Change and Leadership at Semco
- Specify the issues that inspired the need for change in the Semco Company and what those changes. (200-300 words)
Through Ricardo Selmer’s leadership, a CEO and President of Semco, a manufacturing company in Brazil, he readdressed ideologies on employee empowered leadership style. He established a management system based on employee empowerment as required by management and scholars on an enterprise that an individual manages the planning, the factors, and process of production to ensure economically viable services and products materialize. In his tenure as CEO, annual sales grew by 24%, and employment rose from 350 to 2,500 while profits tripled.
One factor that contributed to the changes at Semco was the need for employee involvement. This existed from post-colonial society’s aspiring for an economic and political model that advocated for the modernization of individual’s terms. Concerning various organizations, employee involvement includes a process outlined to empower workers to solve a problem appropriately and make decisions according to their level best (). The rationality behind employee involvement is that individuals close to opportunities and issues are best qualified to make effective decisions for improvement and control processes.
Another factor includes industrial democracy, which involves an economical array of sharing responsibilities, employees’ decision making, and workplace authority. Although it regards with an organization model where employees directly run workplaces instead of state or private ownership, it embodies decision making structures like consultative and committee bodies that ease communication between the staff, union, and organization (). Workplace democracy also inspired change in the company by promoting structural and interpersonal arrangements that link employee influence and interests with the company’s decision making at various levels.
At Semco, changes followed with employees fixing their production quotas, redesigning their work environment, and products and also formulating desired market plans. Managers controlled their units with practical business strategies and freedom with minimal intrusion from management. Each division was authorized to develop their desired salary structure with freely disclosed financial information.
- Critically analyze the changes the SEMCO Company implemented. Use OD or ED theories to justify the utility of those changes. (400-600 words)
Under the changes implemented at Semco, workers were expected to undertake increased responsibilities, including plant relocations and product designs. Employees were allowed to become cross-functional in specific areas of interest in the business to participate and transfer in different units as they saw fit. Nonetheless, the significant indication of Semco’s advocacy for a democratic, participatory management structure is that the associates were inspired to comfortably and openly reject and oppose proposals from higher levels management.
Flow of Information
Semco provided its financial information to its employees and created a training program for its workers to interpret cash flow statements and balance sheets. The company also availed knowledge on each division’s profits and losses with openness in salaries of every worker and manager. Besides, the organization’s meetings, including counselor’s sessions, were open to all workers wishing to attend with equal voting ability. The free flow of the company’s data equipped associates with adequate information for knowledgeable decisions and supported the democratic essence of the decision making process.
Strategy
By 1998, Semco company sustained a limited number of in-house functions, including engineering, applications, research and development, top management, and various capital intensive services accommodated within the range of Semco’s core competencies (). This followed a shift in its significant functions to satellite companies outsourcing other firms. As the CEO, Semler believed in inevitable competitions and argued that continuous innovations resulted in competitive advantage (). Furthermore, the affinity between satellite companies and Semco ensured that competitive information resided within the organization. Selmer perceived that Semco held minimal strategic details, and imprudent planning discouraged creativity and spontaneity. In supporting his arguments, Selmer referred to the company’s profit summing to approximately 15% from environmental consulting. The justification of this change is marked by environmental consulting as a strategic plan in Semco, which supports Selmer’s reasoning that the corporate mission statement was needless.
Loss and Profit Responsibility
Semco’s constancy to concepts of democratic employee management promoted a sense of necessary commitment and individual freedom to financial accountability. As each manufacturing unit receiving autonomy, it was obliged to provide accountability. Besides, to attain accountability, the firm employed practical strategies that objectively measured each unit’s failures and success. The company’s profit-sharing plan supported this strategy and provided incentives to associates to enhance its profitability. To justify these changes’ utility, each associate was evaluated based on their contributions with underperforming associated pushed out.
- Suggest your own OD or ED plan for the company and theoretically justify your recommendations. (400-600 words)
Structure
Semco has a democratic structure with few levels that allowed affected employees to make decisions. The hierarchy organizes and manages activities within business units and contains the decision making power over the choice of partners, income distributions, capital investments, strategies, and production processes. However, they are controlled by the management approach, structure, norms, and core values, limiting a worker’s freedom to oversee their work. There is a need for control to minimize conflicts between employees and management perspectives and ensure objectives set under democratic decisions are met. Although coordination may seem to obstruct worker’s freedom, managers should be set to control worker’s performance and secure each unit’s goals are achieved since they coordinate work.
Decision Making
In Semco, employees contribute to policy decisions through the company’s committee characterized by workplace democracy. The direct democratic participation in occupation environments motivates the workers while involvement in team environments is vital since workers are expertly educated to make the group’s democratic decisions. However, in Semco, worker’s notions of participation reflect the quality and intensity of involvement; therefore, since workers can participate in all decisions, it results in an unequal distribution of votes. Despite a management perspective on free information flow and democracy in voting, the company’s workers should trust management with the mandate to decide on elections that influence business activities and change the organization. This can be justified that, in typical workplace democracy, no single employee can participate all decisions. Despite adequate information availability, most employees fail to access this information or even be aware of its existence.
Workplace Democracy
Democracy undertakes employee rotations, which extends power, knowledge and reduces the dependency of vital employees. It essential for the company to have managers with diverse skills to reduce dependence on a single coordinating manager and dispensing all available managers to employees. In Semco, despite rotation programs improving employee’s knowledge, it bases on managers letting out employees. Among managers, rotations inhibit power monopoly by transferring authority to others. It also reduces the concentration of information and knowledge acquired by single employee overtime by forwarding it to the next person in charge. However, in Semco, rotation only shifts functions among managers; therefore, it results in unequal power distribution in a unit while moving authority to managers in other divisions. This is justified as most employees perceive that the company limits their work variations and learning capacity as they are assigned and operate on tasks in similar environments under the control of a manager.