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Sempco Group Of Industries

1) Describe SEMCO’s team structure relative to team leadership and decision-making?

Semco is a business that has been consistently growing for the last twenty years.[i] Their manufacturing operations are very unconventional: there are no job titles, no personal assistants, employees set their own salaries, and all employees share in the profits. Ricardo Semler is the son of the founder of Semco, and is current acting CEO.

“There are four team structure components that, along with team dynamics and development, affect team performance.”[ii] The two that are important for this question are leadership and problem solving and decision-making. These team structure components affect behavior, human relations, and group performance.

We know that “teams with effective leadership should clearly outperform teams lacking leadership skills.”[iii] Having these leadership qualities is the responsibility of all employees of the company. “All teams encounter problems in getting the job done. How the members work together to solve the problems affects team performance. How decisions are made, whether the teams are centralized or decentralized, and the decisions themselves also affect performance.”[iv] It is very important that the team works together and get input from all members of the group in order to reach the right decision in short amount of time. “The leader allows participation in decisions and does not closely supervise employees.”[v]

Semco is a truly democratic corporation.[vi] The employees at Semco govern themselves and do the hiring and the firing. They work in small teams. The reason that Semco is successful is because they developed good self-management work in groups and teams mentality. The employees want the company to succeed because it directly benefits them, so they make sure that their team does what it should. Team size also affects the leadership, in Semco teams are made up of 150 employees. In Semco, “having a small group makes it easy to spot a threat or opportunity, figure out what to do, and swing into action. This structure provides excellent flexibility-new groups can be formed to take advantage of new prospects while under performing groups can be eliminated without dramatically impacting the rest of the operation of the firm.” [vii]

2) At Semco, how does size affect the performance of this team? Are these teams too large?

Team size affects leadership, members, and the process of getting the job done. If the group is too small, it tends to be too careful; if it is too large, it tends to be too slow.[viii] But larger groups tend to reate higher quality ideas because they benefit from different contributions. The larger the team size, the more autocratic leadership needs to be to provide direction. Managers tend to be more informal and participative when they have small functional group larger groups tend to slow down equal participation.

As per the general business terms, the smaller the size of the business units the more effectively and efficiently they perform. “In Semco, group approach started when at one factory the workers elected to divide themselves into three manufacturing units of about 150 people each. Each unit was given complete responsibility for manufacturing, sales, and financial management.”[ix] Working in smaller groups in order to accomplish the same goal, made employees stick together in order to accomplish the work on time. Looking at the success on the balance sheet and increase in productivity, CEO Ricardo Semler decided to continue this management approach in the company.

“For Semco, the key to their success seems to be in the development of self-managed teams.”[x]

Group cohesiveness is the extent to which the members of a group are attracted towards the ideas of the group and work together.[xi] More cohesive groups, tend to work better together, as a team. Some of the factors like objectives, size, homogeneity, participation, competition and success affect the cohesiveness of these groups.[xii]

Objectives are the goals a group needs to focus on.[xiii] The more they commit to achieve those objectives, the more their group cohesiveness will be.[xiv] Employees of the Semco Company are invited to attend board meetings and are encouraged to actively participate in the company’s management decisions. This gives the group members a chance to understand the objectives of the company and work accordingly. These teams do not depend on third party, and take their own decisions. Every six months, the performance of each team is reviewed. This gives the team members the clear understanding of what is expected from them, and thus they are dedicated to their work goals.

Size of the team plays an important role in decision making because smaller groups tend to be more cohesive.[xv] Employees working in Semco once divided themselves into three groups, 150 members in each group. Each team is given responsibility of manufacturing, sales and financial management.[xvi] Working in smaller groups in order to accomplish the same goal, made employees stick together in order to accomplish the work on time. Looking at the success on the balance sheet and increase in productivity, CEO Ricardo Semler decided to continue this management approach in the company.

Success can be defined as achievement of our goals.[xvii] It gives spirit to the group members to work harder and perform better, compared to last project. Thus, in order to be well functioned and successful, groups need to be more cohesive. Size, success and objectives are the factors influencing positive cohesiveness in the Semco Company. The company whose sales were merely, $4 million in 1982 had jumped to $212million in 2003. It has an annual growth rate of 40%. The labor turnover is less than 1%.[xviii]

Groups and organizations, that work in teams or have departments, tend to form their own unwritten rules about the way objectives need to be handled. These unwritten rules are called the norms of the group. Norms “are the group’s shared expectations of its members’ behavior”.[xix] When Ricardo Semler became CEO of the Semco Group he did not force the norms that were already established on the employees. Semler decided to encourage the employees to turn into a self-managed work force. Changing the type of environment of the work place changes the every day norms most employees stress about at work all the time. For example, when most employees at other organizations are forced to work on a Saturday they are expected to be at work on Monday. Semler tells the employee’s that if they work on Saturday he demands that they go to the beach on Monday. [xx]

When the norms are changed at the workplace team performance can suffer or succeed depending on how and what the norms change to. In the case of The Semco Group, the norms have helped the company succeed and survive for at least twenty years. The reason the norms have helped the company is because the norms of the company have reduced a tremendous amount of stress. Stress has been reduced by making the work place a comfortable work environment. For example, one way The Semco Group has a comfortable work environment is through incentives that the company offers. These incentives give employees other ways to make money besides their normal salary. The incentives the employees get are; if a group or individual reduce operating expenses the person or group involved will split the profits from the new process.[xxi] The employees also get a performance review of their groups every six months and take a percentage of sales as compensation.[xxii] Having these incentives in place gives comfort to employees that there is more than one way to make some money in the company.

