Where is Semco now? 2010

Semco: Management by Samba

  • An update on where Semco is today

By Ben Kuiken

Based on Visit to Semco by Ben Kuiken (Nieuworganiseren.nu) in 2010


Translated by John Oliver


At the world famous Brazilian company Semco employees may come and go as they please and they have great freedom to do as they think right. But there is something else to liberty: taking responsibility. "It's okay to go to the movies on Friday afternoon, but you have to make sure that your work is done. Especially the younger generation to forget that sometimes.”


Behind the factory of Semco Equipamentos Itatiba, about a hundred kilometers North of Sao Paulo, there is a small courtyard. The walls are painted fresh blue and there are some tables and chairs. The quality manager Walter Lobo Monteiro  showed me around and noticed that the hammockshad been taken down. He then calls one of the employees who hangs two hammocks at his request. "They can relax a bit here after lunch for example. They have to reach a certain production per month, but they can decide when they do that. And sometimes they have to work overtime to get the job done. That freedom they manage by themselves, which is a matter of trust.


It is perhaps the best example of the famous Semco style that I encounter during my four-day visit to the Brazilian company. It is a confirmation that this is surely a very special company for me. Nevertheless, since the first introduction to Semco, earlier that week, the experience was frankly a bit disappointing.


On Monday morning at nine o'clock, I am picked up by Guilherme Beliero at my hotel in the Moema district of Sao Paulo. In his black truck with trailer, we then drove to a factory in the south of the metropolis, a journey of about twenty minutes. After having parked in the parking lot located behind the factory, we walked through a long corridor to the front of the building where Semco has its offices. Waiting for me there were some disappointments.


After all the expectations that have aroused the books of Ricardo Semler, the appearance of the offices are quite commonplace and even a little old-fashioned. A standard coffee machine with not particularly good coffee, grey walls with here and there a poster with one of the products the company sells, and a poster about safety in the workplace. Beyond that, formica desks with chest-high cubicle walls. A closer inspection reveals that the desks are in fact flexible/hot-desk working areas, each with four desks as a work island. But they are not a comparison to the more spohisticated flexible work stations that I've seen before at Microsoft and Rabobank in the Netherlands.


Secrets

There is also something else that arouses my disappointment. During a long conversation that I have that first Monday morning with Jose Alignani, the CEO of Semco Equipamentos, it become clear that there is not much left of the group of about sixteen companies which Semler describes in his latest book, The Seven-Day Weekend. These companies I read in the book, sought out one after another new market and developed their employees from through exciting business adventures. Semco had over 3000 at the time, writes Semler, and according to him, all were self-directed, innovative and mature people who do determined when they come and when they go, how much money they want to earn and who is the boss.


From those sixteen companies, I now hear from Alignani, that there are only three remaining. The third is in fact a joint venture agreement with a law firm, leaving two of the original companies. Those two companies, Semco Equipamentos and Pitney Bowles, have 80 and 90 employees respectively. And to make matters worse, Pitney Bowles, is a joint venture with the American manufacturer of mail sorting equipment, in which Semco owns only a share of 30%. So basically we are talking about a real-Semco company with eighty people and that's pretty much it. Oh yes, then there is the holding where six people work. Semler himself hardly interferes with the business, I understand from Alignani.


Did I come half way round the World, I ask myself in despair, to see a single small company? A company that also look looks like it's stuck somewhere in the 1980s and where the management team is made up of just a CEO?


I would have almost taken the first flight back home, but Alignani says something that arouses my curiosity. I can talk to anyone, he says, they have no secrets. Moreover, because they have set up a visitor program for me and I decide to linger. And fortunately so, because in the course of the next few days it becomes clear to me from the many conversations I have with a large number of employees, that this surely is a very special company.


A company that indeed, like so many other companies, is still looking for the right organization. And it sometimes puts two steps forward and then one step back.


Mixers

But let's start at the beginning. Semco Equipamentos, or in English, Semco Capital Group, is the company that actually started it all. This company has been located on the site which I now visit the factory on the south side of Sao Paulo since the 1960s. Here Ricardo Semler took his first steps in business, says Guilherme Beliero with some reverence in his voice. The company makes large industrial mixers, pumps and dryers for the food, mining and oil sectors.


Another branch of the company is in refrigeration equipment, for cooling buildings as well as for use in the production of steel and foods such as cola and beer. However, Semco itself now manufactures almost nothing. Most production was outsourced to partners, during the recession in Brazil at the beginning of the 1990s, to often former Semco employees who were dismissed during this difficult time and with the severance pay were given the opportunity to start their own business.


