Analysis of Semco Company - Assignment Example

SEMCO When globalization set in Brazil, Semco was one of the hardest hist company. Its core business had been severely affected that it threatened existence of the company. It was aggravated by the hyperinflation in the Brazilian economy due to the advent of globalization in the1990s worsened by Brazilian President Collor’s decision to restrict access to liquidity. As a result, a severe recession ensued during which many companies in Brazil were forced to file bankruptcy. Semco also almost filed for bankruptcy during these difficult times. Instead of folding up with the crisis, Semco underwent a cultural change. The cultural change that was introduced in the company turned around its near bankruptcy position with the assumption of Ricardo Semler, Antonio Semler’s son, a Harvard educated man. He implemented drastic change upon assumption as the new CEO of Semler. Upon assumption as the new CEO, Ricardo Semler fired two-thirds of the top management of Semler & Company and that included many close friends of his father. This would not have been possible under his father because Antonio Semler did not separate work from his personal relationships. The new set-up of the company was also a socially responsible to do to save the company and to introduce a new kind of company culture which is a total departure of the old autocratic style of leadership of the company. The young Semler felt that the old autocratic leadership thwarted people’s motivation and creativity. Thus, he decided that the authority to make decisions at Semco to be more evenly distributed to be more responsive and competitive in a globalized economy. In the process, he dismantled the rigid bureaucracy and structure of the company to make it more flexible based on the new three values of the company – employee participation, profit sharing and free flow of information. And to emphasize the change, even the name of the company was changed from Semler & Company to Semco. There were a lot of changes that can be considered drastic if it will be compared to the old leadership. Strategy wise, among them product was product diversification and the creation of Nucleus of Technological Innovation (NTI). Leadership and ethical perspective was also changed to democratic and participatory to the point that employees can already direct themselves- set their own budget, even their own salaries and even the hiring and firing decision of both employees and managers and above all to make the company a professional and ethical business organization. During the time of Ricardo Semler’s father, senior positions in the company were occupied by Antonio Semler. The basis of selection and promotion was based on nepotism and not on competence and qualifications. This translated to company’s poor performance and non-competitiveness with globalization as most of the officers of the company were cronies of the old Semler. This translated to autocratic and transactional leadership that is not only unethical as it was autocratic but also thwarted innovation, creativity and growth. The change at Semco to become a more professional, ethical and democratic organization however proved to be good for the company. As Ricardo Semler put it, they have transformed the company from a moribund to a very productive, highly profitable and highly preferred employer company. Due to the professionalism instituted in the company, changes were made that had direct impact to their bottom lines. Some changes that Ricardo Semler implemented to cut cost and make Semler a profitable company was the removal of secretarial positions. They were removed not only as a part of the companys transformation but also to save on cost so that profitability will increase. The change at Semco made everybody obsessed with increasing their productivity and ultimately their profit because employees are accountable to the profit of their own business unit where they could also share the profit. The company made the employees literally socially responsible for the company by giving the employee the responsibility, authority as well as the accountability to get things done by themselves. As a result, Semler unleashed thr creativity and potential of its employees that increased their productivity at record levels. The employees became so effective that they assume leadership in many aspect of the company that Ricardo Semler does not have to sign checks anymore nor approve contracts or projects because the employees did it themselves. To balance the democracy and responsibility given to employees, Semco reminds its employees that corporate democracy can only be carried for as long as it is not destructive to the company’s bottom line. Ricardo Semler himself called this the freedom that was wrought by taking care of the bottom line. Such, for as long as the company become productive and profitable due to corporate democracy, it should be continued. For Semco, it has been carried far enough to the point that Ricardo Semler no longer owns the company but just the capital. He does not sign any check nor approve anything because it is already the employees who are doing it for themselves. And this has been good for everybody in the company. This practice of corporate social responsibility within the company however is not without caveat. Although Semler practiced corporate democracy, the company was unforgiving about mistakes especially with mistakes that affect the bottom line negatively. For him, it is the positive bottom line that gives them the freedom or license to do the things the way they want it to be. If they make a mistake in how things are done, then that freedom will be revoked. As a result of this transformation in ethical perspective and practicing social responsibility within the company, many notable changes happened in the company that made it one of the most competitive businesses in a globalized economy and preferred place of employment. The unethical practice of nepotism that nurtured an autocratic leadership that made the company a moribund was transformed into an empowering leadership that is not only ethical but is also socially responsible. In fact, Semco became Brazil’s flagship of business competitiveness in a globalized environment that it now transformed into SEMCO Partners (www.semco.com, nd) that would partner other companies who would want to venture into Brazil having the competency and professionalism to ensure success in the Brazilian marketplace. Reference Semco Partners. (n.d.). Semco Partners. Retrieved June 29, 2014, from http://www.semco.com.br/en/ Read More