Status and roles are very important to an employee because they show them where they stand at that moment within the company. The status “is the perceived ranking of one member relative to other members of the group”.[xxiii] The roles “are shared expectations of how group members will fulfill the requirements of their position”.[xxiv] The status and roles of an employee could easily hurt or improve a group or team because the employee knows where they stand with the company. Knowing their status and role will affect how hard that employee will work or how much they are willing to slack off.

In The Semco Group, there has been great rapport with the employees and the groups they are in because they know every employee is equal.[xxv] Having the company run as a democracy gives every employee a role in the company and a say in what goes on and the decisions that are made. In fact, employees are encouraged to attend board meetings and actively participate in the company’s management. Semler also decided to give the employees the privilege to set their own work hours and own salaries. Semler also implemented a set of circles or committees where they rotate CEO every six months; this gives equal opportunity for status gain in the company. These privileges show employees that their role in the company is not only important to the employee but important to the company also. As the company continues to profit and grow, you can only conclude that there must be a positive team performance under the democracy established. The company has been able to profit and grow in one of the most volatile countries in the world so the company has proven to have a strong team performance.

6) How do employee and owner attitudes, values, and ethics affect the SEMCO Group?

Attitude is a complex mental state, which involves beliefs, feelings, values and temperament to act in certain ways[xxvi]. Ricardo Semler, the son of SEMCO’s founder says that employees can be trusted to do the right thing for their employer if given freedom.[xxvii] At Semco in Brazil, any worker can turn into a board member.

. There is no centralized buying, which means people buy whatever computer or car tires they want and everyone is taught to read the company balance sheet. A quarter of the companies profit is shared among the workers. Semler, CEO of company expects his employees to take a day off on Monday if they work on Saturday. This attitude makes the employees feel appreciated and thus put all of their efforts at work, in order to achieve goals.

Values are the beliefs of a person or social group, which is considered emotional involvement[xxviii]. Semco values democracy and respects employees privacy (emails and internet usage are not monitored and employees’ expenses are not audited)[xxix]. Semco values progress and trust their employees to work for self-interest, which naturally aligns itself to the company. The organization is bound together by the three interdependent main values: Employee Participation, Profit Sharing and Free Flow of Information as per the management research. These three values are considered from the belief that participation in design and implementation of work procedures would give employees control over their work; profit sharing would bring in a sense of ownership; and the availability of information when needed would help the employees understand how to improve their work practices continuously.

Ethics is the logic of right or wrong performance.[xxx] Semco commits strongly to the highest standards of legal and ethical conduct in its business practices. All Company representatives are expected to stick to the highest personal and professional standards in their dealings with customers, employees, shareholders, the public and public officials.[xxxi] Company representatives are expected to comply with the letter and spirit of all applicable laws and regulations and the highest standards of business, professional and personal ethics.

Hence, SEMCO’s management can be called ‘unique’, and something to learn from. Its success made businessmen from the entire world want to visit it, in order to learn their strategies.[xxxii] The credit of success of this company is given to their employees and their working strategies.

[v] Lussier Robert. Human relations in organizations (seventh edition). McGraw-Hill/Irwin, 2008.(284)

[ix] Lussier, Robert. Human relations in organizations (seventh edition). McGraw-Hill/Irwin, 2008.(460)

[xii] Lussier, Robert. Human relations in organizations (seventh edition). McGraw-Hill/Irwin, 2008.(437)

[xiii] Lussier Robert. Human relations in organizations (seventh edition). McGraw-Hill/Irwin, 2008.(436)

[xiv] Human relations in organizations (seventh edition). McGraw-Hill/Irwin, 2008.(437)

[xv] Lussier, Rober. Human relations in organizations (seventh edition). McGraw-Hill/Irwin, 2008.(438)

[xvi] O’Brien Kerry. "Interview with Semco’s Business Guru”. Australian broadcasting company. 6 March. 2007. Lexis-Nexis academic search. CSU library. Hayward, CA. 29 July. 2007. [Article from Lexis-Nexis online database subscription, accessed July. 29, 2007.]

[xix] Lussier, Robert. Human relations in organizations (seventh edition). McGraw-Hill/Irwin, 2008.(438)

[xx] Lussier, Robert. Human relations in organizations (seventh edition). McGraw-Hill/Irwin, 2008.(460)

[xxi] Lussier, Robert. Human relations in organizations (seventh edition). McGraw-Hill/Irwin, 2008.(460)

[xxii] Lussier, Robert.Human relations in organizations (seventh edition). McGraw-Hill/Irwin, 2008.(460)

[xxvi]Lussier, Robert. Human relations in organizations (seventh edition). McGraw-Hill/Irwin, 2008.(438)

[xxx] Lussier,Robert. Human relations in organizations (seventh edition). McGraw-Hill/Irwin, 2008.(440)

[xxxi] O’Brien Kerry. "Interview with Semco’s Business Guru”. Australian broadcasting company. 6 March. 2007. Lexis-Nexis academic search. CSU library. Hayward, CA. 29 July. 2007. [Article from Lexis-Nexis online database subscription, accessed July. 29, 2007.]

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