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Brazilian Company Sees Democracy as Its Hallmark

CEO turns typical method of doing business on its head. INTERVIEW

AT Semco, a Brazilian manufacturing company, very little is done in a traditional way. Sometimes things are not even done the easiest way.

When the company recently posted a job opening for an engineer, 1,430 resumes came pouring into the Sao Paulo headquarters. With no personnel department, employees took it upon themselves to carry home stacks of applications to review each night. The process of filling one job took six months.

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``This latest job posting was a big mistake,'' says chief executive officer Ricardo Semler, who is currently touring more than 26 countries promoting his book, ``Maverick: The Success Story Behind the World's Most Unusual Workplace'' (Warner Books). ``Next time we're going to have to find a more creative way to handle the situation.''

In the 13 years since Mr. Semler took over the family business at age 21, creativity and a different way of doing things have been the hallmark of the company. In the process, Semco's revenues have increased from about $2 million to $30 million.

Semler's book, which expounds on the radical changes the company has undergone, was published in Brazil five years ago and spent 200 weeks on the bestseller list.

The book is not a ``how-to'' business book, Semler says, but more of a novel about a company that has tried to prove there is a different or better way to work. At Semco, a manufacturer of pumps, valves, mixers, and other industrial equipment, the policy is that there should be very few policies at all, Semler says.

Employees work in small clusters or teams and assemble completed products. A majority of the workers set their own salaries that are posted for all to see. There are no departments and no audits. There is no dress code. Employees spend whatever money they think necessary on business trips. And the individual clusters decide how to spend the money they have earned from the firm's profit-sharing program.

``In restructuring Semco, we've picked the best from many systems,'' Semler writes. ``From capitalism we take the ideals of personal freedom, individualism, and competition. From ... socialism we have learned to control greed and share information and power.''

THE process of turning a struggling family business around has been neither quick nor easy. Because of their different ideas and management styles, the transition from father to son was ``traumatic,'' Semler says. On his first day, he fired 60 percent of the company's top management. He had no managerial experience himself but quickly hired an executive who did. All along, he says, the changes were based on a ``profound belief in freedom - which is something that's very rare in organizations.''

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Since those early days, 720 companies, including IBM, General Motors, Nestle, and Dow Chemical, have visited Semco to learn more about how it operates. The companies find it difficult to believe that Semco's theories and principles could work in practice, Semler says. ``Most go away with the feeling that they'd like to try a couple of these things in their own environments,'' he adds. ``But then [the ideas] get swallowed up in other day-to-day concerns and not a lot happens.''

Semco is based on three principles - employee involvement, profit sharing, and information - that are really just common sense, Semler says. Companies talk about getting their employees more involved, he says, but often the talk is just hot air. ``For one thing, it is very basic common sense that if we did not find a way of balancing work and family lives, we certainly would not be able to create a self-motivated work environment,'' Semler says.

At Semco, no one is hired without the approval of all the people the prospective employee would be working with. Most of the large decisions are made by a companywide vote, including one decision to buy a factory that Semler did not like. And all workers are taught how to read company balance sheets that are always available for anyone to see.

Semler insists that Semco is only halfway there. He says it will probably take another 10 years before the company fulfills his vision. ``The main goal I have is to see [Semco] consolidated and apart from myself, with its own work culture,'' Semler says. ``If this were all connected to me, it would be a tremendous failure after all.''

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