by Ricardo Semler, Arrow Books, 2003.
Semler tells the story of how he turned normal management approaches upside down in his business, moving from command and control to genuine participation. A relaxed and largely self-managed style has been very successful. It raises the question: Why does work have to be the opposite to leisure?
(Reviewed by Kevin Barham in March 2004)
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Ricardo Semler turns all our traditional notions of work upside down. Why, he asks, are we able to answer emails on Sundays, but unable to go to the movies on Monday afternoons during the so-called working week? If we can take work home, why can’t we take our kids to work? Why do we think the opposite of work is leisure, when in fact it is idleness?
Semler heads up Semco Inc of Brazil, Latin America’s fastest growing company and one of the world’s most unusual workplaces. Since he took control of the company from his father in the early 1980s, he has challenged practically every maxim of hierarchical, control-based management - while at the same time producing a turnover of $160 million that is growing at 40% a year. So he must be doing something right.
Semler’s first book Maverick!, published in 1993, described how he and a radical management team overturned traditional management theory by doing away with organisational charts while allowing employees freedom to choose what products they worked on and how they would produce them. The first book generated huge interest in Semco from outside organisations around the world. At one point there was a 17-month waiting list for the bi-weekly tours that the company arranged for interested visitors. In the end, Semco had to cancel the tours because, says Semler, its workers were beginning to feel like animals in a zoo!
Semler’s new book describes how, while building a highly successful company, he has pursued a relaxed management style that has allowed him to watch his favourite movies or relax with his son in the middle of the business day. He emphasises, in particular, the importance of free time away from the office and time for creative thinking in the office. People are free to soar when they find equilibrium between their personal and work lives, he says. For most people, however, life is ‘out of whack’. We can, however, use the time granted by the seven-day weekend to restore balance.
We used to define the weekend as our free time but, according to Semler, that definition is outdated. The traditional weekend ended long ago. Semler explains he uses that notion to explore making work more fun and to finding a balance between work and private passions, so both can be significantly gratifying. To do that, we have to reorganise the workplace, both physically and culturally. In redistributing the weekend across the work week, employees find balance and Semco makes money - the right approach to employees always creates profit, Semler declares. The repetition, boredom and aggravation that too many people accept as an inherent part of working can be replaced with ‘joy, inspiration and freedom’.
One example of freedom is the lack of a dress code at Semco. Employees are generally free to wear what they want, except perhaps when going to outside meetings. Semler believes that requiring people to wear suits and ties is just another way that organisations seek to control people and make them conform.
Semler states that he has no idea what business Semco is in. He resists defining Semco because he believes that once you define what business you are in, you create boundaries for your employees that restrict their thinking and give them a reason to ignore new opportunities. Instead of dictating Semco’s identity, he lets employees shape it with their individual efforts, interests and initiatives. Everyone is encouraged to develop new ideas for products and services and to form ad hoc teams to develop them.
Semler says that Semco’s architecture is the sum of all the conventional business practices that it tries to avoid, so it is easier to say what it is not, rather than what it is. The company is defined by the lack of formal structure and the way it gives up control so workers can follow their own interests and instincts when choosing jobs or projects. He has a deep conviction that the individuals in his workforce are all adults who make complex and far-reaching decisions in their daily lives, so they can be trusted to perform without supervision and controls in their working lives. More than that, Semco actually insists that workers seek personal challenges and satisfaction before trying to meet the company’s goals. Semler says he encourages employees to ‘ramble’ through their day or week so they will ‘meander’ into new ideas and business opportunities.
Semler also defies conventional thinking on strategy and planning. He says he does not want to know where Semco is headed. He wants employees to ‘ramble’ through their days, to use instinct, opportunity and intrigue to choose projects and ventures. They do not write anything down in black and white with numbers because any written plan is dangerous. People will follow a plan mindlessly with no thought for the final destination. Business success is the result of worker balance and that is what Semco seeks when it asks why all the time. Balance results when people are given room to manoeuvre so they can find where their talents and interests lie and merge their personal aspirations with those of the company. Once employees feel challenged, invigorated, and productive, their efforts will naturally translate into profit and growth for the organisation.
Semco insists that its people form new habits. One abiding principle is to avoid routine and steer clear of habit. Semco has therefore eliminated some of the more familiar structures of most organisations. New communications technology, for example, has allowed it to abandon the conventional nine-to-five, Monday through Friday schedule. Semco employees are free to customise their workdays and to come in earlier or later than traditional schedules. The hours they work are determined by their self-interest, not by company dictates. They are seen to be the best judges of the amount of time and the proper place necessary to get their job done. Semco has also abandoned the requirement that employees work only in Semco offices or factories and is dismantling its headquarters in favour of satellite and portable offices.
Employees are also allowed to manage their pay and work hours flexibly. If someone is going through a phase where, for good reasons, they want to work less - and lower their pay accordingly, Semco will do its best to adapt.
