Introduction
Semco a Brazilian company was founded by an Austrian born engineer Antonio Curt Semler in 1954 and it started off with processing centrifuges. Within a decade Semler & company became one of the speediest growing companies of Brazil by acquiring major contracts to supply sea pumps to armed service.
Ricardo Semler the child of Antonio Semler after graduating from Harvard took over the reins of the company in 1982. Until then Semco was a paternalistic company governed by an autocratic leader. Ricardo Semler had a different way of working the organisation; on his first day as the CEO of the company he fired two thirds of the senior management. After one of the incidences in a manufacturing plant floor, where he fainted & later hospitalized, he came up to realize the value of fabricating work life balance not only for himself also for his employees. After that he carried out a series of tests within his company, which not only made Semco survive the rough patches of Brazilian market but thrive after words. Semco's sales increased from $35 million in 1990 to $100 million in 1996.
Ricardo came to know for his radically different design of management and lots of the bundle of money 500 companies paid a stop by at Semco to identify the causes for their success. Also Ricardo Semler triumphed in the business innovator of the entire year honor in Brazil both in 1990 & 1992. He has authored two highly acclaimed literature "Maverick" and "The seven day weekend" where he has heavily challenged the modern management tactics.
In this article I am exploring different approach of Ricardo semler to management and would be evaluating its efficiency. Also I will make an effort to apply the system utilized by Semler at Semco to the UK consumer giant Sainsbury and predict the likely outcomes both in the medium & long lasting.
Q1. Semco Organisation Design and its effectiveness
Semco has an extremely flat structure consisting of only three layers. The top most layers comprises of six counsellors who determine the general policy and technique for the organisation. These six counsellors act as CEO for a six month period in succession. The second layer consists of associates, with seven to ten leaders from each Semco department. The final covering consists of employees who are called associates in Semco.
Semco is an incredibly decentralised organisation; it includes probably got the extreme form of decentralisation. Here each employee makes decision regarding their work, they may have the entire liberty to set their working times, their incomes and everyone works within an wide open office. Everything is transparent and everyone works in the same office floor without having any private chambers for anyone. This is quite definitely similar to Japanese organisations where everyone has same dress code; they eat from the same self applied serviced canteens and use the same carpark. This effectively reduces the barrier between the management & employees (the Them & Us hurdle).
However this is within much contradiction to american management style which will have taller organisations with a wider middle management. Control is held in the hands of select few and decisions are used only near the top of organisation. Although lately there is a lot of talk about empowerment in the work place but it seems to be pretty much on paper somewhat than actually being practised. Electric power and control are incredibly difficult things for any top management to give up.
I imagine the difference in concentration between Semler and other organisations create this radical difference in which they are been able. Where Semler will not have confidence in any mission affirmation and is always ready for change, on the other hand most organisations have a fixed goal to accomplish. Also one of quite key points of Semler is to create a work life balance for employees, his main goal is never to make revenue at the expense of employees, whereas with most organisations this is merely a story book, they pursue demanding targets and ensure they have the best out of employees in pursuance of this target. I'd say the major difference is Semco can be an employee centred company whereas most traditional organisations are objective/ goal centred organisations.
Semco demonstrates an unbelievable level of transparency, it offers all its employees a copy of its P/L affirmation and and yes it leaves no rock unturned to make them understand by submitting them in a toon like manner. Each employee sets their own salary and they not only know each others salary but also what other employees are receiving in similar positions in other companies. During performance appraisal interviews if their salary is found to be low, they should take up higher incomes.
Employees placed their own working time and have no formal dress code to check out. An ideal evident is the two receptionists in Semco; no one knows who is heading to be at the desk as the two of them decide their work schedule among themselves. Semler demonstrates an unbelievable degree of beliefs on his employees, relating to him the best way to management is to haven't any management by any means. He thinks that employees are developed adults and they will do their level best to achieve results beneficial to the company, the client, their colleagues and themselves. He doesn't consider himself who owns the company; corresponding to him he merely owns the administrative centre of the company.
Semco is a highly flexible company, after taking over the reigns, Semler has diversified the business and has nine different areas of operation including environmental consultancy, which is a consequence of the proposal the company received in one of its NTI (Nucleus of Know-how). Remaining available to suggestions Semco has were able to grow its business and income.
The approach followed by Semco has shown to be impressive which is mirrored in the success of Semco. Not only it includes increased its income and proven itself one of the quickest growing companies in Brazil but also it has turned into a highly sought out employer in Brazil with an extremely low labour turn over rate. Both increased revenue and low labour turnover rate are indications of the success that Semco is generating by implementing its present system of professional democracy.
