Where Employees Decide Their Own Salaries

Selling Business Case To Your CFO
November 24, 2016
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Where Employees Decide Their Own Salaries

Businessman Put Coin To Highest Stack Of Coins

When a company with US$4 mill revenue is looking to grow by 100% in next 3-4 years, what steps would you foresee them taking to achieve their goals?

Going past the obvious “expand the customer base” step, one of the key thing for business growth is having the right strategy, structure, processes, people and rewards (The Star Model). The proponents of this model, which includes the big consulting firms and the big businesses themselves, emphasize on the need for structure and processes in the organization for their growth.

Enters Ricardo Semler, the leader of Semco Corporation, Brazil, who against all the common beliefs and wisdom, grew his company from US$4mill to US$212 million in 20 years by doing the following:

• Eliminated all the titles. Anyone could choose their own title but no boss no junior
• Instituted democracy – one could choose their own salary, the work they liked, the team they liked to work with
• Complete transparency – all the financial information, the secrecy of which is protected with blood by the big corporates, was publicly available for anyone to see
• No policies, no rule books – a worker could fly business class for their work trip if they wanted to
• No training, no development – when you are bored of your job, spend a month in other work areas and learn new skills

These decisions were flying straight in the face of the structure which Mr Semler Senior had created as he ran a tight ship for several years before Ricardo took over.

The organization was a ridiculed in not only Brazil but also across the shores in their early years. But Ricardo, as he recounts in his first book The Maverick, was convinced that a company can be and should be run by treating workers as adults and not as kids.

The basis of this new workplace, which Frieberg puts it as “Insanity that works”, was trust in the ability of human beings to find their way.

An artist at heart, Ricardo firmly believed that people know their jobs and can take the decisions to create success for themselves and their clan if you leave them to it. Yes, they will make mistakes. But organizations make mistakes, in fact they make blunders. As long as you have a simple system which allows people to learn from their mistakes and make better decisions next time.

We salute the courage of Mr Semler. He took the decision to swim against the current and kept at it when every wise person around him was advising him against it. Even today, if we tell a management guru that we have a company where we have no HR department, no organization structure, no rule books, no policies, employees can choose their own salaries, their own furniture, then that guru will be handing us the forms for filing Chapter 11 Bankrupcy. They will not believe it is possible even today. Ricardo made it happen in 1980s.

Do give his book, the Maverick, a read and get to know the genius behind his ideas. You read the stories about him retaining an employee who took Semco to court and about a worker occupying the CEO’s office and telling his CEO to move elsewhere and you feel here is an ingenius misfit who genuinely believed in people.

He is now invited to speak about organization culture and innovation all over the world. Here is one clip where he talks about being wise, not smart:

https://www.youtube.com/watch?v=1wk9ryFuTwo
And here is the link to his Ted talk
https://www.youtube.com/watch?v=5xJo3zD9efQ

2 Comments

  1. Chasmine says:

    Woot, I will ceilnraty put this to good use!

    • Sanjeev Verma says:

      Thanks Chasmine. Ricardo has been an inspiration for me for more than a decade. Led me to believe that when the traditions are challenged objectively, they pave way for the radical solutions

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