Examining the Leadership of Ricardo Semler in Semco

Leadership is the person who has the capacity to direct others or the way into outcome on other people in order to grasp clear-cut goals. Currently, leadership is one of the most important subjects around the globe. This in truth not just because the thrive in any company depends on the level’s of its leader and his talent in leading the human resources, but also because people need a leadership in their life in all places and at any time, for example, people in any country need a organizer, any people is the process of encouraging other people to act in meticulous ways in order to achieve exact goals’ (need a leader, any successful sport team require a good leader, also any gang require a leader, and so on. ‘Leadership’ Hannagan, T 2002 pg.37).

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SEMCO:

Semco, a successful Brazilian industry which specializes in marine and food-service equipment. This company was established in 1952 by Antonio Curt Semler. In 1980 Ricardo semler took over the company he implemented a lot of changes. As an impact SEMCO started producing mixture of chemical, pharmaceutical and mining industries it was the first step of change made by Ricardo semler.

During the upcoming years SEMCO manufactured industrial refrigeration equipment, air -conditioning systems, food processors .Later in 1984 SEMCO purchased subsidiaries and foreign companies which departed from Brazil such as Hobart.ion

In 1990 when globalization started it moved into innovative areas and they found partner’s in international market. Thus ERM Brazil an environmental consulting agency was started.

In the new Y2K era at 2001 SEMCO manutencao volante is created and they provided electrical and civil maintenance in Brazil. The company also responsible for mobile maintenance services all over the country.

In 2006 semco created Bioenergy project which later raised as BRENCO (Brazilian renewable energy company).

In 2007 they made Tarpon investimentos to list their shares on the Luxembourg stock market and on Bovespa. So, they are the first to asset managers in Brazil to initiate the capital’s market.

(http://www.semco.com .br/en/content.asp?content=1&content Id=610 accessed 17 October 2010).

IDENTIFY THE MANAGEMENT AND LEADERSHIP STYLES ADOPTED BY RICARDO SEMLER. WHAT IMPACT DO YOU THINK THESE STYLES HAVE HAD UPON THE COMPANY’S STARETEGIC DECISIONS?

Management and leadership are the two vital things of an organization.

“Leadership and Management are two distinctive and complementary systems of action. Each has its own function and characteristic activities. Both are necessary for success in an increasingly complex and volatile business environment, strong leadership with weak management is no better, and is sometimes actually worse, than the reverse. The real challenge is to combine strong leadership and strong management and use to balance each other”- JOHN KOTTER, MANAGEMENT/LEADERSHIP AUTHOR AND PROFESSOR OF ORGANIZATIONAL BEHAVIOUR, HARVARD BUSINESS SCHOOL.

When Ricardo Semler became CEO of semler he implemented a lot of changes in his organization. SEMCO’s management style is likely said to be employee empowered.

When considering about leadership style Ricardo semler follows’ Democratic style leadership in his organization.

The democratic leader welcomes team input and facilitates group discussion and decision making. This leadership style helps others and offers multiple ideas towards the organization. This kind of leadership encourages the other members to work freely to carry out and finish their tasks.

At SEMCO workers set their own production tasks. Employees decide among themselves about work time, work environments. They even formulate new marketing plans. Managers run their units with lot of freedom from the top management. Each unit in the company fixes their own salary structure. All meetings and financial information are discussed openly and freely like Chinese parliament. In SEMCO workers and managers works together to make decisions. There are no personal secretaries or assistants. Every one in the organization is responsible for their units.

As an impact Ricardo semler throw out all the rules. He reduced the layers of management from 12 to 3 and reduced the corporate staff by 75%.There are no rules and no audits. The entire budget system has been issued to all. He stopped the autocratic type of management that reduced productivity.

SEMCO does not use a formal organization chart it is absolutely necessary to sketch the structure of the company they always do it in pencil and dispense with it as soon as possible (“THE SEMCO SURVIVAL MANUAL”). The basic standard text definition of self-sufficient teams defines them as” groups empowered to make certain changes in their work processes” (Stevenson, 2004, p.301). The recent literature of SEMCO made the other work groups encouraging by following this style. Almost 50% of the fortune 1000 companies report using such work style. At SEMCO the work team illustrates scheduling, projects and methodologies, hiring and training process. There also been “quality of work life done” it supports the workers to overcome the toughest tasks.

(www.thirdway.org/files/articles/empwrkpl.html) (Accessed 17th October 2010).

An important part of SEMCO’s success is the investment of worker’s energy through Research and Development process. Thus it provides to motivate the employees to do their on going tasks so, that they can be able to achieve high in their future projects.

