate respect."
- 13. PARTICIPATORY MANAGEMENT FUNCTIONAL STRUCTURE MATRIX STRUCTURE LATTICE STRUCTURE Counsellors Partners Associates & Co-ordinates
- 14. "Semco's ongoing transformation is a product of a very simple business philosophy: give people the freedom to do what they want, and over the long haul their successes will outnumber their failures."
- 15. A bonfire of bureaucracies Spin off new satellite suppliers Rounding the pyramid Set your own salaries and bonus Appraise your boss Small, symbolic changes that make a big difference Workers’ committees take on a managerial role A new leadership network Profit Sharing Information Sharing THE NEW SEMCO
- 16. Ask someone at Semco “who’s in charge?” and the most likely response will be “no one.” Semco doesn't plan which businesses to enter. Instead it 'rambles' into new areas by trial, error and argument ORGANIZATIONAL CULTURE
- 17. Core Values Linking pay with performance Autonomy given to employees Wednesday Voucher Freedom & Accountability Three step test for starting a new business
- 18. "Rather than force our people to expand a business beyond its natural limits, we encourage them to start new businesses."
- 19. “Participation gives people control of their work, Profit-Sharing gives them a reason to do it better, and Information tells them what's working and what isn't.”
- 22. A person’s appearance is not a factor in hiring or promotion. Everyone knows what he or she likes or needs to wear. Feel at ease — wear only your common sense.”
- 24. How it actually works… • Ricardo Semler doesn’t have a current title. The company recently held a party to commemorate the tenth anniversary of the last time he made any decision at all. • The only real rules at Semco - is huge peer pressure and self- discipline. • Semler is more worried that the company's uniqueness will be diluted if it grows too fast or makes too much money. • Semco’s products are so good and its customer service so efficient that 80 percent of its yearly revenues come from repeat customers.
- 26. Semler's Rules for Management Without Control Forget about the top line. Never stop being a start-up. Don't be a nanny. Let talent find its place. Make decisions quickly and openly. Partner promiscuously.
- 27. Can Semco’s culture work for Indian Companies? • First, to copy Semco's structure, you need to: • Be convinced that it will work for your company • Be able to change your company's structure • Make it work in practice, with your own people • In the Semco case, the transition worked because the leadership (Ricardo Semler) owned the company, was young and he found the right associates to lead the change. • Above all it requires smart, humble and daring managers, willing to change their minds often.
- 28. • One of them is the relationship between the boss and subordinates. The general belief is that in India the relationship is very formal and hierarchical. • There are instances of companies with the traditional hierarchical model moving to a more decentralized way of functioning. • Not all of them may be able to make a transition to the "boss less" model. • A lot of Indian startups are coming up with the flat organizational system.
- 29. Thank You