As Semler points out, the big challenge in making this highly flexible structure work is that managers have to relinquish control. Companies hoping to recruit the best and brightest people today, he states, must show that they trust employees to work anywhere and must assume that they are buying talent and dedication.
Semler says he wants people who are excited by their work. Any employee who puts himself first will be motivated to perform. Instead of spending hours and money on motivational training, Semco therefore looks for the source of the problem. If someone is not motivated, they need a different job or a different way of working; they do not need motivational training.
Semler acknowledges that it is human nature to lose interest in anything after a time. People cannot be passionate about doing the same thing over and over again. Companies need to understand that interests tend to be cyclical. Semco therefore uses incentives to employees to move around different jobs and departments. This is another means for them to dip into their reservoir of talents and to develop independence.
Unfortunately, Semler complains, our society conditions us to accept boredom from an early age - we are taught to expect it at school. (Semler spent his own youth in a rock band). Employees need latitude to try different jobs because the education system compels them to make training choices at a very young age, when they have little information about professions and no experience. People who stay in conventional jobs simply learn to live with boredom but that is a huge waste of human potential. This is why Semco lets people ‘ramble’ around the company and explore their interests.
Semler believes that work must be customised to people’s talents but he says that few organisations really try to help people identify their talents or find out if they have a calling. He believes organisations should indulge their interests and talents by seeking the same professional growth and satisfaction as musicians. Semco tells employees to ‘make sure that you are where you want to be, and make sure this is what you want to do’. To help people explore their talents, the company has several different programmes. ‘Lost in Space’, for example, allows young recruits to migrate around the company for a year trying different activities to see where their interests lie. In the company’s ‘Rush Hour MBA’, people attend classes on Monday evening instead of wasting two hours sitting in rush-hour traffic.
Semco’s recruitment and selection process relies heavily on the shock value of intensive mutual exposure. Candidates participate in an open interview where they have the opportunity to see the other contenders. They are then collectively interviewed by groups of Semco employees who can voice their opinion about the people who might be joining their team. Only by spending a lot of time with the greatest possible number of employees, says Semler, will candidates get any sense of Semco and understand how important interaction and novel situations are for the company.
People at work, Semler has found, do not relate to more than a small ‘atomic family’. The maximum anyone is able to deal with regularly is a half dozen people. Groups of between six and ten people know all about each other and don’t need outside control. Semco’s units are no bigger than a few hundred people. The maximum is always whatever number permits people to know each other, understand the whole, and undo the need for excessive control.
Meetings are voluntary at Semco. No one is obliged to attend any meeting and people can come and go as they wish. If the company forced workers to attend meetings, says Semler, it would never learn when projects or subjects were of no interest to the company’s employees. Workers can attend any meeting they are interested in, read all reports and memos, participate in budget forecasts and preparations, and sign up for board meetings. Semco’s board has nine seats, two of which are always open at meetings to any employee who signs up on a first-come, first-served basis.
Semco rotates the CEO job every six months to prevent the deification of the board and to make the system independent of the CEO. Semler says that, while Jack Welch of General Electric is a tremendous example of leadership and success, such forms of leadership do not create sustainability. What is better in the long run, he asks - a charismatic central figure or a sustainable organisation? Rarely do the two coincide. For that reason, Semler has been distancing himself from day-to-day involvement in decision-making at Semco.
Semco has grown 40 times the size of the original family business but Semler does not believe in perpetual growth for its own sake. Instead, the company concentrates on finding the right organic size for each of its markets. Nor is money the barometer of success. He believes we need a new way of evaluating companies, a 360?, comprehensive management gauge of how well an organisation is doing. In an effort to develop a new touchstone, Semco surveys its employees, customers, suppliers, consultants, independent contractors and other third parties to give it a barometer of success. Semler reveals, furthermore, that it plans to publish the results along with its financial reports in the hopes of convincing people and markets that transparency pays.
Semler’s book is highly readable and engaging, with plenty of anecdotes about the diverse array of individuals who work for Semco and stories illustrating the different ways in which he has tried to implement his management beliefs. Throughout, he presents a strong case for how common sense and a deep belief in the capacity, intelligence and desire for fulfilment of people can lead to business success. He is honest too about the mistakes he has made and what he has learned from them.
The book is very alluring. You find yourself saying, wouldn’t it be great to work for such a firm? But can an organisation really let people do what they want, when they want and how they want? Can it let them participate actively in deciding the direction the company is taking? Can it live with active dissent? Can it let people participate to the extent that they have the power to vote down company decisions?
Yes it can do all this, replies Semler, and he points to his company’s success as the proof. ($100,000 invested in Semco 20 years ago would now be worth $5.4 million, he tells us). Self-management, he declares, requires courage from those practising it but it beats the traditional approach to business hands down. You may not want to go as far as Semler has in freeing up the workplace, but his book cannot fail to make you reflect on your own approach to management.