Thus democratic style of leadership creates a mutual relationship between the manager’s and worker’s it makes a huge impact on managers about their workers ability and mindset .so, it creates real life models in business organization.

When people are appointed or given promotion others in the organization have the opportunity to interview them before making any decision.

SEMCO has flexible work time. Each work at different speed at different timings so SEMCO do its best to full fill its employee’s needs.

When considering job security any one in SEMCO for the past three years who attained the age of fifty will have special protection and he can be removed after many approvals.

(http://www.newunionism.net/library/case%20studies/SEMCO%20-%20Employee-Powered%20Leadership%20-%20Brazil%20-%202005.pdf, accessed 19th October 2010).

2. EXPLAIN THE LINK BETWEEN SELECTED STRATEGIC MANAGEMENT AND LEADERSHIP THEORIES. WHAT IMPACT DO THESE THEORIES HAVE ON ORGANISATIONAL AND LEADERSHIP STRATEGY?

LEADERSHIP:

This moves beyond the position defining the leader, to looking at the ability of the leader to influence others-both those who could consider themselves followers, and those outside the circle. Indirectly, it also builds in leadership character, since without maintaining integrity and trustworthiness, the capability to influence will disappear (JOHN C MAXWELL).

MANAGEMENT:

“Management is the process of working with and other to effectivrly achieves organizational objectives by efficiently using limited resources in changing environment” (sisk).

Henry fayol a French engineer published “THE PRINCIPLES OF SCIENTIFIC MANAGEMENT” In the United States Of America in 1911 which synthesized various principles of organization and management. Fayol’s five functions are still relevant to discuss today they are forecast, planning, organize, command, co-ordinate and control.

(http://www.bola.biz/competence/fayol.html accessed 24 October 27, 2010)

FREDERICK WINSLOW TAYLOR defined a system called scientific management which described the application of scientific method in management which could improve productivity in a vast manner. He insisted the following principles in scientific management,

Replace the thumb work methods with scientific case study work.

Select and train the workers in a scientific way.

Ensure the workers that the whole organization is following the scientific methods.

Division of work between manager’s and worker’s are essential so that managers’ can apply scientific management principles and workers can perform it.

According to Peter Drucker Managers should avoid activity trap by inducting themselves in all activities instead of that they should actively participate in strategic planning process in order to improve them for future plans. Another concept of management by objective was that managers should implement a range of performance appraisal. In fact management by objectives can thus be seen as a successor of value based management.

Explicit time period

Performance evaluation

Feedback

Specific objectives

Decision making

(http://www.12manage,com/methods_smart_management_by-objectives.html accesses 24 October , 2010)

Henry Fayol 1916

Fw Taylor 1881

Peter Drucker 1954

FORECAST

SCIENTIFICWORK

TIME PERIOD

PLANNING

SELECT AND TRAIN

EVALUATION

ORGANIZE

ENSURE THE WORKERS

FEEDBACK

COMMAND

DIVISION OF WORK

SPECIFIC OBJECTIVES

CONTROL

PERFORMANCE

DECISION MAKING

CONTINGENCY THEORIES:

Contingency theory explains that group performance is a result of interaction between two factors such as leadership styles and situation favourableness. In Fiedler’s model of contingency theory leadership effectiveness is the result of interaction between the leadership style and character of environment where the leader works. (Fiedler)

Contingency theories in leadership also identify the interaction between leadership style and situational variables. It shows the size of the organization and helps to adopts them to the environment where they work. Contingency theory helps to know the importance of design an organization and also shows to fit themselves in the environment.

New technology should be used

The managers should have an assumption about their employees

It shows how the organization firmly adapts themselves in the environment

Contingency theory shows the importance of decision acceptance and quality

The leaders ability to lead is contingent upon various situational factors which includes the leader’s explicit working style, the capabilities and behaviour’s of follower’s and also the various situational factors

(http://changingminds.org/disciplines/leadership/theories/contingency_theory.htm accessed 24 October 2010)

(http://www.12manage.com/methods_contingency_theory.html accessed 24 October 2020)

LEADERSHIP THEORIES:

Leadership theories focused on the qualities renowned between the leaders and their followers, while ensuing theories looked at other variables such as situational factors and proficiency levels. Whilst scores of other theories have emerged nearly everyone can be classified of eight main theories,

“GREAT MAN” THEORIES:

Great man theories believe that the power for leadership is inherent-that great influential leaders are instinctive not made. These theories often depict great leaders as gallant, mythic and intended to rise to leadership when needed. The word “GREAT MAN” was used because, at the moment, leadership was thought of chiefly as a male eminence, particularly in terms of military headship.

