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Where Radical Design Meets Effective Business
EXECUTIVE UPDATE, June 2004

Toss your mission statement? Tell employees to think of themselves first? What kind of crazy way to run a business is that? A highly successful and profitable one, claims Brazil's two-time businessman of the year Ricardo Semler. His new book, The Seven-Day Weekend, explains why radically changing "the way work works" can lead not only to tremendous organizational growth and opportunity but also the happiest employees on the planet.
By: Ricardo Semler


 
When it comes to conventional business wisdom, Semler is downright heretical. It hasn't escaped notice, however, that his crazy notions actually work.

 

The way I run my company, Semco, in Brazil has been called everything from "unconventional" and "quirky" by the polite to "crazy" by the more blunt. But creating a workplace that does not drive its employees insane while making money and pleasing customers at the same time is not such a wild management philosophy.

I took over my father's traditionally structured business more than 20 years ago. It didn't take long for me to get sucked into the long hours, high stress, and frantic pace of organizational "leadership." But I paid a serious price in terms of my health and mental well-being. "Was this the way work is supposed to be?" I wondered. Surely, life — and business — could be, well, so much more civilized. What was really important? I mean, really important. That's when I adopted the first elements of an unusual management philosophy toward running organizations in a more humane, holistic fashion.

Sound soft? Then look at some hard numbers. Six years ago Semco had $35 million in annual revenues; today, we're at $212 million. Staff turnover within our 3,100-plus employees is less than one percent. World business leaders visit us in São Paulo to study our "unorthodox" operations; I just completed a spring term as an invited visiting scholar at Harvard University.

People everywhere want to know how we work the way we do. Would such success follow them if they were to adopt these values and unconventions?

Association leaders are unlikely to find much discussion in traditional business publications about the four concepts they should most understand: intuition, luck, mistakes, and serendipity. None of these elements is controllable, which is why few organizations embrace their importance or actually strive to keep them out of the workplace.

Fortunately, one of my primary ideas about revolutionizing work has become deep-rooted and flourishes at Semco: the seven-day weekend. Semco assumes that if people's personal and professional balance isn't in equilibrium, something will give eventually. People will become sick; their family life will go to hell; or their job frustration will rise. That's bad for business. That's bad for associations. That's bad for work. And it's just silly.

Our employees set their own hours and, using 11 options, their own paychecks. They are free to redistribute their workweeks as they see fit. Why force someone who is not a morning person to come in at 8:30 a.m. when he works best late at night? Why demand that parents sit at desks and "be productive" while their minds are on their children's after-school piano recital?

Idleness is good. You can't expect people to produce something with which they are happy unless they find work-life balance. And if they don't have a certain amount of idleness in their week, they're not rethinking what they're doing. If that's the case, they're probably not adapting, and then they fall into the trap of a routine, which depresses productivity and satisfaction.

At Semco, we trust that our employees are conscientious adults who will make sure the work gets done as needed; we don't need to dictate the exact terms under which they will accomplish that. Whoever is going to cheat or steal will do it anyway. We just don't want the other 97 percent to have to suffer daily constraints because of that three percent who will eventually abuse our trust, so we prefer to do nothing.

Leaders willing to open their minds to a different perspective on long-term, values-based organizational success may glean some guidance from our experience incorporating other aspects of our seven-day weekend standard.

Revisit your childhood. Remember at age five when you annoyed everyone by asking, "Why? Why? Why?" every time someone stated a "fact" or gave a fuzzy answer?

Childhood is the phase in our life when we are less calcified by what we've been conditioned to accept or believe over time. Semco's work culture is like going back to what childhood meant for many people. Rather than assuming that people are going to come in as late as possible, do as little as possible, and want to make as much money as possible, we start with the more childish notion of believing that people basically are there because they need gratification in their lives, and work is the format for doing that. If we're constantly questioning how these things could be done differently, then we are taking a more childlike view of life that is a fresher, uninhibited view.

Let go of control. Seriously, just let go. Semco recognizes the fact that leading is a transitional situation. Different leaders come to the surface in response to unique situations and circumstances. Thus, static, general-purpose leadership models simply are not based on reality, nor do they provide methods for alternating power and leadership regularly and objectively based on the situation.

You don't have to be a leader for four years straight. You can lead a niche or a side issue instead — just don't get caught up in the idea that "I am either the big boss, or I'm nothing," or "I'm a department head, so I can only go up."

Our leadership and management process is simple: We create groups of six to 10 people who then manage themselves. Although that may sound like a recipe for silos, in reality those groups are always changing because employees generally rotate jobs every six months.

As I note in my new book, we operate in an era of crisis management. Modern business is about administering first aid to the wounded and cleaning up the mess, not about orderly execution of a plan or policy. But exchanging the old boss for a new one is not situational leadership. True situational leadership — flexible, effective, evolutionary — can only arise from self-management, which means always giving up control.

Meanwhile, the organization must ensure that a person doesn't outlive his or her welcome as a leader and that it has a place for the person when he or she no longer is the right leader. Executives shouldn't say, "Look, the situation has changed. You're no longer the right person for this, and we're so sorry; see you later." Instead, they should explain, "We've found a structural way for you to step down and still make the same amount of money or still be as gratified, but you're no longer the leader we need at this point. Don't go anywhere, though. You still have a lot of good things to offer, so here is something else to focus on, and maybe in a year, you'll be the right leader again."

The best leaders walk away — often. Dedicated leaders must physically distance themselves from the workings of the organization. Although counterintuitive, they must aim to decrease their influence. I want customers to depend on my organization, not on me.

