How we work: Ricardo Semler and Semco, entrepreneur

Ricardo Semler's anti-Taylorist methods at Semco may seem nutty (you can choose your own salary and manager, everyone can see the company financial accounts), but apparently they work.

Semco's staff work in small, autonomous units of about a dozen (the size, says Semler, of a close family group). They make the decisions, choose their leaders, set objectives and decide who they need and what they should be paid: someone who wants too much pay for what they are doing might be frozen out by the group. "From a distance it can sound like a workers' paradise," says Semler, "but the system is pretty unforgiving, because if you put your salary too high, and people don't put you on the list as someone they need for the next six months, you're in more trouble than you would be at General Motors.

There is little bureaucratic control beyond financial accountability; almost everything depends on peer pressure. "We have a higher trust in human nature," says Semler, "but we're also convinced that peer control is fabulous as long as there is a common interest. If someone's interested, the sort of corporate corruption you see elsewhere can never happen. It can only happen in places where people really don't care, where they're doing their nine-to-five thing, and the chief executive knows he's under the sword of Damocles so might as well make as much as he can. If he has that attitude, a lot of other people think the same way, so that system is doomed."

The Guardian's article pulls a quote out as its headline ("Idleness is good"), but the core idea is that Trusting People Is Good. The next step is probably to ask customers to name a fair price they want to pay for services, and accept it (or for customers to ask their suppliers to do a fair amount of work for a budget of X). Perhaps Semco do this already.

Meetings are  voluntary:

Because of the fundamental tenet that we don't want anyone involved in anything that they really don't want to do, all of our meetings are on a voluntary basis, meaning that the meetings are known, and then whoever is interested can and will show up, and should also leave the moment they become uninterested. It is a bit unnerving to watch these things, because people come in, plunk their things down, and then 15 minutes later somebody else says "Bye bye, see you." But the fact is that whoever is left there has a stake in the decision being made, and the decision is final in the sense that it's going to be implemented after the  meeting.

From the Maverick book, the principles:

To survive in modern times, a company must have an organizational structure that accepts changes as its basic premise, lets tribal customs thrive, and fosters a power that is derived from respect, not rules. In other words, the successful companies will be the ones that put quality of life first. Do this and the rest - quality of product, productivity of workers, profits for all - will follow.

At Semco we did away with strictures that dictate the 'hows' and created fertile soil for differences. We gave people an opportunity to test, question and disagree. We let them determine their own training and their own futures. We let them come or go as they wanted, work at home if they wanted, set their own salaries, choose their own bosses. [...]

At the heart of our bold experiment is a truth so simple it would be silly if wasn't so rarely recognized: A company should trust its destiny to its employees. [...]

Semco is an invitation [to] forget socialism, capitalism, just-in-time deliveries, salary surveys, and the rest of it, and to concentrate on building organizations that accomplish that most difficult of challenges: to make people look forward to coming to work in the morning.

Ricardo Semler: Set Them Free (CIO Insight, 2004)
Idleness is good (Guardian, 2003)
Ricardo Semler and Semco S.A. (PDF file, Garvin School of Int Mgmt, 1998)
Semler's Maverick: google, Allconsuming, Amazon.co.uk
Semler's The Seven-Day Weekend: google, Amazon.co.uk

More how we work.

Comments

[Barbara Roszkowski]

It is amazing that Ricardo Semler in his twenties demonstrated so much wisdom.

I am a mechanical engineer. My entire career I devoted to engineereing education and conformed to its conservative culture. It took me about four decades to rebel against centuries of educational tradition and develop a new learning model for tertiary education in engineering which is similar in concept to Ricardo's philosopies.

The model is based on collaborative learning with a major project as curriculum. Students are working on projects that they are passionate about and instead of rigid classes in a 'closet' we conduct meetings using public libraries or other institution locations. Students form community of learners. A lecturer becomes a member of this community. Knwoledge is shared and all ideas are valued. It works well if students are committed to learning.

Ricardo's attitude to put people's happiness first rather than company's profit is commendable and I am planning to integrate his philosophy in the engineering studies context.

[syed Shahrier Ali]

As an employee its a desire of everybody to work in such boss like Ricardo Semler.
i highly appriceate his steps and no doubt he become the modle to every body.
As an IT professional i will love to work with him if i get chance.

[deano (auz)]

semler iz awz he iz my idle i wana be like him.....

[bob]

who is ricardo semler?

[priyanka jadhav]

Semler is the best leader in the world according to me. In my opinion he followed the traditional management structure but it was hidden. and which made the organisation culture free.

[VB]

I am not getting a clear picture of the salary system. It appears that an individual has to decide a salary for himself, which would become public. There could be some people who might agree with it, and some who would not. How is the salary decided in such cases?

[Jake]

VB: teams set their budgets and targets. If you set your salary too high-- and/or the team thinks it can get your work done cheaper by someone else-- you're out. So there's peer pressure to be reasonable. It's a genius system.

And before you ask "what if the whole team agrees to inflate it's own salary"-- ignoring for the moment that this just doesn't seem to happen (this is how my company works, so I speak from experience) -- the company sets overall profitability goals. If you can pay yourself a ton AND hit those goals, that's called being a superstar and you probably deserve it.

[Gurpreet Singh Siviya]

Hi We are implementing this in our organisation & even if we acheive 10-15% of what Semco has done it will be great. Journey is tough but we have begun .

Gurpreet Singh Siviya
+919910264477