One of the biggest challenges for just about any modern company is to make employees feel a part of the company. The sense of possession & belongingness made among employees raises their determination level and in turn increases their production. Modern management theories like contribution, delegation, empowerment etc appear to be the answer for these challenges but companies are still fighting their implementation.
However Semco appears to have mastered these concepts and have applied them in a very common but unpractical manner. Some critical indicators that emerge from the study of the organisational design of Semco are:
It encourages contribution / participation of employees which effectively gives a sense of control to employees, it breaks down the status quo, it emits the creative imagination among employees, which creates a feeling of belongingness which in turn leads these to take responsibility because of their job. This may best be defined in Semler's own words "where every employee has the freedom but also take collective responsibility for their work".
Q2. Difference between Semco system and traditional methods to Strategic HRM
Strategic HRM targets discovering the right amount and type of employees had a need to realize the functional and business strategy. Every business creates its technique to achieve its aims; Strategic HRM focuses on obtaining the individuals who is needed to carry out the strategies in practice.
So it should concentrate on finding people whose attitudes and behaviours are likely to be congruent with what management believes to be appropriate and conducive to success. However Townley (1989) is convinced that excessive concentrate on attitudinal and behavioural characteristics would lead to risk as it would stop any innovation and would lead the organisation to a state of inertia and rigidity where it would be difficult for those to survive in an extremely competitive environment.
The main elements within a traditional approach to strategic HRM are: Human being Learning resource planning, Recruitment & Retention, Learning & Development etc.
Human tool planning focus on identifying today's human resource capability and future people learning resource requirements of the business enterprise and then it formulates a plan to bridge the space.
Traditionally Recruitment and retention plans are formulated by the Man Resource department. And they're often aided by the line professionals in doing so. Here I will be checking out the difference between Semco's method of recruitment and retention from the original approach.
Recruitment is regarded as the process of attracting ideal prospects towards a vacant position and then selection is carried out to select the best possible candidate. Normally it undergoes some steps:
Identifying the vacancy
Analysing the job
Formulating job description
Formulating person specification
Creating employment Advert
Determining the medium for advertisement
Internal / External Recruitment
Collecting CVs or software packs
Short listing the candidates
Arranging interviews
Conducting interviews
Selection of the suitable candidate
Induction
Semco has a different way of carrying out recruitment, in cases like this it isn't the HR division or Line supervisor who makes a decision whom to recruit or not rather it is the associates who would work with the new recruit would determine whom to employ regardless if the new person would be a manager or co-worker. And they adopt the next procedure:
a) Initially the associate includes the need to retain someone.
b) An over-all voluntary appointment is held to go over the new recruits' characteristics & skills
c) Then an advertisement is completed in a papers or a head hunter is appointed.
d) Resumes are accumulated and Semco a gets a high level of application every time it advertises for a vacancy.
e) Applications are distributed among the participants to indicate them on grading requirements.
f) All the applicants that receive A+ are needed the interview.
g) They are simply called for an organization interview and the best prospect is chosen.
Retention of key individuals is essential for the success of any company. Traditionally organisations tend to link additional benefits to salary to be able to wthhold the key individuals. They are given campaigns, higher pay deals, more getaways, company vehicles etc. to remain loyal to the company. In case of Semco retention rate is high as they are labour turnover rate is very low around 1% and they are considered one of the very most searched for employers in Brazil. The reason why because of this unbelievably high rate of retention could be attributed to three concepts of Semler:
Participation / involvement of employees provides them a feeling of control
profit sharing provides them grounds to work
Open information system that explains to employees what works and what doesn't work
Q3. Software of Semco System to the English supermarket giant Tesco
Tesco is the largest retailer in the UK in conditions of sales; its revenue is continuously increasing and has exceeded 2 billion in 2007. In 2007 both its sales & revenue grew respectively by 10. 9% and 20. 3%. It really is undoubtedly a highly successful organisation and controls more than 30% of the grocery market in the united kingdom. They have both varied into different product amounts and into different marketplaces like the USA.
Tesco was founded by Jack Cohen in 1924 and the name resembles the first two words of his surname and the first two letters of his supplier T. E Stockwell. It exposed its first store in 1929 in Burnt Oak, Edgware, Middlesex. By 2007, Tesco has about 1, 988 stores in the UK and 1, 275 beyond your UK. Tesco operates in four different types of store format e. g. Tesco Express, Metro, Superstore & Extra. In 2007 there was only a modest inflation 0. 2% across Tesco Stores. Also Tesco is the major private sector company in the UK.
Tesco has a huge reputation within the retail industry and it is highly successful. Over time it is continuing to grow from lots two position to become the market leader. Here I will make an effort to apply Semco system of management to Tesco and identify the potential impacts than it.