BEHAVIOURAL THEORIES:

Behavioural theories of leadership are based upon the conviction that grand leaders are made, not born. Ingrained in behaviourism, this leadership theory focuses on the behaviour of leaders not on psychological merits or inner states. According to this theory, individuals can be taught to befall leaders through teaching and scrutiny.

(http://psychology.about.com/od/leadership/p/leadtheories.htm accessed 24 October 2010)

TRANSACTIONAL LEADERSHIP:

Transactional leadership is based on contingency, in that reward or punishment is deputation upon performance. The transactional leader works through creating lucid structures whereby it is clear what is requisite of their subordinates, and the reward that they get for subsequent mission. While transformational leadership has more of a ‘business’ style, transactional leadership, once the bond is in place, takes a powerful style.

(http://changingminds.org/disciplines/leadership/styles/transactional_leadership.htm accessed 24 Octoberv2010)

Transformational leadership:

Transformational leadership is the way to get things done by injecting passion and vigour. It starts with the progress of a idea, a outlook of the expectations that will enthuse and adapt probable followers. Transformational leaders also lean to see the big representation, but not the details, where the fiend often lurks. Working for a transformational leader can be a wonderful and uplifting experience. They put enthusiasm and energy into everything; they care about the organization and advance to do well.

(http://changingminds.org/disciplines/leadership/styles/transformational_leadership.htm accessed 24 October 2010)

Emotional intelligence is a unique quality to control, assess and identify the passion of one’s own self, one’s group and of others related to him. There is a broad sort of difference in the meaning of EI. No ordinary set of explanation has been reached as to how this phrase should be used. Within all these differences, this tenure is widely used and applied in diverse fields. The initial origin of this phenomenon can be traced back to Darwin’s book on the significance of emotions for survival.

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These entire hypotheses affect the executive and leadership strategy in different ways. Every theory is in terms of its implementation and effects. As discussed above, transformational theory provides the business with a replica in the leader to whom all the persons of the company look up as a loom of strength and motivation. Whereas, the transactional leaders affect an organization by setting out the objective by following a certain policy . While contingency theory provides an organization with a leader who can either be job oriented or rapport tilting, depending on the situation. Thus making the method deprived on the need. On the other hand, a magnetic leader leads the organization by example.

3. UTILISE APPROPRIATE TECHNIQUES TO REVIEW SEMCO LEADERSHIP REQUIREMENTS.

According to Theodor Roosevelt “People ask the difference between a leader and boss. The leader works in the open and the boss in covert. The leader leads and the boss drive”

(http://books.google.co.uk/books?id=C3ORVrTOjcgC&printsec=frontcover&dq=leadership++quotes&hl=en&ei=SYLFTI76DIKEOu-I5ZUM&sa=X&oi=book_result&ct=result&resnum=2&ved=0isCDgQ6AEwAQ#v=onepage&q&f=false, accessed 25 October 2010).

As per the above definition a leader is like a captain of a ship, he should always lead the front and rest of his comrades should co-operate with him. Therefore, leadership needs a lot of requirements and patience to improve his organisation. In case of SEMCO, Ricardo Semler follows democratic style of leadership and thus it needs some specific requirements handle it?

To carry out a company’s leadership requirement STEEPLE ANALYSIS is done.

STEEPLE ANALYSIS:

All businesses functions in a dynamic environment. STEEPLE analysis is a technique used to identify the changes and requirements in a business organisation that may results in new opportunities and changes. It also helps to rectify the threats and overcomes the factors such as Social, Technological, Economical, Environmental, Political, Legal, and Ethical.

SOCIAL:

Social factor deals with trends such as job security, income distribution, work life balance and other demographic factors. When considering SEMCO Ricardo semler made his environment changing day by day some may think this may not ensure job security but he has opportunities to all workers from top brass to lower management and employees can’t dismissed without proper procedures. Thus it makes every worker to do their work sincerely. Thus every worker knows the importance of their work and makes a solution for other demographic factors this includes Ricardo semler too.

TECHNOLOGICAL:

On the terms of technology when Semler took the management from his father he saw a lack of technology gap between the professionals and the business. As a leader Semler must know the importance of communication and networking but it is not essential to know all the technological terms. So adding intelligence to communications allowed the business networking widened all over the world. So Semler added rich media conferencing and unified communication such as CISCO to take a new business approach thus it helped Semler to lead the technological crisis.