And Semco partnerted with a lot of foreign manufacturers, such as the Dutch GMF-Gouda, with Semco providing a gateway to the Brazilian market.


Alignani explains "we know the market, have good contacts in the country and know how to deal with the huge bureaucracy and arbitrariness in the Brazilian government. We also have a good reputation abroad: almost everyone knows Semco or at least Ricardo Semler. Our management style appeals to many companies. Many of these partnerships and joint ventures have a clause that either party can take over the shares of the other”.


This explains why there are so few companies left. "Take for example, Cushman & Wakefield, a global real estate manager where I was CEO before I came here. There we had a joint venture since 1993. In 2002 the company was acquired by Itil from Italy. Their philosophy was to do everything internally and have no partnerships. Cushman & Wakefield had already established a solid position in this country, so we sold the shares to them. That was for all parties a good deal. And so it went with many of those partnerships. We are now looking at whether we can enter new partnerships The dealings are with the lawyers in the first place, but I expect that there will soon be more. But we're in no hurry - the partner has to suit us.


Survival Guide

Alignani, a friendly man with a grey beard and thin strands of hair on a balding head, arrived in 1984 at Semco and has experienced all company developments closely. "Semler had taken over the management from his father and instilled around 1985 a new management style.


That was quite a shock, especially for me. It was not easy in any case. I was purchasing manager and had a private room with a secretary. And a year later, Ricardo decided that nobody could have their own room. And there were committees of employees, who were allowed a say. For a manager who grew up in a traditional system where the boss really is the boss, those early days were very difficult. Now however, the alternatve approach is in my blood.


"Look" says Alignani, as he conjures up a little book with a drawing and the text “Manual de Sobrevivência” It is the survival guide of Semco "to prove that there is a more decent and honest way of managing companies in Brazil."


In the English translation, besides the obvious disapproval of gambling and the ban on weapons in the company, the guide pays much attention to leadership and the right of everyone to express their opinion, regardless of his position.


Alignani points to one of the bold headings: Freedom. "There is no room for formalities within Semco Group," I read. "The doors are always open and people should be able to say what they think without fear or inhibitions." Alignani continues: "We want everyone to be part of the decisions. We want them to know how the company is doing, that they know the purpose and that they then do what is right for the company. They feel responsible. But that responsibility arises only when the workers are engaged in the decisions.


“To create and maintain such an environment, Semco has developed six instruments. First of all our meetings. We have a monthly meeting at the department level, every two months a meeting of all managers, and every two months a meeting with everyone in the company. All these meetings are open, where everyone can attend, and we always talk first about the results and what we expect in the coming months.


Then everything can be discussed, everyone should items for the agenda. At the General Assembly, we have something we call "Parla che fa bene ', which translates as “Speak to make you feel better”. The idea is that people say what they have in their hearts. Not everyone feels comfortable with that, but it is something that we try to encourage.


"The second tool is the evaluation of managers by their subordinates. This happens once a year by means of a questionnaire on the Internet. But more important than this survey is the conversation that the manager afterwards with his employees, which they can explain the results. "The managers take that very seriously. If they score low on a particular part or go backwards on a score, they want to know how they can improve it."


Now it only rarely happens that managers are assessed so badly that they draw their conclusions and decide to leave, Alignani says. "In the eighties, however, when we had a lot of problems. I myself too had poor scores, because I had grown up with the idea: I'm the boss. But today we'll talk a lot more, so you know more, and that old perspective does not sit well.


"A third instrument is an annual survey of employee satisfaction. It is not only asked how staff feel about the company, but also what can be improved.


A fourth important tool is the hiring: new employees are not accepted by the manager or the HR department, but by the people who have to work with the new employee. "That's strange," says Beliero, who also had to undergo this procedure three years ago. "You're at a table with ten people who ask you every detail. They are really interested in you, like you know them well. The advantage of this system is that if you are accepted, you already know everyone. And they know you too. They have hired you, so they themselves will do their best to make you feel at home and help you if needed.


"In the eighties, Semco had a workers' committee that could have a say about everything and protecting the culture of the company. When the plants in the early nineties were outsourced, this began to disappear. Then a number of people within the company threatened to go and there was a clear need within the company to have a group to continue to spread the philosophy. This was the GPS group, a reference to the GPS navigation systems. GPS is our guide. The colleagues are elected by the staff and they actually provide an additional communication channel. For example, if someone has a problem with his boss, he can always go directly to his boss to discuss it. But some people do not dare that or do not know how best to address the issue. That person can then can go to the GPS group. The group does not solve the problem - it's approach is to mediate. They are facilitators, it is an additional tool to create a good working environment


"The final tool for developing employees’ responsibility for the company, is Semco’s bonus program. This can, in an exceptionally good year, exceed seven months' salary. But in 2009, a very bad year for Brazil and Semco, no-one got a bonus. The latter is a big difference with many other companies, where managers often still receive a part of their bonus, even if the performance results are poor.