Thus, I don't do anything that someone else can do, and I haven't signed a contract, check, or the like in 12 years. I regularly hand off both minor and major decisions. I advocate for ideas and solutions I think are best and participate in discussions when I have something to add, but my focus is on removing obstacles and creating new mechanisms that make the organization successful, namely freedom, democracy, and lack of control.

Our other leaders seem to like walking away, too. The percentage of Semco executives who spend one or two days at home each week or who travel has increased dramatically. Slowly, people have learned that there is no correlation between how important you are, how many hours you work, or how physically close to the organization you are.

Tell employees to put themselves before the organization. The self-interest of employees is essential to organizational success, because workers then are motivated to perform. We consider this value to be a form of corporate alignment. Otherwise, we would have to establish programs to pressure, beg, or force people to do their jobs. People who need such active "motivating" should be in different jobs. Instead, move employees to a different office, invite them to new project meetings, or offer to help them create their own businesses.

We also understand that it's human nature to lose interest in something eventually, so we offer incentives for employees to move to different departments and jobs. This lets them increase their independence and tap into what we call their reservoirs of talent so they stay interested and don't rely on the organization to dictate their development.

Throw away your mission statement — and don't replace it. Mission statements are very limiting. First, at a certain point, it's done. Second, it usually takes a long time to do. And third, in the end, it runs the risk of stagnating. Say that we explain, "Our organization is here to better the situation of the poor in X neighborhood of this city." Suddenly, you find an opportunity in another geographical location or a sub-element of that mission that is a better niche. Your mission statement has to be redrawn every time, so you are not going to take up opportunities as easily, because you're consulting a road map that says, "We're going exactly there."

To have an idea of why you're here is fine, but to actually write it down and establish that as a mission statement means you end up with a pied-piper mentality — following something without absolute certainty of why you're doing that anymore.

Crumple up your strategic plan, too, while you're at it. Long-term strategic planning is a self-fulfilling prophecy. "In four years, I want us to be a $100 million association, so I need to have 15,000 members," you say. If you then have 12,000 members, you're going to push for those last 3,000, and you don't even know why. Maybe the number should have been 18,000 or 26,000. Maybe 12,000 members are already 3,000 more than you should have. You end up following strategic plans that have become old, but you continue following them out of a feeling of control and discipline, which are false feelings altogether.

Don't have the same board meet twice. Consider replacing your board chairs every six months. We mix up our board structure regularly. For several years we changed board chairs every six months, but now we're piloting a fixed two-year term. Also, our eight-person board changes every meeting. Although four board members — three senior executives and I — are permanent, two seats rotate among senior managers, and two are held on a first-come, first-serve basis to any interested employee. This means we get fresh insight from all levels of the company. At first it was strange to see people we had never seen before sitting there with the same vote as we have, but that issue quickly dissipated and was replaced by a feeling of fresh perspective.

Go with your gut — and those of the people around you. Intuition is a leadership concept we take very seriously. We try to create some of the technical, scientific, and intelligence background that helps with a decision, but basically, we're looking to cut a path so people can develop a gut feeling and follow it. We're trusting that this skill is superior to PowerPoint charts that anyone can put together. I'm surprised at how afraid organizations are to use intuition and acknowledge it, just because they can't put their finger on it.

Sure, sometimes our intuition is off and we make mistakes, but I actually support repeating mistakes. It's a fallacy that mistakes teach us what not to do. Nothing is as difficult as transmitting experience from one person to another or from one situation to another. Look at penicillin. It's just one example of the important discoveries made by repeating mistakes based on an intuition that something there is worth pursuing.

Hire like a caveman. In more modern terms, don't make your own hiring decisions. Heresy? No, healthy. At Semco, hiring by consensus — meaning that a majority-rules vote is taken by whoever in the organization (from the mail clerk to the chief executive officer) attends the series of interviews — has resulted in much more successful, better-fitting employees and bosses than if a couple of managers and a human resources wonk run the person through typical dog-and-pony interviews.

Bringing on new people and choosing bosses also are the business areas in which we most practice intuition. Our process allows people to interview their future boss.

Recently, we had an open position for a department chief financial officer. The three or four finalists were interviewed by whoever was interested in the potential colleague in that position. Finally, we asked our people to decide, based on intuition. We don't want them to tell us what they think about the candidates' characteristics, their personality traits, their ability to do accounting, or speak English, because that's already been handled. I know they have hired a woman I've never seen, but I also know that the intuition of 17 people was compiled, and they chose her.

I also know, because we keep statistics on this, that the number of times in the last 25 years in which these intuitive choices were right — meaning the person has lasted — is more than three times as successful compared to our other traditional path of choosing people without subordinate involvement in the decision.

Rethink everything every day. The first thing I do after riding my exercise bike in the morning, clean up my e-mail glut, and have breakfast, is to write down five things I have to do before I can finish the day. Then, typically, I cancel at least one or two things, because I can see that they will get done regardless of whether I'm there or not. Often, it's best if I just read something, anything, or drop by a department with a new employee to gather ideas.

I'm not bothered that I don't know what Semco will "look like" in five years or even what businesses we might be in. More challenging is spreading the word that rethinking work is in the best interest of everyone in the world. Semco now provides an architecture for a successful revolution in the workplace today, whether corporate or nonprofit, whether in Brazil, the United States, or elsewhere.

Association leaders are among those who should recognize that we have tremendous latitude in all aspects of our lives, but until they give up control and adopt the accoutrements of a seven-day weekend, their organizations will never be as successful as they hope, their employees will never be as happy as they deserve, and the world will never benefit as much as it needs.

Author Link: A bestselling author, often-profiled business leader, and frequent speaker, Ricardo Semler is CEO of Semco. His new book is The Seven-Day Weekend (Penguin Group, 2004). He can be reached at relmes@semco.com.br.

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