Conventional Business, Unconventional Views

March 1 st 1999

Progressive labour relations are often assumed to take place in environments that more readily lend themselves to less traditional collaborative practices. Hi-tech, high wage, nonunion, new industries in more socially progressive countries, such as Sweden or Germany, are the most likely places, it is assumed.

Ricardo Semler, president of Semco, shoots holes in every one of those assumptions. In his book Maverick, he tells a fascinating story of corporate change and innovation. His company is not hi-tech—they manufacture appliances. It is not nonunion; its workers are represented by an established industrial union. Nor is it new—he inherited the company from his father. And lastly, Semco operates in Brazil, a country known for many things, stability and a well-integrated social network to support and foster innovation not being among them.

Semco faced many of the same issues other mature manufacturing companies face. Increasing international competition, rising costs, employee productivity and motivation, labour unrest and strikes, and quality control problems. Its untraditional and yet very humane approach to addressing these challenges provides a stimulating read.

The success of Semco offers hope that, despite appearances of cards stacked against you, a positive labour relations environment and corporate culture can be built. How? By respecting each individual, assuming that every employee has both the ability and the desire to make a positive contribution, and letting go of the too-often management penchant for maintaining control just for the sake of maintaining control.

Different approach

Semler swims against the stream of established corporate thinking throughout the book. The following excerpt illustrates his ideas for a different approach to employee relations by a CEO:

Almost all businessmen think their employees are involved in the firm and are its greatest asset.

Almost all employees think they are given little attention and respect, and cannot say what they really think.

How is it possible to reconcile these two positions?

The sad truth is employees of modern corporations have little reason to feel satisfied, much less fulfilled. Companies do not have the time or the interest to listen to them, and lack the resources or the inclination to train them for advancement. These companies make a series of demands, for which they compensate employees with salaries that are often considered inadequate. Moreover, companies tend to be implacable in dismissing workers when they start to age or go through a temporary drop in performance, and send people into retirement earlier than they want, leaving them with the feeling that they could have contributed much more had someone just asked.

The era of using people as production tools is coming to an end. Participation is infinitely more complex to practice then conventional corporate unilateralism, just as democracy is much more cumbersome than dictatorship. But there will be few companies that can afford to ignore either of them.

The practical implications of this perspective resulted in a fairly flat organizational structure. The company implemented full disclosure to employees concerning the financial health and details of the company, including the salaries of executives. Interestingly, Semler reports that most employees were surprised to discover that the company's profit level hovered in the seven to eight per cent range, rather than the suspected 30 per cent level.

The company adopted a unique position with respect to strikes (see sidebar below), organized factory committees that had real decision-making power, implemented semi-annual supervisor reviews by workers, and developed a comprehensive profit-sharing plan, all in a unionized environment.

Semler's success illustrates the concrete benefits of implementing an approach based on many of the principles supported by the WRF in a very traditional industrial setting. With bold perseverance, an alternative approach can be a successful one.

Sidebar: How to Deal with a Strike

Traditional Company Approach:

  • Take a stand. Show the flag. Don't back down.
  • Guarantee that anyone who wants to work can, even if that means calling in the police.
  • Protect company property, with force if necessary.
  • Make it hard for workers by closing the plant and suspending benefits.
  • Try to divide and conquer the strikers.
  • After its over, fire the instigators and anyone else you want to get rid of, intimidating others in the process.

Semco's Approach:

  • Treat everyone like adults.
  • Tell the strikers that no one will be punished when they return to work. Then don't punish anyone.
  • Don't keep records of who came to work and who led the walkout.
  • Never call the police or try to break up a picket line.
  • Maintain all benefits.
  • Don't block worker's access to the factory, or the access of union representatives to the workers. But insist that union leaders respect the decision of those who want to work, just as the company respects the decision of those who don't.
  • Don't fire anyone during or after the strike, but make everyone see that a walkout is an act of aggression.
 

Ed Pypker is a former editor of Comment. He currently serves as Director of HR at ATS (Automation Tooling Systems), and as chair of the board of the Paideia Centre for Public Theology.

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