Case-Study: How a Brazilian, 3000-employee Company Trusted Its Employees with Freedom

When CEO Ricardo Semler talks about the work culture at Brazil’s Semco Group, a 3000-employee company, one word stands out: exhilaration.

imagesSemler spoke with Polly LaBarre of the Management Innovation eXchange about corporate culture and leadership.  He noted that although business leaders are talking more and more about passion in the workplace, they aren’t doing much to foster it.  Semler said he wants to create the “conditions for people to feel exhilaration, to get involved to the point they shout ‘yes!'” and asks, “What if, instead of assuming passion will just show up when we invoke it, we focused on designing organizations to unleash human flourishing?”  This is precisely what he aimed to do at Semco Group.

Semler arrived at the company in the mid-1980s and since then has done away with organizational charts, fixed offices, working hours, a fixed CEO, an HR department.  He also has abandoned business plans projecting one, two, or even five years into the future, as well as job descriptions, permanent positions, and many of the approvals formerly needed to accomplish tasks.  As LaBarre describes the culture at Semco, it incorporated an “endless array of clever practices and initiatives to increase individual autonomy and agency, participation at every level, trust, and informality.”

The company began as a manufacturer of centrifuges used in the vegetable oils industry and has grown into a myriad of companies from real estate, to industrial equipment, to document management. Now it rakes in around $240 million in revenues with a turnover rate of 2% in an industry where 18% is the norm.

Freedom from bureaucratic clutter and freedom to pursue one’s own destiny are the central themes through all of Semco’s culture experiments:

There are no timesheets, no standardized expectations for where people should work or when to show up or leave or take time off, because the assumption is that they are working with adults whom they can trust to create their own structure and that “every person’s rhythms are different when it comes to when and where and how they do their best work.” This allows employees to work a “seven-day weekend” during which they are encouraged “to be men and women in full for seven days a week.”

People set their own salaries.

Autonomous, self-managed teams of 6-8 people that have the power to hire and fire both workers and supervisors by voting.

 “Up’n’Down Pay” (an adaptable system of flexible pay and work hours to accommodate different stages and circumstance in an employee’s life supported by an active database of job-sharing and –switching candidates)

“Rush Hour MBA” (a program that uses two hours of high-traffic commuting time into a volunteer-led study session)

Retire-a-Little,” (a radical design for rethinking the traditional career by building retirement into work and work into retirement with a clever exchange of time off for life pursuits mid-career for the opportunity to do some meaningful work in later years).

Semco welcomes “trespassers” (individuals, from interns and assistants to heads of businesses to check out meetings and projects as far afield as they fancy) and promotes a “ramble when bored” approach (a very loose and self-directed job-rotation program).

What is the regulatory mechanism to keep everyone accountable? Team consensus. A cohort of colleagues (between 8 – 12 people) decide whether or not to include you in the next six-month budget.

Lastly, colleagues are encouraged to consistently speak up and ask “why”—such as why they do things the way they do, why it’s important for everyone to come together at the same time, and why they agreed to what they did in previous meetings.  The purpose of encouraging this frequent questioning is that, “When people are not only free, but actively encouraged, to question, to get up and leave a meeting that bores them, to bop into a meeting that interests them, and to push back on previous conclusions, you actually have a chance to get to the heart of the matter, to escape ruts, and to do something that’s worth doing.”

How Analysis:

Semler’s approach to culture at Semco Group is truly powerful in the way it nurtures and taps into employees’ capabilities, talents, and ideas. By building a culture that gives employees the freedom to be exhilarated by what they do, Semler creates the conditions that drive innovation and performance, not by exerting his command and power over people, but through the power that comes from human freedom and inspiration.  Semler’s policies, or lack thereof, offer employees the freedom from constraints that typify traditional work places, and encourages a freedom to lean in with their full selves—for example, the ability to structure work around practices and times that employees know will be conducive to doing their best work. Constant with our Freedom Report, companies like Semco who inject “freedom from” and “freedom to” in the workplace experience higher levels of innovation and financial performance.

Also, giving employees control of their “destiny” helps them develop what it is that truly interests, engages, and inspires them to create meaningful change through their work, and to pursue issues that are significant and larger than themselves.  This freedom to strive in ways that employees find purposeful is integral to inspiring the work that they do.  Lastly, the emphasis on constantly evaluating how things are done within the company, and why they’re done that way, promotes the sort of individual and collective self-awareness that is needed to scale a system of shared values that help individuals navigate the ups and downs that any business goes through.

Judging by Semco’s successes so far, these reflective pauses have served them well.

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