Published by:
Harvard Business Publishing
Length: 7 pages
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Abstract
Ricardo Semler is a Brazilian industrialist whose company, Semco, manufactures marine equipment, food-service machinery, and other highly differentiated products. Semco has long practiced unusual but successful management innovations, but when the Brazilian economy took a turn downward in 1990, empowerment, profit sharing, self-set salaries, and other policies were no longer enough to ensure survival. The only solution was to cut permanent staff and contract out more work. But instead of contracting it to strangers, Semler gave the contracts to his own workers, setting them up in business with generous severance settlements and an offer to lease them Semco''s equipment, on- or off-site, and to defer lease payments for two years. The transition was painful, but only one satellite has failed, while most ex- and semi-employees do very well with ad hoc compensation systems.
About
Abstract
Ricardo Semler is a Brazilian industrialist whose company, Semco, manufactures marine equipment, food-service machinery, and other highly differentiated products. Semco has long practiced unusual but successful management innovations, but when the Brazilian economy took a turn downward in 1990, empowerment, profit sharing, self-set salaries, and other policies were no longer enough to ensure survival. The only solution was to cut permanent staff and contract out more work. But instead of contracting it to strangers, Semler gave the contracts to his own workers, setting them up in business with generous severance settlements and an offer to lease them Semco''s equipment, on- or off-site, and to defer lease payments for two years. The transition was painful, but only one satellite has failed, while most ex- and semi-employees do very well with ad hoc compensation systems.