Relinquishing Control

The Seven-Day Weekend: Changing the Way Work Works
by Ricardo Semler

(Page 3 of 4)

Semco's glass and steel high-rise headquarters is a far cry from the gritty industrial shop floor that my father, Antonio Curt Semler, founded in 1954. It started not long after he moved to Brazil from Argentina, having emigrated before that from his native Vienna. He patented a centrifuge for separating oils, and with that started his own small machine shop, choosing its name from a contraction of Semler & Company. Soon Semco was a $2 million a year business. Then, in the late 1960s, my father formed a partnership with two British marine pump manufacturers, and Semco quickly became a major supplier to the Brazilian shipbuilding industry.

For the next twenty-five years, Semco built marine pumps, and its name became synonymous with the shipping industry. It could also have been synonymous with rigidity and tradition. When I was still quite young, my father assumed that I would take over Semco. I wasn't anywhere near as certain as he was. I spent many youthful years in a rock band and one miserable summer as an intern in Semco's purchasing department. After that, I wondered, "How can I spend the rest of my life doing this? How can I stomach years of babysitting people to make sure they clock in on time? Why is this worth doing?"

When I told my father about my qualms, he reassured me with "that'll pass, young man," or "I, too, was once like you." Of course that only made matters worse. Instead, I began to wonder if it was possible to foster change by creating an entirely new kind of organization. The answer was yes, but it involved a deceptively simple principle - relinquishing control in order to institute true democracy at Semco. And that is very complicated indeed. Convinced that my family wouldn't let me have free rein at Semco, I spent a year investigating a faltering ladder manufacturer. I was then twenty-one and preferred the prospect of a small, dangerous venture before I made a commitment to family interests. On the day I was to sign the final papers to acquire the ladder company, my father called me and proposed a deal.

After much debate and negotiation, we agreed that I'd take over Semco, and he would step back and allow me to remake the company as I saw fit. I was so young that no one at Semco took the news seriously. Clovis Bojikian, today one of five senior Semco managers and our venerable human resources guru, remembers coming to Semco for an interview shortly after I took over.

"They put me in a room, and a boy arrived," Clovis says now. "I thought he was a messenger. He was about my son's age. He sat down and started to ask me questions, and it was Ricardo Semler."

Within days of taking over, I fired two-thirds of my father's most senior managers outright. A risky move that I felt was necessary to quickly implement reforms without foot dragging from the entrenched executives. I then spent the next two decades questioning, challenging, and dismantling the traditional business practices at Semco.

TODAY, I CAN HONESTLY say that our growth, profit, and the number of people we employ are secondary concerns. Outsiders clamor to know these things because they want to quantify our business. These are the yardsticks they turn to first. That's one reason we're still privately held. I don't want Semco to be burdened with the ninety-day mind-set of most stock market analysts. It would undermine our solidity and force us to dance to a tune we don't really want to hear - a Wall Street waltz that starts each day with an opening bell and ends with the thump of the closing gavel.

Thanks, but no thanks. We generate enough of our own cash, and we're growing nearly 40 percent a year without public investment. Yes, we're successful by market standards - we've grown, we've made more money, and we've added employees. But that success means little to me if it's measured only in those terms. Sure, it's wonderful to have money. Yet it doesn't change how we feel about getting out of bed in the morning, going to work, and performing a job day after day.

The principles we now practice have resulted in tremendous growth: Semco has gone from my father's peak of $4 million a year to $212 million in annual revenue in 2003. My father's ninety employees have increased to nearly three thousand. We've moved from industrial manufacturing to services to high technology without giving up any earlier businesses.

Semco workers make money for the company and take a good chunk of it for themselves in a profit-sharing plan. Most important, they make it the kind of organization that people clamor to work for, a place where turnover is negligible.

Semco's experience befits more than just business. It's germane to any organization where flesh-and-blood realities of the workplace guide how people interact. The type and size of the organization is irrelevant - that's why Semco practices have been adopted at schools, hospitals, police departments, and large and small companies around the world.

Along the way, I've lost sight of what defines Semco. That's not because it's too big to manage or because I've stepped back too far from day-to-day operations. I don't want to know where Semco is headed. It doesn't unnerve me to see nothing on the company's horizon. I want Semco and its employees to ramble through their days, to use instinct, opportunity, and ingenuity to choose projects and ventures.

Fortunately, my convictions have borne results that business people value, and more important, can understand: sustainability, productivity, profit, growth, and new ventures. These are all by-products of running a company where employees are encouraged to establish their own sense of balance.

And the increasingly popular concept of work/life balance is not all that we seek. Balance also ensues when people are given room to explore so they can find out where their talents and interests lie and merge their personal aspirations with the goals of the company. Once employees feel challenged, invigorated, and productive, their efforts will naturally translate into profit and growth for the organization. That's what the Semco way is all about.

Copyright © 2004 Ricardo Semler. All rights reserved. This excerpt, or any parts thereof, may not be reproduced without permission.

About the Author

Ricardo Semler has been CEO of Brazil-based Semco for the last two decades. He is known around the globe for championing his employee-friendly management style. His first book, Maverick, was an international bestseller.