Magazine article New Zealand Management

Ricardo Semler: Still a Maverick

Magazine article New Zealand Management

Ricardo Semler: Still a Maverick

Article excerpt

HR departments? Not needed. Five-year plans? Just wishful thinking. Leadership development? Not that material. Technology? Hasn't done much to change our state of mind.

Time spent listening to Ricardo Semler challenges a whole bunch of sacred cows. But the Brazilian, who has so successfully democratised his family company, Semco, over the past two decades that he was recently able to celebrate "10 years since I made a decision about the business", is a refreshingly creative thinker.

In Australia recently to speak at the Global Insights conference sponsored by Very Gold Coast Tourism, he asked why we are still "running organisations as if Henry Ford was still alive" when the environment in which they're being run is so different. His interest in creating an organisational architecture that was more responsive to today's needs prompted the radical changes at Semco that were outlined in his book Maverick.

Semco has no mission statement or written policies and plans just six months ahead. "You notice that in yearly plans all the good stuff happens in the last six months--that's because the first six is what you can reasonably focus on, the rest is a wishlist," says Semler.

The company has no need for an HR department because employees set their own salaries and choose how and when they work, as well as the technology they work with. Those who have an interest in new hires take part in what is a very open, collaborative process (everyone shortlisted is interviewed simultaneously by anyone who cares to be involved); employees can also hire and fire their own managers; they can also start new business ventures or shut down unprofitable business units on a show of hands. Interestingly--at a time when talent retention rules--personnel turnover at the company is just one percent.

As Semler points out, such an open, democratic system is in reality very rigorous--you might choose your salary or your laptop but with all the company books open everyone knows how you valued yourself and whether your performance matches up to it. A profit-share scheme keeps everyone focused on Semco's financial health.

It's an organisational design that no longer has to prove its worth, says Semler. It has not only weathered Brazil's cycles of deflation and hyperinflation plus political swings to right and left, but actively prospered--often growing at a rate of 30 to 40 percent a year and now employing over 3500.

Asked why so few other companies have followed the Semco model, Semler talks about fear and stasis.

"There is nothing in the system to help people make the leap of faith to let go of control. I know that as I let things deconstruct it will turn out better, but not many can do this. Giving up control is something none of us do well in any aspect of our lives."

Part of the problem, he says, is that the present system throws up the wrong sorts of leaders. It ousts the timid or introverted and alienates women.

"It brings the people who are willing to be tough and fight and get up early and leave their kids and not see them for years because they're going to make a bigger profit this quarter. That is the sort of self selection you get at MBA schools. …

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