Semco

Happy workers, higher profits: organizational freedom for revolutionary corporate structure

Tuesday 20 January 2009

5 inspired

Why did we choose this company?

SEMCO is an extreme example of ethical business that provides a good paradigm for a new organizational structure. When workers are satisfied they perform better which in turn results in higher profits for the whole company. SEMCO has proved that this is not a theoretical hypothesis. It can work in a real world when the right goals are settled and the process is performed thoroughly.

Main facts about the activities of the company

SEMCO was founded in Sao Paolo by an Austrian engineer Antonio Curt Semler. He produced industrial machinery. Then, his son Ricardo Semler (its current CEO) inherited the firm. Due to stress problems he had a passive management style allowing his employees to make many proposals: they started by avoiding massive dismissals and adjusting their salaries to the profits of the firm. It was just the beginning of a surprising organization. Today SEMCO is still controlled by the son of the founder and CEO, Ricardo; 6 Advisors, 6 Partners and Associates.

The company produces a wide range of industrial and refrigeration equipment and also provides some services specializing in “mailstream” solutions for other companies. It led to a profit of more than a $1,000 million and a net income of $9,992,000, while in previous years the firm had suffered net losses. SEMCO has an “inside-out” approach, so it works on itself and its people (the workers are the ones who benefit the most from the company’s achievements) before moving to society at large.

Ethical challenges the company is addressing and reasons to trust in it

SEMCO’s mission is to improve what the market already offers. SEMCO also wants to create job positions with a high degree of creativity and liberty. Accordingly, its values are the reliance on the goodness of individuals, flexibility, conscientiousness, pure democracy and respect. In fact, the firm strives to have happy workers. All these values are comprised in the “SEMCO tenants”: freedom, self-determination, self-discipline, passion and love.

What is interesting about SEMCO is its own internal organization: the workers can fix their own salary, dress and working hours. Supervisors and workers are hired and dismissed by a democratic decision taken by all the members of the firm. All the norms appear in their «Manual of Survival», which is written as comics.

The symmetrical and perfect information for everybody is the key to SEMCO’s business. Each member of SEMCO is fully aware just how much others are earning and working. Everybody is responsible for the accounting of the firm so they take courses to do it well and to interpret it properly. Another striking characteristic is the fact that the offices have no walls and all the staff does all kinds of tasks such as sending faxes and answering the phone. It has a totally horizontal structure in which leadership is based on the gained respect (a ballot is held).

They are profitable because SEMCO has a positive stimulus of competitiveness within the organization: employees can create new divisions and they can use the services of the market instead of the ones that other departments of the firm offer. So each division is always trying to improve and to be better than the market (this is linked with its mission).

Challenges the company might face in the future and ways to improve

The goals set by the company are very challenging: apart from being profitable, SEMCO also seeks to find the most efficient way to treat its workers through the constant organizational innovation. The most important is its absolute commitment to the excellence. The whole company, from junior staff to the CEO, believes in a better world we should create and is convinced that no idea how to reach it can be judged as stupid. However, experiments always convey risks of failure and take time to reveal the results. These place restrictions to the company growth and future development.

Ideas for future business:

“An open management model to create and manage unconventional ideas”

Start a new discussion

1 Discussion / 1 Message

  • Semco 13 May 2013 at 12:44 , by nelsonquesado

    Semco is an inspiring company because of its organizational model. Most companies outsource specialists or trust in their top managers to decide their way of business. If we translate this in a political view and compare, it’s almost a dictatorship. Well, it might make sense, once that the top managers and shareholders are the one who are taking risks on the business. But Semco thinks different.

    Semco believes that the floor workers are the ones who knows how the factory works and how to make it better. It is like a democracy, where the important decision are made by the workers, directly or indirectly through elected representatives, in order to ensure the company’s growth and wellbeing of employees.

    This business model was put on proof at the time of the most recent economic crisis in Brazil. Semco workers agreed to cut 40% in wages and have been given the right to approve every item of business expense. This was a key decision to avoid bankruptcy.

    I would be proud of working in this company.

Location: Brazil

Sector: industrial manufacturing and correspondence management

Official website: http://SEMCO.locaweb.com.br/en/

Key figures:

net income of $9,992,000, profit more than $1,000 million

Nbr. visits: 2968

Nbr. inspires: 5