Companies You Should Know: Semco

What’s Possible: A Brief Look at Semco

I think all of us are enthralled by the wonder of children – the way they’re curious about everything, not afraid to question anything, always eager to learn. For some time, I’ve believed that coming into adulthood for most human beings is about that particular trait being systematically beaten out of us until there’s nothing left but total submission and convention.

There’s a company in Brazil called Semco, whose leadership goes out of its way to remain “refreshingly childish,” in its own description, by continually asking “Why” and challenging convention. This company, incidentally, has been the topic of more case studies than just about any other company at universities such as Harvard and Stanford. It has also been routinely visited by CEOs and executives of major corporations all over the world to study its practices and policies.

What makes Semco interesting is that its desire to challenge convention has created a completely different type of company. For starters, employees choose their own salary and their own manager. The company has no formal organization chart, and actually encourages its employees to play hooky on the workdays if they really feel like it. In other words, if it’s your mom’s birthday on Monday, don’t come to work! You’ll be better off spending time with her, and be more motivated to do your work by whatever deadline you have to meet.

Its founder and CEO, Ricardo Semler, in his book, The Seven-Day Weekend, cites the following reason: “The secret. Ask why. Ask it all the time, ask it any day, ask it every day, always ask it three times in a row.” This practice of asking “why” caused him to challenge conventional practices and create a fundamentally different approach to building a company.

Semler goes on to say that, “For a company to excel, employees much be reassured that self-interest, not the company’s is their foremost priority. We believe that an employee who puts himself first will be motivated to perform. At Semco, this is considered a form of corporate alignment. Without it, a company has to institute programs to pressure, exhort, and compel people to do their jobs.”

This would be less interesting were it not for the company’s progress. Semco today employs over 3,000 people across its 10 divisions. Its revenue has grown 40% a year for the past six years to over $200M today. It has only 1% turnover in the organization, and rarely ever fires anyone. Between 2000 and 2001, for example, only 3 people left out of its nearly 3,000 employees.

These days, we’re all bogged down with increasing stress in our lives. Semler believes “stress is the difference between your expectations and reality.” A lot of the company’s philosophy is about having employees live the life they want to live through balance between what’s important to them professionally and personally, and allocate time through the entire week accordingly. There’s a core belief in Semler’s mind that this is totally selfish on the company’s part, because it creates the highest performance from the employee. I tend to believe him.

Now I know that Semco must not be without its problems, but it just got me thinking. For a long time, I’ve believed that “why” is a considerably more important question than “what”. Know why, and the rest is downhill. So when was the last time you asked “why?”.

When you have a moment, read The Seven Day Weekend. I’m curious to hear your perspective on it. As I come across other companies I find interesting, I’ll cover them as part of this series, which I call Companies You Should Know.