Semco and Tesco are both popular and successful companies in their own geographic region. Both operate across a varied range industry. However they have a number of significant dissimilarities as well:
Tesco is publicly exchanged company whereas Semco is an exclusive company with Semler being the major shareholder.
Tesco is much bigger in proportions compared to Semco and operates internationally.
Tesco has a quest statement and corporate and business objectives and is also led by strategies whereas Semco doesn't have any mission affirmation or strategy.
Tesco has a board of directors and a CEO who set the overall plan for the business, whereas Semco has six different CEO s but none of them entirely place the plan of the company
Tesco derives its competitive advantages from its selection of products and low cost of products whereas Semco derives its competitive benefits from getting a loyal and dedicated workforce.
Tesco is really a service company and is also into mass market where it provides general public with items of basic need whereas Semco is really a manufacturing company with out a great deal of customer participation.
In case of Tesco most of its procedures are carried internal whereas in case of Semco the majority of the operations are outsourced and company actually functions a few functions e. g. higher management, Research & development etc.
The difference in operation can be attributed to the position of both companies. Being a publicly exchanged company Tesco must generate profit for its shareholders and therefore should be motivated by strict targets. On the other hand Semco is a private company where Semler holds most the share and his target is on creating a better working environment for its employees and also produce a work-life balance on their behalf. However both organisations practice revenue writing among employees to certain degree, whereas it is extensively practised in Semco, in case of Tesco during 2006, it distributed 77 million value of shares among its employees under "Shares in Success" design.
Possible influences of Semco System of Human Source management on Tesco:
Employees determining their working times and dress code: Tesco employees in majority of stores work on a rota basis and have a formal dress code to check out. Many of them would argue it avoids unneeded discord among employees and provide management with the choice of spinning employees predicated on their need and uniform derives a feeling of owned by the organisation and creates a standard culture. However if Semco system is applied at Tesco then there would be both long & medium term benefits as employees can make a decision their own working time, they can balance their work and life better and would feel a feeling of control. Nonetheless it can lead to chaos with less quantity employees being present through the busy period and more being present through the tranquil period.
Employees deciding their salary: Tesco has predetermined salaries for every single level, this is based on the industry standard, nonetheless it can be mentioned that generally retail industry is not very attractive in conditions of repayment. On several occasions during my conservation using its employees they have got indicated dissatisfaction over their pay. And almost all of them get the job done because they are either learning or have no other choice. Giving employees an chance to determine their salary, in my own opinion Tesco would improve its image as an company of choice thereby able to appeal to and hold on to highly talented individuals. However since it is an inexpensive provider and always seeking to reduce its operating price it must set up a certain quota to avoid overpaying its employees.
Employees determining the type of products to sell or type of special promotion to carry out in confirmed store: this is certainly a healthy recommendation as employees would be more aware of the neighborhood needs than the top quarter. It will give them a sense of participation and involvement in organisation decision making thus increasing their degree of job satisfaction.
Employees recruiting their co-workers or professionals: Tesco has a dedicated Human Resource Section which holds out the recruitment and retention. Given the volume of operation it could not be wise to devolve this function to employees; however employees must have a say in the type of person they would like to use and that needs to be taken into account by Human Source department while formulating the individual specification.
The system of performance management in Semco can be applied at Tesco where every worker will be not only being judged by their managers but also by their fellow workers and managers would be judged by their subordinates. This certainly is a fair system of appraisal and would eliminate any bias during the performance appraisal process.
Conclusion
Semler is an extremely respected business man and intellectual, his concepts have made his own organisation successful. The three primary values: participation, profit writing and free move of information are highly pleasing. His argument towards dealing with employees as developed adults in the work place and giving them responsibility because of their own job jobs has its merits, however this gets rid of the need for a formal management and the lack of which might create confusion and chaos in the company.
Participation from employees is definitely one of quite factors for management and Semler has put this into practice by giving employees the expert to make decisions relating to their job and the whole organisation. However sometimes to make right decision employees need to have the right information and understanding and in the event of a crisis where decision should be produced immediately, it should rather be done by the higher management. Not absolutely all democratically made decision is beneficial. Semler methods an extreme form decentralisation, although it has shown to be successful in case there is Semco, I mistrust its request in other large organisations e. g. Tesco.
On a nut shell the management system at Semco is very unorthodox and on the same scale very attractive, it generates high degree of commitment among employees and them with an unrivalled working environment. For me I would like to work at Semco to get a feel of the sense independence enjoyed by employees but insufficient career progression is certainly a deterring element in making that decision.
