Tuesday, March 16, 2010

Maverick’s Way!

Maverick is a book authored by Ricardo Semler. It is the success story behind the world’s most unusual workplace.

First thing I said to myself after reading this book is – “Better late than never”. This book was first published in 1993. Thanks to my friend Ravee for introducing this mind blowing book to me.

All these years, I was attracted to only one company to work with. That is Google. I am sure many people would dream about working with Google (I know some of you aren’t) for its employee friendly policies, work place practices, culture, and outstanding campus and also in terms of its highly paid compensation.  

After reading Maverick, it is all past. Now I would die to join this world’s most unusual company –SEMCO headed by Ricardo Semler. Maverick is a story of how Ricardo Semler led his family business, Semco, through the change from an autocratic/authoritarian structure to a participative structure.  Semco is a Brazilian manufacturing business. Their products include: pumps to empty oil tankers, high volume dishwashers, cooling units for air conditioners, and mixers among other products. It isn’t a small company. Semco has many factories.

Ricardo Semler, when he was 21, took over the business from his father in the year 1980 as the CEO. On his first day as the CEO of the company, he fired sixty percent of the top managers. Obviously, he did not like the way the business was run and he wanted to change all of it. He started working on a diversification program for the company to survive during the tough times. When he was 25, he was suffering from physical and emotional exhaustion from trying to run the entire show himself, his doctors told him if he didn’t make a change, he was headed for an early grave. That moment was an inspiration for him to think of creating a work-life balance for himself and his employees.

He decides to try on a series of experiments that can bring the healthy change at Semco. Starting with the implementation of matrix organizational structure; there by decentralizing many of the operational tasks and to the extent of removing all the unnecessary corporate staff. Many of the initial experiments failed due to the lack of support from the employees and factory workers. Eventually, he decides on bringing in the participative management into his operations.

I had studied about participative management during my course and had even read a few case studies of the same. But, those case studies were not the ideal examples for participative management. What I had thought difficult to implement, Semler has done it beautifully. Semler believes in democracy and he created the clear case of the corporate democracy at Semco. He managed to transform the whole company in to a participative structure where every decision by the people. Semler has assembled an outstanding management team. But, more importantly, the workers run the company.

If I start describing about all the points that I liked in the book, I will end up writing more than the book itself. Here are some of the points that I can highlight to project how Semco was transformed: 
  • Semco has reduced its layers of management from 12 to three.
  • It has reduced the corporate staff by more than 75%.
  • The workers have a labor union that works in cooperation with the management of the company.
  • Workers evaluate, hire and fire their fellow workers.
  • Any supervisor, who is getting into Semco, will be interviewed and hired by his/her future subordinates.
  • Workers evaluate performance of their bosses. Bosses with poor performance are fired! (I know what you are thinking!)
  • Workers set their own production quotas.
  • Factory Workers set their own wages and corporate staff set their own salaries.
  • Profit sharing is collectively divided and it is decided by all the employees together.
  • Workers are taught on how to read the balance sheets. All the financial information is posted on the information boards and is easily available to anyone anytime.
  • All of the workers vote on major decisions, such as buying another company or moving a factory.
  • Workers are responsible for their own quality control, eliminating the quality control department.
  • There are no receptionists, secretaries or personal assistants. Semler says, you are the receptionist for your customer. 

Employees can work from any place and decide on their working hours on their own. Working from home is a right and it is not a request anymore. And employees are asked to take leave and go on a vacation for 30 days a year. Semler works mostly from home and travels for 2 months on vacation, he does not give his contact details to anyone in the company during his vacation. He believes in complete independence. No one should be dependent on him. I remember a statement made by Ricardo Semler which is my favorite in the book – “If you know how to respond to official mails/calls during the weekend, you should also know how to watch a movie during the working hours”.

There are no designations at Semco. All the employees are classified into four categories: Counsellors, Partners, Associates and coordinators. Ricardo Semler is just one among the counsellors. He calls this structure as a round structure and he does not believe in pyramid structure. He says it gets narrower as it rises, rewarding the few who keep climbing but demoralizing a far greater number who reach a plateau or fall by the way-side.

