SEMCO: A case study in distributing organizational power, Part Two

(Continued from Part I)

SYNOPSIS:After inheriting his father’s company, Ricardo Semler worked so hard and long at building the company that he began exhibiting serious symptoms: dizziness and fainting, chronic sore throat, shaking hands and constant heartburn. He checked himself into a clinic for exhaustive medical tests, and braced himself for bad news.

“Ricardo,” the doctor told him gravely after three days of every conceivable medical test. “There is absolutely nothing wrong with you.” His symptoms were the result of a serious case of stress.

This diagnosis led to serious self-reflection about what his life had become.  It marked the beginning of what would become a lifelong habit of asking the question, “Why?”

  • Why had he stopped making time for the things he used to enjoy, like music and reading?

  • Why was he killing himself for work?

  • Why should he be making decisions about how his employees did their work when they had more expertise at their work than he did?

  • Why was he treating adults like children, mandating all aspects of when, where and how they got the job done?

  • Why was he the only one who got to make important decisions when they would affect everyone in the company?

  • Why shouldn’t the people who worked at Semco have an equal voice in creating the future?

  • Why didn’t he take more advantage of the collective wisdom of the people he hired?

  • Why wasn’t he educating workers about every aspect of the business so they knew how to make good decisions?

These kinds of questions lead to the transformation of Semco. The first thing to accomplish, Ricardo decided, was to “rid the organization of hierarchy.”

It was a constant work in progress, but throughout the years, Ricardo kept asking “Why?” And the answers would lead to a further dismantling of the policies, procedures and processes of a traditional organization.

Semler eventually was running a company where “CEO” was nothing but a title, and he had little more power than any given worker. Today’s Semco is a place where employees decided when it makes the most sense for them to work and when. They choose their own leaders, define their own schedules, and set their own salaries.

They order their own equipment and supplies, without purchase orders. All meetings are open — show up if you’re affected or interested, leave when you lose interest. Projects get a green light only a when critical mass decides to make it happen. Leaders are situational – the staff determines when it needs one. When a leader’s role is no longer necessary, it goes away, without anyone losing pay or status. Nobody is entitled to the corner office, the premium parking spot or an executive dining room.

Those who are interested in who gets hired do the hiring, regardless of their position in the organization. People choose their own titles based on what the customer needs. The HR department consists of one person.

Semler says he exchanged the traditional system “hire, then manage” to a company that tells its employees: “Let’s do what you think you need to do in a way you’d like to do it. “

Sounds like a recipe for disaster? Well…. You can decide after next week’s installment.