Hammock

Alignani and Beliero show me around the building. The offices of Semco are located on the ground floor and the second floor. The rest of the building is occupied by former partners who no longer belong to the Semco Group. Because many of the people who work here are ex-colleagues, there are still many people and some of these companies who still use (parts of) the Semco style. They also use the same facilities, such as conference rooms, restaurant and car park. At the back of the building is the former factory, which is now only being used as storage. Semco has a small lab, which is used to test equipment, and to give to demonstrations to customers.


In the field behind the factory is a small open building with tables and chairs and a barbecue. After the lunch break, the employees play a game of cards or dominoes and watch TV there. They can also take a nap in one of the hammocks.


"These hammocks have become a bit of a symbol of the Semco style," says Alignani. "Of course, it's not like we're in a hammock all day, but if you just want to lie, for example, after lunch here: go ahead. Since you are responsible for your work, you can also decide whether you have time for that. And of course the reverse is also true: if the work makes it necessary, you sometimes work a little longer. The point is that you have the freedom and  you balance that with the responsibility you have. That is a matter of trust. I can for example, go home two hours early, but only if my colleagues or customers do not need me any more. Otherwise I have to be here.”


According to Márcia Fraçao, responsible for marketing and with 23 years in Semco one of the longest serving workers the company, young people still have the wrong idea about what that freedom implies. "They come in here with the idea that they get a lot of freedom here. That is true, but you also have your responsibilities, for your work and for the company. Yes, you can go to the cinema on Friday afternoon, if you like, but of course only if the work load allows for that. We try to make sure that this way of thinking penetrates throughout the company, including the workshops.”


Fraçao explains further that the older generation have less trouble with this responsibility, because they came from a totally different situation where they had no freedom at all. "Many people who have worked here, have difficulty leaving. Those that do, often come back to us. Here, we listen to you, in most companies that is not the case.”


This is confirmed by virtually everyone I speak to during my four days at Semco. Financial Manager Ridrogo Franceschini Oliviera has previously worked for major international companies such as Alstom and Thyssen. "I had a great career opportunities and would go right back there, but here it is much better. The salary is reasonable, but other things, such as freedom and autonomy, I find much more important. It would be very difficult for me to work for a traditional business again.”


And Wagner Marinho Barbosa, Sales Manager responsible for the refrigeration equipment line; "If you like me have worked for 23 years Semco and you are so accustomed to the culture, then it would be too difficult a change elsewhere. They say: "If you've tasted the water here once, you will never want to drink anything else.”" I think, that's a true salesman.

"Someonewho can definitely confirm this sentiment of loyalty is Adir Fassina, a 71-year-old, who will celebrate this year his fiftieth anniversary at Semco. Twenty years ago, he had, according to Brazilian law already been able to retire, but he chose to stay. "Sometimes I think about it to stop," he says, "but then I think about how I will miss it here. I want nothing more than the whole day with clients and colleagues talk about our products. The knowledge that I have, that you do not find in books. I am now trying to convey to the young people so that it will be preserved." When I ask him whether it actually still work for him what he does, he laughs and says, "No, for me it's a pastime. A pastime which I get paid for.”


Landscape

On the third day of my visit I drive with the Quality Manager Walter Lobo Monteiro Jr. by a stunning green landscape to Itatiba. In a giant partner factory Semco put here six employees for the mixer and dryer products, supplying other Semco businesses. As it is a partner company, Semco has only a small part of the hall in use: the vast majority is used by its partner company Reli. In one of the offices I have a conversation with Nilton Morais, a friendly, rather lanky man of about 55. Morais worked for more than 27 years at Semco, but in the summer of 2009 he decided to start his own company, and bought into Reli.

Now he is also trying to introduce at this production facility the Semco style. "My partner did not really support it initially, but he let me choose my way. Now he sees the results, he is more enthusiastic. I try to let people take their own decisions, as I learned at Semco. I can as a boss after all not be everywhere. They also often know very well what needs to be done, but in the old system, they must always first to their boss to ask for permission. That change is difficult and takes time. Most are not used to it. They are afraid of making mistakes and being sanctioned. But gradually, it gets better. I try to give them self confidence, and it works."

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