MBA

Assignment
Subject: MANAGING PEOPLE

Date Issued: 20 OCTOBER 2010

Hand in by: 10TH DECEMBER 2010 Time: 3pm

INSTRUCTIONS TO CANDIDATES:
1. Assessment Criterion – 100% Weighting.
2. Students must submit their assignments with a copy on a CD-Rom to the reception on 10th
December 2010 at the latest. Assignments without a CD-Rom will not be accepted. Do NOT
attach CDs to your assignment with sellotape as it can damage the CD & result in loss of
coursework.
3. YOU will be allowed a 24 hour late submission whereas your mark will be capped should
you pass
4. No assignments will be accepted after the 24 hour deadline and therefore a zero mark will be given
to a student who falls into this category. Unless you have mitigating and must have gotten
permission from the registrar or the exam office to submit late.
5. Your assignment must be word-processed in Microsoft Word. All pages should be numbered.
6. You must keep an electronic copy of your assignment.
7. Students are assessed anonymously. You should put your KCB student registration number (but
not your name) on the front cover and on the top right hand corner of every subsequent page.
Please do not include your name anywhere on the document.
8. A Turnitin report must be submitted with your assignment. Please follow the instructions at the
end of this assignment.
9. Policy on Plagiarism:
a) The work that you submit must be expressed in your own words.
b) Plagiarism, which is presenting the views and/or words of another person as if they
are your own is strictly forbidden.
c) If you do use quotations from books, journals and or websites then these must be
placed inside quotation marks and referenced ideally using the Havard method.
d) If you do cite the views/ideas of another person then you must refer to this person in
the main body of the assignment, including the work cited in your bibliography.
Cite, in this context means to quote a passage, book or author in support of an
argument, etc.
e) Copying the work of a fellow student also constitutes plagiarism. It must be pointed
out, though, that any student allowing another student to copy part or all of his/her
assignment is just as guilty as the plagiariser. You should therefore protect your own
work, so as to avoid others copying your work, without you knowledge.
f) If you do not observed the above rules then this will lead to an allegation of cheating
and, if found guilty, you will incur a severe penalty which may involve having to leave
the College. Any repetition of plagiarism in any module will lead to expulsion from the
College.
 Semco Pumping Success

When Ricardo Semler took over his father’s pump-making business in 1980,
Semco was a US$4 million company, focused on the domestic Brazilian market,
and heading for bankruptcy in a severe recession that was to last for most of the
decade. By 2003, Semco had expanded beyond pumps to dishwashers, digital
scanners, cooling units and mixer of anything from bubble gum to rocket fuel,
operating as a federation of ten businesses, with revenues totalling US$160
million and about 3000 employees. While a fascinating business success,
Semco’s turnaround is all the more interesting because it was achieved without
the leadership of a charismatic CEO. It was achieved without having a CEO at
all!!!

Semco has no traditional organizational hierarchy for decision-making and

control. Major decisions affecting the entire organization, such as the purchase of
a new plant site or an acquisition, are put to a democratic vote, while other
decisions are taken consensually by all employees involved. There are no
internal audit groups, no controls on travel expenses and inventory and storage
rooms remain unlocked but all information is made available to everyone,
encouraging self control. According to Semler: ”Freedom is no easy thing. It does
not make life carefree because it introduces difficult choices”. To stimulate
information exchange the offices have no walls and all memos must be kept to
one page without exception. Furthermore everyone is trained to read financial
statements of the company and their business unit.

The alternative organizational configuration of Semco is made up of four

concentric circles. The innermost circle consists of six counsellors who serve as
the executive team and take turns as chairperson every six months. Despite
being the 90% owner of the company Semler is only one of these six. Around the
Counsellors is a circle of partners, who act as business unit managers. Around
them is a circle of coordinators who function as first line supervisors. Everybody
else is in the fourth circle and is called an Associate. Additionally there are
Nucleuses of Technology Innovation which are ‘no boss’ temporary project teams
who are freed from their day-to-day work in order to focus on some kind of
business improvement project, a new product, a cost reduction program, a new
business plan or the like.

The members of Semco decide among themselves what their pay will be. The
amount is made transparent to all others by regular participation in salary
surveys, thus everybody knows what the pay is of everyone else. Furthermore,
every member is part of the company-wide profit sharing program that pays 23%
of business unit’s profits per quarter to the employees. In fact, the payout ratio of
23% was also decided by the employees. Members of Nucleus of Technology
Innovation receive royalties on the achievements of their projects.

At any given moment, who belongs to Semco company and who doesn’t, can be
rather fuzzy. Semler explains:

When we walk through our plants, we rarely even know who works for us. Some
of the people in the factory are full-time employees; some work for us part-time;
some work for themselves and supply Semco with components or services; some
work for themselves under contract to outside companies (even competitors);
and some of them work for each other. We could decide to find out which is
which and who is who, but… we think it is all useless information.

As for strategy, Semco has no grand design. Semler readily admits that he has
no idea what the company will be making in ten years: ‘I think that strategic
planning and vision are often barriers to success. ‘Semco’s approach is largely to
let strategy emerge on the basis of opportunities identified by employees close to
the market. Where new initiates can muster enough support among colleagues,
they are awarded more time and money to bring them to fruition. In this way,
Semco can make the best possible use of the engagement and entrepreneurship
of its employees.

Summing up the Semco philosophy, Semler told the Financial Times:

At Semco, the basic question we work on is: how do you get people to come to
work on a grey Monday morning? This is the only parameter we care about,
which is a 100% motivation issue.
Everything else, quality, profit and growth, will fall into place, if enough people
are interested in coming to work on Monday morning. (source: De Wit et al.
2003, Strategy Synthesis, Thompson, pp218-219)

YOUR ASSIGNMENT AS MBA STUDENTS IS TO EXAMINE THE SUCCESS

OF SEMCO AND TO REPORT ON THE FOLLOWING MANAGEMENT
ISSUES:

YOU MUST WORK IN GROUPS OF FOUR.

1. TO WHAT EXTENT DOES SEMCO RELY ON THE CONTRIBUTION

THAT WAS MADE BY THE CLASSICAL SCHOOL TO MANAGEMENT?

2. CRITICALLY EVALUATE TWO DIFFERENT MOTIVATIONAL

THEORIES, AND THEIR RELEVANCE TO SEMCO.

3. DISCUSS THE CONCEPT OF EMPOWERMENT AND ITS RELEVANCE

TO SEMCO.

4. RESEARCH WITH YOUR TEAM, ANY COMPANY IN THE 21st

CENTURY (WHICH HAS A SIMILAR MANAGEMENT PHILOSOPHY TO
SEMCO), AND CRITICALLY EVALUATE ITS SUCCESS / FAILURE.

NOTE : Ensure that you use the HARVARD Method of Referencing

(4000 WORDS )