(http://www.ngoilgas.com/article/Technology-briefing-ndash-The-Semco-Intelligent–Information-Network/ accessed 23 October 2010)

ECONOMICAL:

In a organisation the leader as well as the managers should able to accomplish the economical factors such as global economy, inflation, unemployment. During the 1990s some restrictions on liquidity were laid down by the Brazilian president Fernando Collor de Mello to face the hyperinflation of Brazil due to this policy Brazil’s economy gone down forcing many company to shutdown. To face this situation Semler decided for wage cuts as of his leadership style SEMCO’S workers agreed for this decision this provided SEMCO to increase the share profits by 39% and all the employees had the right to approve expenditure. Due to this kind of style as of 2003 he got annual revenue of $212 million from $4 million in 1982 and $35 million in 1994 thus it got an annual growth rate of 40% per year.

(http://www.semco.com.br/en/content.asp?content=1&contentID=610 accesses 23 October 2010)

ENVIRONMENTAL:

BRENCO (Brazilian renewable energy company) was one of the companies of SEMCO which produced ethanol from sugarcane on a large scale which took part in producing bio-fuels. By producing bio-fuels SEMCO helps themselves for global warming so there is no possibility of environmental hazards in SEMCO in case of any environmental risk Semler founded Environmental resource management all over the world with 3000 employers in 120 offices in 40 different countries to handle environmental audits, sustainable development, waste management, corporate social responsibility, correction of contaminated areas, air and noise quality and health and safety.

(http://www.semco.com.br/en/content.asp?content=1&contentID=562,

http://www.semco.com.br/en/content.asp?content=7&contentID=616 accessed 23 October 2010)

POLITICAL:

Ricardo Semler formulated a survival manual for SEMCO so that it helped his workers to overcome the political, demographical factors and trade unionism. As of to the survival manual SEMCO does not allow politics inside the company or among the workers it also does not allow any discrimination activities based on colour, religion, politics etc.. Moreover Brazil has a rough economy and politics but semler don’t allow any political activities inside or outside the company. But SEMCO itself coincide with Brazil’s political system.

LEGAL:

Every organisation they will have some legal aspects such as rules and regulations, corporate governance, compliance. The following are the some of the legal aspects of SEMCO they are,

Equality between short term and long term profit

The organisation ensures safe working conditions in order to protect workers and the environment

Employee empowerment is strictly conducted.

No tolerance to dishonesty

No dress codes, regulations on travel

Rules thwart innovation

Pragmatic lessons for managers

(http://www.scribd.com/doc/19128972/Maverick-Book-Review accessed on 23 October 2010)

ETHICAL:

SEMCO is an extreme example of ethical business that shows an epitome good paradigm for a new organizational structure. When workers are satisfied they perform better those results in high profits for the whole company. SEMCO has proved that it is not a theoretical hypothesis. Thus it can work in the commercial world with right goals and get settled.

(http://wedreambusiness.org/index.php?id=196 accessed 23 October 2010).

4. PRODUCE A FUTURE LEADERSHIP SKILLS PLAN FOR SEMCO. REPORT ON HOW USEFULL WAS THE METHODS USED TO PLAN THE DEVELOPMENT OF LEADERSHIP SKILLS. ENSURE YOU EVALUATE EACH METHOD.

“Strategic management is an ongoing process that evaluates and controls the industries in which the company is involved; assesses it competitors and sets goals and strategies to meet all existing and potential competitors : and then reassesses each strategy annually or quarterly that is regularly to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment, or a new social, financial or political environment” (Lamb, 1984). Relaxed attitude is a key factor in SEMCO. Since it follows an active management in the company every member of staff can take part in any affairs of the company. Consequently this system helps to work the new employees without training. There are no job titles and personal assistants. Since the company is following and free style working conditions it is different from other companies due to its style. In SEMCO both managers and workers have the same responsibility and they express their thoughts wherever required. Therefore this bearing outgrowth to the company. Incase SEMCO had common organizational structure then it may lead the company to tragic end. So democratic type of leadership made Semler to paths of glory “The health of democratic society may be measured by the quality of functions performed by private citizens- Alexis de Tocqueville”

(http://www.brainyquote.com/quotes/keywords/democratic.html accessed 25 October 2010)

The methods of developing leadership skills have their own consequence. They can execute well in diverse situations. Most of the business organization works in formal measures while SEMCO works in self styled leadership thus this method sounds stronger after an aerial view of SEMCO case study. Its casual working style let the beginners easy out of pressure to work in such environment.

CONCLUSION:

After this comprehensive discussion about the development of strategic and leadership styles, we can figure out that the preferred objective by different methods, theories and styles. Semler himself introduced himself as a rebel in industry by adopting perilous methods of management. But all of his employees worked well for him, he gave opportunities to all his workers to be leaders of their own firm. But after the prolonged analysis of the case study of SEMCO, We can state that the style adopted by Semler one of the best creative styles of management. Thus it creates assurance among employees and boosts them to work with more strength and passion towards the achievement of target.