There is no rule book in this company. No written policies. Anyone who gets into the company will get a survival manual. They also get training on how to read financial reports.

Worker can file a case against the company while he is still an employee of this company. There is a case of one worker filing a case against Semco for some issue; but, the Judge gets surprised after knowing that he was still an employee. He will eventually praise Semco for its outstanding practice and the trust that they have in their employees.

There are no limitations on any business trip expenses. At Semco, if an employee is travelling on a business trip or a sales trip, he is free to spend any amount as per his wish. They say, after all, employee is going to get us business, so why should we set limitations on his spending during the travel.

Employees can become entrepreneurs at any point of time. Semco will support the same. And there is no restriction on them selling products to Semco’s competitors as well.

Semco has crossed many of the economic downturns without any problems. It has survived many difficult times. None of the employee would leave Semco and there were times at Semco, without any attrition rate for 14 months. In the process of making change, Semco has grown from annual revenue of $4 million in 1982 to more than $240 million in 2007.

I know, it all looks overwhelming comparing it to the way most of the other companies are run. That is the reason Semco has created a history. It has proved what true Corporate Democracy is. It has dealt with the basics of corporate philosophy. It is like why do we need to have rules when we can work fine without it? 

I do not know what to talk about Ricardo Semler after reading all about his strategies and corporate philosophies. That he has transformed the work place which is an example for most of the companies around the world. Read about Ricardo Semler here. Visit the unique looking website of Semco here

I strongly recommend this book to employees of all the companies. Actually I have shared very less about it. I do not know what you would do after reading, but I am sure you will say ‘Better late than never’.

Am now going to read his second book titled interestingly as “The Seven day weekend”.



Supreeth said...

Awesome! Truely inspiring and yes, better late than never!
Thanks for sharing.

BABA said...

Its Really amazing to see that, this kind of a company exists...Thank you very much for sharing the Info Srikanth...

Sudhi said...

It can be called as a Unique Corporate Story! and it is very difficult to believe that such an Organisation is existing in this world.

Thanks for sharing.

Narasim said...

After reading your excellent detailed review I felt that you were not doing a review but enabling me to get an annotated version of the book.

Thank you for bringing my attention to a very innovative management experiment.

Do you know if there is a more recent follow up to that book?

Srik said...

Dear Narasim,

The recent follow up to this book is the second book of Ricardo Semler published in 2003 - "The Seven Day Weekend".


Shubhananda said...

Its a super cool organization..!! I will read the book.

Raghu said...

It is very interesting.

It makes sense if all corporates read this book once if we really want to understand the power of Participation and Democracy in the corporate world.

Even his second book is very interesting which is an extension of his first book. In this book he introduces very many other practices/programs like Seven Days Week End, Lost in Space, Rush Hour and etc. for the benefit of all employees. All these practices/programs are very innovative and unheard of earlier.

RG said...

This review cum synopsis is superb. Look forward to see more of your writing.


Srik said...

Dear RG,

Am delighted to see your comment. Thanks a ton.


Manjunath Byadigere said...

Truly innovative...

The greatest thing I have found out through your review(and going through the links you have provided) is the confidence people can have in each other to make a business work successfully.Belief in each other leads to development, very simple, yet it requires great courage to demonstrate it in this cut-throat business world.This one has really impressed me.

Hari said...

Simply Superb!!!..Hats off to Semler and his innovative approach...!

Vaishnavi said...

Sounds very interesting! Just what I need :) Will definitely read the book. Love the quote you have mentioned from the book...wish I could say the same to those in my office! Saw SEMCO's website as well, unique indeed!

Will let you know what I think once I get my hands one the book and read it. Thanks a lot for reviewing it here.

Anonymous said...

Hey Srik,

You've whet my appetite.. I did some reading on Semler .. waiting to read the book.

thanks, Jacob