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SEMCO

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This presentation is based on the Semco case study in which Ricardo Semler has shown radical leadership with wisdom and have a democratic and shared work culture in Semco where every employees are respected and are welcomed to provide innovative ideas for a successful business.

This presentation is based on the Semco case study in which Ricardo Semler has shown radical leadership with wisdom and have a democratic and shared work culture in Semco where every employees are respected and are welcomed to provide innovative ideas for a successful business.

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SEMCO

  1. 1. INTRODUCTION • Semco SA (Brazilian company) • Manufactures over two thousand different products (industrial pumps, cooling towers etc) • Also provides environmental and internet services. • Between 1982-1998 its productivity increased nearly sevenfold and profits rose fivefold.($32- $212 million)
  2. 2. THE CULTURE • No Power-packed job titles • Employees including Top level managers themselves did all the work.(photocopying, faxes, letter typing, like parking was strictly first come first serve basis) • No idea about what business Semco is in. • No organizational structure/chart; no fixed CEO; no VP’s, no CFO’s, COO’s or CIO’s. • No long term strategic business plans, no career plans, no job descriptions or dress code for the employees.
  3. 3. BACKGROUND NOTE • Semler’s father, Antionio Curt Semler. (Austrian- born engineer) • Migerated to argentina in 1937. • Visited brazil 1952 (while he was working on a centrifuge technology capable of separating oil from vegetables. • Started contraction of Semler & co in 1953.( obtained patent for his technology) • 1960-1970s, it was mainly manufacturer of marine pumps. (90% of the sales were to Brazilian shipbuilding industries) • According to Semler it was a company “with a pyramidal structure and a rule for every contingency.”
  4. 4. SEMLER ENTRANCE • In 1980 Semler took the CEO’s position(21 years old) • With the different opinion he wanted to do some changes(fired two thirds of the top management.) • Later on said to make a redical shift in the direction and capabilities of the company this was the only solution.
  5. 5. Organization Structure
  6. 6. I don’t want to know where Semco is headed. It doesn’t unnerve me to see nothing on the company’s horizon. I want Semco and its employees to ramble through their days, to use instinct, opportunity, and ingenuity to choose projects and ventures. - Ricardo Semler, Semco.
  7. 7. Organization Structure • Semler started out with a functional organizational structure at Semco. • Under this structure, decision-making took a long time and each department took independent decisions that sometimes were not in the interests of other departments. • Then, the company shifted to a matrix structure. But, unhappy with its effectiveness, Semler changed the structure of the organization once again.
  8. 8. • The company was divided into autonomous business units, each headed by a GM. • According to Semler this would result participatory management. • After this Semco adopt a kind of lattice structure. • Also established factory committees in the various business units. Organization Structure
  9. 9. PARTICIPATORY MANAGEMENT FUNCTIONAL STRUCTURE MATRIX STRUCTURE LATTICE STRUCTURE Counsellors Partners Associates & Co- ordinates
  10. 10. Results : • The factory committees created an environment of trust and cooperation, and employees started taking a number of work related initiatives. • These radical changes made the middle managers feel threatened, as they felt like they no longer held positions of power & authority.
  11. 11. Results : • The empowered workers started multi-tasking for work place improvement and cost reduction. • Employees divided themselves into three units of 150 people each, with independent responsibilities in the area of finance, sales and manufacturing. • This practice was reinforced by the development of (NTI). • The group had the freedom to select the area of work and set their own work practices.
  12. 12. Results : • The salary compensation went down but employees were given share in revenue they generated through operational cost savings and earned through the development of new products. • At the end of six months, when the first review occurred, the group had 18 projects to work on. • Around two-third of Semco’s revenue came from such units.
  13. 13. Organizational Culture
  14. 14. Organizational Culture • Replication of Business units into Smaller units - Common set of values, philosophy and culture - Core values: Employee Participation, Profit sharing, Free Flow of Information • Pay & Performance - Costs reduced while production and profits went up - To Workers: 1/4th of divisional profit - Governance: Elected committee for design and allocation of funds
  15. 15. Organizational Culture • Participatory Culture - Early 1990’s : Cost reduction remained the main objective, Layoffs exception. - Pay-Cut Proposal: Landmark in development of the culture at Semco • Reward System - Option to choose one 1 of 9 (Exexcutive-11) - Encouraged to innovate & take risk - Organizational support - Decisive & quick decision making
  16. 16. Organizational Culture • Freedom - Free to choose job-titles - Choice of work - Collective decision on leader • Career Development - ‘Lost in Space’ - No specific responsibilities or JD for the first 12 months - Try their hand at various jobs - Continuous career & skill development
  17. 17. • Mutual Benefit • A Free Floating Organization • Transparency Voucher System:
  18. 18. • Freedom & Accountability • Budgeting & Planning • Effective Utilization of Resources Control Mechanisms:
  19. 19. • “ I have no particular talent. I am merely inquisitive.” – Albert Einstein • Semco due to inquisitiveness, focussed on: • Profit & Growth • Profitability & Happy Customers • Innovation • Eliminating Massive Layofffs Inquisitiveness & Innovation:
  20. 20. • High Level of Complexity • High End Product or Service • The Idea should aim at making Semco a Major Player in that industry. 3 Step Test:
  21. 21. LEADERSHIP
  22. 22. Leadership • Taking away Power and Authority. • Employees innovate continuously. • Clean out sessions • Semco was transformed to a culture based on democracy and shared leadership. • Change management process.
  23. 23. Leadership • Small changes make a big difference. • A new leadership network. • A bonfire of bureaucracies. • Appraise your boss. • Rounding the pyramid.
  24. 24. Contingency Theory • Contingency theory explains that group performance is a result of interaction between two factors such as leadership styles and situation favourableness. In Fiedler's model of contingency theory leadership effectiveness is the result of interaction between the leadership style and character of environment where the leader works. • It shows how the organization firmly adapts themselves in the environment. • Shows the importance of decision acceptance and quality. • The leaders ability to lead is contingent upon various situational factors which includes the leader's explicit working style, the capabilities and behaviour's of follower's and also the various situational factors
  25. 25. Transformational Leadership • Most of the leadership theories presented have been about transactional leaders. These kinds of leaders guide or motivate their followers in the direction of established goals by clarifying role and task requirements. • There exists a kind of understanding between the leader and the follower that if the goal is achieved the follower’s own interests and desires will be rewarded. • But there is another type of leader who inspires followers to transcend their own self-interests for the good of the organisation, and who are capable of having a profound and extraordinary effect on their followers. • These are transformational leaders like Ricardo Semler. They also pay attention to the concerns and developmental needs of individual followers, they change followers’ awareness of issues by helping them to look at old problems in new ways.
  26. 26. MAKING NEWS • The Semco way of running an organisation is slow but steadily accepted as a very effecive way of running a business. • Semco believes in treating people as adults has created a benchmark. • The BBC series ‘Re-engineering the business’ selected Semco five most successful management structure across the globe. • CIO magazine selected Semco among the most successful re-engineered company in the world.
  27. 27. MAKING NEWS • Semco has been profiled into more than 200 magazine across the globe. • Semler played a very major role in the way Semco became no. 1 choice for his stakeholders. • Charles Handy said “The way that Semler runs his organization is impossible; except that it works, and works splendidly for everyone.”

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