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SEMCO: A MaverickOrganization.

Strategic Human Resource Management


The Preface
Semco, a Brazilian co. manufactures 2000 different products and also provides environmental and internet services. Turnover from $32 to $212 (in a decade). No power packed job titles After 1980, there was functional organization structure. Each dept took their own decision and it was time consuming. In 1986,company was divided into autonomous business units, headed by a general manager.

Semco tried adopting lattice structure where self-managed teams were provided to decide on production matters. Independent responsibilities was reinforced by the development of the Nucleus Of Technologies Innovation (NIT) By 1988, Semco had outsourced most of its functions to other companies or moved these to its satellite firms.(2 dozen satellite co) Semco was made up of Associates, Coordinators, Partners, Counselors. 4 titles and 3 management layers. 2004, Semco had 9 units. Autonomous business units consisting of 150-200 people.

The Questions in the case

Q1: Part 1: Did SEMCO succeed only because operating in an economic environment which was dynamic?
Yes . 1) The Brazillian govt. was focusing on import substitution 1945-64. 2)The political scenario was a post dictatorship era and in favor of liberty and industrialization , the government policies were in favor of private entrepreneurships 3) The literacy rate rising . 4) Focus from an agarian governance to agro based and mineral based policies were initiated. 5) Deficit and debt in government coffers became execessive .and government needed money. 6) public income was less than dollar 100(poverty) and urbanization got concentrated to cities in coastal areas. 7) Pro- Labour laws were enacted. 8) Growth with debt 1974-1980. & Inflation 1981-1994. 9) Antonio Semler perceived these situations to be favourable , thus led to the growth of SEMCO.

Q1:Part2: Did SEMCO culture fit any business segment and any business environment?
Yes SEMCO culture fits into almost any business segment of today. Business Environment- It can be compared with Indian economic condition of the era of 1950s on the following lines. 1-Focus on raising self sufficiency. 2- Strict pro labour laws. 3-Economic dependency and high imports. 4-Fairly closed economy. 5-Focus on raising enterpreneual skills by governments. 6- Need for technological upgradation. 7- Change in social environment from a dictatorship type of rule to liberty and democracy.

SEMCOs business culture fits with organizational culture of 1) Johnson& Johnson 2) Google, SIMILARITY :1) business units are autonomous and profit centres are present. 2) Autonomy and innovation is a welcome and life of business unit is based on profits. 3) Low on formalization and hierarchy . 4) Accountability and freedom are inseperable.

Q2: Part 1: What are the ways in which an entrepreneur/unit leader can make an organization grow?
1) Open business at different locations. 2) Offer franchise or outsource work by creating subunits. 3) Patent the unique products/idea and generate money. 4) Form alliances. 5) Creating unique selling preposition by creating a - Brand name. - Price competitiveness. - Quality . - Service / After sales services. - Logistics management and making product available at many locations . - Marketing via different mediums. 6) Diversifying the product range : selling complimentary product or distinct product ranges. 7) Target Niche market segment. 8) Acquisition or merger. 9) Taking agencies 10) Winning Govt. contract.

Q2: Part 2: Leadership traits Semler displayed while driving SEMCO at various stages of its growth?
1) The cyclic rotation of the members of counsellor group made employees understand the importance of being a sincere follower. 2) Transformational leadership was displayed- He tried to develop a culture of attaching hearts and minds of employees to work in favour of company. 3)Showed firm grasp over few principles and its fanatic application such as participatory culture , openness to suggestions, belief in innovativeness of employees, employee empowerment.

4) Participative leadership - He tried to develop existing followers to future leaders + open to dialogue on related matters. 5) Free flow of information. 6) Increased employee participation. 7) Trust between employees raised by moving from autonomy to democracy. - Quality in products was focused. - Service / After sales services- business of maintenance of the cooling towers. 8) A 3 step Evaluation before starting a new business segment. - Appointing right person at right place. 9) Focus on training the person : giving the person 12 month time for adaptation and learning the tricks of trade. 10) He acted as organizer and Linker : providing base for experimenting and linking organizational goals with individual employees goals. - Participative style with focus on results ( pay for performance enacted).

Q3: Is there a need for alignment between organizational structure and organizational culture?
Yes there is a need for alignment. Culture acts as a social glue that helps organization together by providing appropriate standards for what employee should say and do. Culture provides control mechanism that guides and shapes the attitude and behaviour of employees. Culture provides a set of unwritten rules and conformity to those rules becomes primary basis for reward and progress of company. Cultural unity brings focus in thoughts which is unidirectional.

Organizational Structure defines how job tasks are formally divided, grouped , coordinated. It includes 6 elements: i) Work Specialization. ii) Departmentalization. iii) Chain of command. iv) Span of control. v) Centralization. vi) Formalization.

How did this alignment between the two happened at SEMCO?

I . Structure : : Work Specialization : No power packed job Titles, Formalization : No positional control and dominance /control over suggestions. Workers Participation in Decision making, Workers having right to see the expenses of management . Workers participation in decision making on profit sharing. No secretaries/ assistants to any one.

Work Culture

II. Structure :

Departmentatlization :No hard & fast divisions of departments , Span of control & Chain of command : 3 concentric circle type arrangement of employees. Fewer control mechanism No autocracy.


Multitasking by workers and management . Profit sharing, Free flow of information, Questioning existing work practices were permitted.



Centralization : Minimal: different business units had autonomy to decide how to generate profits but different business units were under Ricardo Semlers control. --Focus on profit generation & employee empowerment --Accountability and freedom bestowed with caution. --Only till the business units generated profits ,the business centres existed. -- Nucleus of Technological Innovation group of researchers for promoting business profits were promoted , and freedom to start a new business unit under SEMCO ,permitted after it passed the 3 step test introduced by Semler.

This case is an example portrays the concept of employee empowered leadership-and participative management technique- capability building & finding what makes employee work. how reduced controls , hierarchy & increased employee empowerment, flexi time approach, can raise employee loyalty and trust and productivity of employees. This can be seen thru In a span of 10 years changes : - employee strength 19025 to 21190 , just 2165 employee rise. -average salary rise-108436$ to 386040$= 277604$ i.e. 3+ times. Revenue rose:32 million$ to 212 million$= 7+times.