Maverick by Ricardo Semlar

Post date: April 25th, 2009

Just who is Ricardo Semlar?

Ricardo Semlar is the President of Semco, Brazil’s largest marine and food processing machinery manufacturers. He studied at Harvard Business School, speaks fluent English and has been voted Brazil’s Business Leader of the year. America Economia (published by Wall Street Journal) named him Businessman of the Year. Just what did Semlar do to earn him these accolades?

From the time Semlar inherited the family company Semco from his father at the age of 24, he started dismantling the corporate hierarchy as we know it. He threw away all the company rules and procedures.

There are some 300 employees and yet there’s no policy manual. There’s no formal organization chart. The workers et their own hours, their own targets, and yes … even their own salaries and profit shares. By normal business conventions this company should have been out of business years ago. But his unorthodox approach has proved highly successful for him. Semco has grown eleven fold since the late 80’s … a period that coincided with savage recession, staggering inflation and political turmoil in Brazil. Profits have increased five-fold.

In an effort to understand the thinking behind his philosophy, we read his book Maverick, and also went to listen to him speak when he visited Perth in October 1994.

Even if you do not have 300 employees or run huge manufacturing plants, please do not switch off to his message. Even if his style of management is not yours, keep an open mind. He must have done something right to get his company from the brink of bankruptcy to where it is today.

Just what is his philosophy?

Semco treats their employees as adults. There are no time clocks at the gate. All employees make intelligent and adult decisions at home … so why do so many companies still persist in treating them like children? We are expected to “clock in” at 8.30 am and “clock out” at 5 pm. Companies assume that unless employees have “the boss” look over their shoulder they will make mistakes and “take advantage”. There’s no receptionist, no secretary, no “office girl” to do their photocopying and filing. Everyone does their own … including the CEO.

Far more controversial is the policy of “reverse” evaluation. It is the workers who evaluate “the boss”. Before anyone is promoted or hired to a “management” position, he or she must be interviewed, evaluated and approved by all the people who will work for him or her. This evaluation is done every 6 months and if you fail (as some do) you cannot retain that position. Semlar does not even exempt himself from this process. An interesting question … would you subject yourself to an employee evaluation?

Another interesting fact … about 1/3 of Semco’s employees have the option of taking up front pay cut of up to 25%. Payback comes in the form of a bonus. In a good year this can translate to 125% of their normal pay. In addition, 25% of all the company profits are given to the employees to be distributed as they see fit.

Where possible all work is out-sourced. Semco helps their employees to become self-employed by hiring their equipment to the employees at advantageous terms. They then invite them to supply back to Semco. The only proviso is that the now self-employed individuals can buy and sell to third parties … even Semco’s competitors. The cost savings have been tremendous.

There’s another fascinating innovation … Semco pays key team members to THINK. These employees are paid by the company but they have no specific “jobs” to do, no one to answer to from day to day. A total waste of money? Apparently not. The ideas from these key team members have resulted in initiatives that have, for example, changed a 14 step 10 hour manufacturing process into a 3 step 1 hour process. Semlar, above all else, sees himself merely as a catalyst … that is his idea of a true CEO. Not somebody who turns up at the office and spends his time signing letters and attending meetings.

All extremely interesting. But unless you take some of his ideas and adapt and translate it into applications for your own business, it is of not much use.

So what can you do? Ultimately, unless you first have a vision of where your company is going, you cannot share that with your employees. It is easy to talk about visions and grand plans. We would urge you to take time out to really think about your business or if you are not running a business, then your personal goals. Think about the processes, about maximizing the potential in your team members, and above all, about how you might be able to harness some of Semlar’s ideas.

Comment: This book review was originally written by us in December 1994.

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