Ricardo Semler: Industrialist, Entrepreneur, Maverick. Since 1975 he has been practicing business principles that only now are becoming trendy: decentralized execution, optional meetings, employee-set salaries. The difference? His business, Semco, is a multi-billion dollar B2B manufacturer / services provider in a cut-throat industry operating in one of the world’s toughest economic environments – Brazil. Successfully.
Semler’s deeply held belief that most of business is designed to restrict employee engagement and productivity has led him to radical operational practices: no business plans, no company strategy or “vision”, no 5-year plans, no formal budgeting processes. Instead, employees are given free reign to follow their interests and instincts in following business ideas; they are also given access to the highest level board meetings and all the financial information they need to determine their own salaries. Bosses who fail to achieve satisfactory marks by their subordinates on their performance review are removed – Semler himself was voted out of the CEO position of his own company, he proudly notes.
This list of initiatives goes on: Work’n’Stop, Lost in Space, Rush-Hour MBA, Retire-a-Little, Family Silverware. The main point, however, remains: Given full executive powers and the reassurance that they can pursue their own interests at work, employees will – successfully and profitably. Setting your own salary sounds great, Semler points out, until you realize that all other employees can see it too and will judge your performance based on someone making the same or less. Also in financially difficult times – of which Brazil has seen a few in the last four decades – employees are perfectly capable of bootstrapping operations and working overtime until the cycle improves. The soundness of his philosophy is proven by the international reach and success of the company; not surprisingly, employee turnover at Semco is practically non-existent.
Read this if you want to challenge your own notions of what is possible within an organization. If that is too daunting, start with this TED video instead and implement Terminal Days into your week and start going to the cinema on Monday afternoon.