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Workplace democracy gone mad
       by Peter Hall-Jones  for  www.newunionism.net

Anyone who doubts the potential of workplace democracy should read about SEMCO, the Brazilian industrial equipment company. It is a wild and awe-inspiring story, and it shows how far a determined mix of organization and partnership can take us.

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Ricardo Semler, the CEO of SEMCO, took over the struggling company from his father in 1982. He was 24 at the time, and wasn’t particularly thrilled at the prospect of being an industrialist. Soon afterwards he sacked two-thirds of the company's top management. What followed was intriguing. He started to devolve more and more power and decision-making authority to his workforce. And as he did so the company became more and more productive. While Brazil’s economy bounced about insanely, with currency devaluation, hyperinflation (averaging 400%) and record unemployment, Semco grew between 30 and 40% per year.

Each step they took down the path of workplace democracy improved the situation, and so they took another. Scepticism melted away as SEMCO grew through crisis after crisis in the Brazilian economy, and in the end the leader of the most militant of the unions involved in the company declared on television: “Brazil has only one trustworthy boss – Ricardo Semler and Semco.”

At one stage, in response to yet another lurch in the economy, management and workers developed a plan to set up “satellite companies”, whereby many of the workers took over ownership and control of the plant and equipment they used on the job (ie the “means of production”). These satellite companies were autonomous, and were free to trade with other companies. Again, productivity increased. Again, the company grew.

SEMCO no longer use the terms workers or managers: it refers to staff as “people”. It’s a pity not to be able to do so here, but it would be impossible to describe the radical model they have developed without resorting to the old terminology.

• Workers at SEMCO interview and elect their managers. They evaluate them regularly, the results are posted publicly.
• Workers take responsibility for their own jobs, and set their own productivity targets and wages. Those still outside of satellite companies receive 23% of the profits from their division, and choose between themselves how this is to be distributed (apparently it is always shared equally).
• Every cheque requires a management and union signature.
• The company’s books are open to all employees, and each receives a copy of the financial statement. The union holds classes on how to read them and interpret the data.
• SEMCO's products are so good and its customer service so efficient that 80% of revenue come from repeat customers. Over the last decade sales increased by 600% and profitability by 500%.
• As a nation, Brazil has grown so fond of this success story that 25% of all graduates now say that they would love to work for SEMCO.

The decentralisation of management functions has enabled Semler himself to develop a new role; perhaps most comparable to that of an external consultant. He has named his approach “management by wandering around”.

Here are some excerpts from a small booklet which is given to each new employee:

Participation
Our philosophy is built on participation and involvement. Don’t settle down. Give opinions, seek opportunities and advancement, and always say what you think. Don’t just become one more person in the company. Your opinion is always interesting, even if no one asked you for it. Get in touch with the factory committee and participate in elections. Make your voice count.

Unions
Unions are an important form of worker protection. At Semco workers are free to unionize and the persecution of those connected with unions is absolutely forbidden. Unions and the company don’t always agree or even get along but we insist that there is always respect and dialogue.

Strikes
Strikes are considered normal. They are part and parcel of democracy. No one is persecuted for participating in strikes as long as they represent what the people of the company think and feel. The workers’ assemblies are sovereign in this respect.

Evaluation by subordinates
Twice a year you will receive a questionaire to fill in that enables you to say what you think of your boss. Be very frank and honest, not just on the form but also in the discussion that follows.

Semco Women
Women in Brazil have fewer employment, promotion, and financial opportunities than men. At Semco, women have various programs, run by women that seek to reduce this discrimination. They are known as the Semco women programmes
1. If you are a woman, participate.
2. If you aren’t, don’t feel threatened and don’t fight against this effort. Try to understand and respect it.

To ensure that the company continues to support full participative ownership and operations, Semler has revised his will to release share equity upon his death.

Isn’t this all a bit too good to be true? That was our first reaction. But there has been a huge amount of critical attention and evaluation of SEMCO, and no matter how you look at it, the story adds up. Our on-line library contains two articles on SEMCO (under case studies), for those who want to know more.

These final words are from the close of Maverick, Semler's first book:
I hope our story will cause other companies to reconsider themselves and their employees. To forget socialism, capitalism, just-in-time deliveries, salary surveys, and the rest of it, and to concentrate on building organisations that accomplish that most difficult of all challenges : to make people look forward to coming to work in the morning.