The Semco Style of working started when 21-year-old Ricardo Semler took over the Semco Group after his father handed over the reins of the dwindling company to him. On his first day, he fired 60 percent of all top managers and started his journey to democratize the company. When Semler noticed that his employees were not happy, he decided to do something about it. He introduced a radical new concept: The Semco Way.
The philosophy: Give employees complete freedom, as long as their work is completed in time.
Over the next two decades, with a maverick strategy and outstanding work ethic, Semler grew the company from just 90 to 5000 employees. Impressively, he also raised the company’s revenue from $4 million to $212 million, with the company growing at an average rate of 47 percent. With this new way of managing employees, Semco also achieved a phenomenally low employee turnover rate of just 2 percent under Semler’s outstanding leadership.
Semco leaves remarkable lessons for companies worldwide to follow:
Nurture And Cultivate A Trusting Environment
At Semco, they function with two ruling assumptions:
1) ‘Trust in adult behavior’— Do not try to micro-manage the actions of every employee. Trust the primary human drive to build toward the future, be productive and to contribute to something larger than themselves, and
2) Every person’s rhythm is different when it comes to working; when, where and how they do their best work.
That goes for the young, ambitious employee working twelve plus hours a day but also taking time off for regular lunches with his girlfriend, or the Shop Floor Manager who takes the day off before a new project launch to spend time in reflection at home. “We want people to work on a structure of their own,” said Semler.
There is no right way to find the right balance. Semler defined human equilibrium as the right mix of challenging, meaningful work and truly rejuvenating pursuits. It is the best ground for producing life’s true highs—the exhilaration, Semler said, is the whole point of the exercise.
The Three Whys
Semco’s primary strategy relies on asking the question, ‘Why?’ Semler called it the ‘Three Whys.’ When faced with a dilemma, “We simply ask ‘Why?’ three times in a row. ‘Why do you do things the way you do? Why is it important for people to come in at the same time? Why is it important for meetings to happen in a certain way?’ You keep asking why and you generally get to the answer, ‘it is what it is.’ And when people realize they’re stuck in a mode they really can’t explain, this works wonders in breaking down resistance and opening up new possibilities.”
Semler admitted, “it’s not very comfortable for anyone.” But he says that’s the point. When people are actively encouraged to question, get up and leave a meeting that bores them to their core, bop into a discussion that interests them, and push back on previous conclusions, it builds a culture that encourages curiosity and empowers employees.
Cede Control And Make Room For Innovation
All of Semco’s experiences are focused on “returning control to our people over a very important piece of real estate—their destiny,” said Semler. The Semco group is ruthless when it comes to clearing the junk in people’s to-do lists, “waste and distraction in all the logistics, the getting around, the sitting in meetings, and the overhead that defines ‘normal’ work.”
Semler’s experiment in cutting out the clutter include:
1) Up’n Down Pay – This is an adaptable system of flexible pay wherein employees elect to increase or decrease their work hours and consequent pay. Parents with young children, for example, may want to cut back on hours for a certain period. The pay structure is completely transparent allowing coworkers to know how much salary each employee in the organization earns.
2) Retire-a-Little- Ricardo Semler also introduced a program for employees to buy back one day a week, so they can spend time on activities that are important to them. Like learning to play the violin or climbing a mountain. The idea behind the Retire-a-Little program is that there are three important things in people’s lives: health, money and time. In the beginning of your career, you’re healthy, you have some money, but no time. When you retire you have time, some money, but not always the health to do what you want to do.
With the program, employees are able to buy back one day a week for 10% of their salary. After retirement, Semco can do the opposite and hire them back for one day a week. After retirement, a lot of people still want to work and Semco can still appeal to the experience and knowledge of ex-employees.
In conclusion, Semler said, “We’re in favor of a hierarchy of self-interest and talent and opposed to the symbols of power and control that come with it.”