When Trust Is Worth More Than Control: Ricardo Semler’s Lesson for Companies

It was 1993 when Maverick, Ricardo Semler’s book destined to become a bestseller, was published in the United States. I tried in vain to share my discovery with someone. For me, as I was learning the fundamentals of the profession, that reading was halfway between a science-fiction essay and a revolutionary manifesto.

Ricardo Semler is a Brazilian entrepreneur, born in São Paulo in 1959. He is the son of Antonio Curt Semler, founder of Semco, whose leadership Ricardo took over at just 21 years old, transforming it from a company in crisis into a diversified group. His fame comes from the decision to apply to the family business a radical form of industrial democracy and corporate organization. Maverick recounts Semco’s managerial succession and unconventional ethics.

His radical policies are summarized in the Employee Survival Manual and in the Semco Lexicon, of which you will find some exemplary entries below.

Boss: greater participation in work led to a 75% reduction in supervisors.

Circular organization: the twelve-level hierarchical bureaucracy was transformed into three concentric levels.

Democracy: representative democracy is achieved through factory committees, while for important decisions every employee has a direct vote.

Family silver: in the case of a new job opening, a Semco employee who meets 70% of the requirements is treated preferentially compared with other candidates.

Flexible hours: there are no fixed working hours; each worker decides the best schedule within their own work group.

Production cells: workers’ production teams are grouped on a full scale, giving workers greater autonomy and responsibility.

Technological innovation unit: a small group composed mainly of engineers without daily duties, free to invent new products, devise market strategies, and create new lines of business.

Paternalism: employees are all free to choose according to their own interests, while the company deals only with work performance.

Profit sharing: the basic percentage to be shared is agreed upon between Semco and its employees.

Reverse evaluation: anyone who is hired or promoted must be interviewed, evaluated, and promoted by all the people who will work for them. Semco managers are evaluated every six months by their subordinates through a special customized multiple-choice questionnaire.

Rules: no dress code, no travel regulations, no working hours, no internal audit department. The rule is to use common sense and have as few rules as possible.

Self-determined pay: about 25% of all employees set their own salary.

Size: a business unit can operate efficiently only if people know almost everyone around them. Therefore, when they exceed 150 people, they are generally divided in order to reduce alienation and encourage cooperation.

Working from home: it is allowed and encouraged, because it improves people’s productivity and personal flexibility.

The Survival Manual also recalls some founding and non-negotiable principles: among others, intolerance toward any exploitation of authority, the absence of guaranteed job security, freedom of union membership and active participation, the freedom to adapt one’s surrounding work environment, the absence of prizes and rewards for suggestions, and intolerance toward those who do not take 30 days of vacation a year.

The application of these principles in a traditional manufacturing context and in a country that, at the time, was still considered “emerging” makes Semler and Semco a highly innovative case for their time. Ricardo Semler’s influence can be found in companies such as Netflix or Google in their early days, in the unconventional and revolutionary spirit of the pioneers of Silicon Valley, inspired by a culture of innovation and freedom. Not to mention the strong similarities between the Semco model and holacracy, or even Laloux’s thinking, which emerged 20 years later and were oriented toward the common goal of decentralizing power and encouraging self-management in organizations.

Semler, like all forerunners, had found the courage and energy to experiment concretely and to tell his story without filters: “Semco is not a model, with programs to be followed precisely, lots of recipes for participation, productivity, and profits. Semco is an invitation (…) To forget socialism, capitalism, just-in-time deliveries, salary surveys, and everything else, and to focus on creating organizations that achieve the most difficult challenge of all: making people look forward to going to work in the morning.” A message that I find more contemporary and relevant than ever, despite everything.