IN TOUCH : Ricardo Semler: still a maverick

HR departments? Not needed. Five-year plans? Just wishful thinking. Leadership development? Not that material. Technology? Hasn’t done much to change our state of mind.
Time spent listening to Ricardo Semler challenges whole bunch of sacred cows. But the Brazilian, who has so successfully democratised his family company, Semco, over the past two decades that he was recently able to celebrate “10 years since I made decision about the business”, is refreshingly creative thinker.
In Australia recently to speak at the Global Insights conference sponsored by Very Gold Coast Tourism, he asked why we are still “running organisations as if Henry Ford was still alive” when the environment in which they’re being run is so different. His interest in creating an organisational architecture that was more responsive to today’s needs prompted the radical changes at Semco that were outlined in his book Maverick.
Semco has no mission statement or written policies and plans just six months ahead. “You notice that in yearly plans all the good stuff happens in the last six months – that’s because the first six is what you can reasonably focus on, the rest is wishlist,” says Semler.
The company has no need for an HR department because employees set their own salaries and choose how and when they work, as well as the technology they work with. Those who have an interest in new hires take part in what is very open, collaborative process (everyone shortlisted is interviewed simultaneously by anyone who cares to be involved); employees can also hire and fire their own managers; they can also start new business ventures or shut down unprofitable business units on show of hands. Interestingly – at time when talent retention rules – personnel turnover at the company is just one percent.
As Semler points out, such an open, democratic system is in reality very rigorous – you might choose your salary or your laptop but with all the company books open everyone knows how you valued yourself and whether your performance matches up to it. profit-share scheme keeps everyone focused on Semco’s financial health.
It’s an organisational design that no longer has to prove its worth, says Semler. It has not only weathered Brazil’s cycles of deflation and hyperinflation plus political swings to right and left, but actively prospered – often growing at rate of 30 to 40 percent year and now employing over 3500.
Asked why so few other companies have followed the Semco model, Semler talks about fear and stasis.
“There is nothing in the system to help people make the leap of faith to let go of control. I know that as I let things deconstruct it will turn out better, but not many can do this. Giving up control is something none of us do well in any aspect of our lives.”
Part of the problem, he says, is that the present system throws up the wrong sorts of leaders. It ousts the timid or introverted and alienates women.
“It brings the people who are willing to be tough and fight and get up early and leave their kids and not see them for years because they’re going to make bigger profit this quarter. That is the sort of self selection you get at MBA schools. The people who are there are not the best fit to run today’s businesses. But they are the ones most willing to go through the treadmill that it takes to run the business.”
Look at the limited proportion of women in top corporate roles.
“Is it half million year old conspiracy by men? Well, maybe in part. But I think very important part of the answer people don’t give attention to, is that most of the people who are sensitive, more intuitive, who are looking for quality of life and don’t want to give up other things that are important in their lives – they do not want to play that game.”
One result of this bias is ever shorter business cycles and activities that are so compressed there is little leeway to make change because everyone is racing to keep up. Technology hasn’t helped.
“Here you have hundreds of people in the business of making each other obsolete in six months’ time…”
What doesn’t happen is true innovation. Take Microsoft, says Semler. In 1984, it took three kids three months in garage to draw up Windows. “Since then 25,000 talented engineers in 20 years have managed to change the colour of the icons.” And there is still no solution to problem that worries him… parallel parking. How come there is nothing anybody can do in any organisation to make cars move sideways?
Okay – apply that to electric cars, low emission fuels… in fact, anything we have long known is possible – but haven’t really embraced. That, suggests Semler, is because people become calcified by the corporate structures in which they work. They are hired because they know about what the company is doing – and so that is what they keep doing.
In terms of work-life balance, his company started looking at the incompatible directions of two life graphs: the bell curve of disposable income and the U curve of available time.
“Overlay these and they make no sense. When you have the money to do things you have no time; when you have the time you have no money and declining health. This system is very unbalanced so we play with this graph and say you have lots of things you’re going to do when you retire so why not start them this Wednesday – buy your time back now when you have the money to do something with it. When you play with these ideas, you find there are ways to do things better.”
Semler himself is now applying the sort of democratic principles he introduced into business to education – which is where his attention is now focused. His Lumiar primary school in Sao Paulo is education without compulsion based on system of tutors and masters – real experts chosen by the students who come to the school for weeks at time. He’s also gone into his own version of property development – luxury eco-tourism resort that has involved the locals – as employees, shareholders and as people who have very real say in how it all plays out.
In his mid-40s, Semler says he doesn’t want to do more of the same – and he doesn’t need any more money. But he is still ‘maverick’ thinker – which, for all today’s talk of “innovation” is something the business world is still sadly short of.