A few months ago, I started preparing a presentation for the
board of a cooperative hospital in Mumbai. My study took me from a member
cooperative to a worker cooperative and then to workers’ democracy, and then I remembered
Ricardo Semler and pulled out SDW from the bookshelf. Holding the book in my hand
itself created such vibes as if I were meeting an old friend. I created a short
case on Semco and discussed it in my class
last month as an example of organizational innovation. Most students dismissed
it as nice but impractical stuff. What’s so special about a seven-day weekend? Is
workers’ democracy as esoteric as it sounds?
After taking over the family business from his father,
Ricardo Semler turned São Paulo-based Semco (erstwhile Semler & Company)
into an on-the-job democracy by relinquishing control and letting everyone
question the existing rules. While questioning dress code, work timings, and the necessity to work from office may not sound like such a big deal today, letting
employees decide their boss, salaries, new products, and so-called strategic
decisions such as acquisitions and factory closures looks surprising even today.
Ricardo gets called only when needed. That is why he spends time feeding the
ducks in a pond on a Monday.
Ricardo defines Semco more by what it is not than what it
is. “Semco has no official structure. It has no organizational chart. There’s
no business plan or company strategy – no two-year or five-year plan, no goal
or mission statement, no long-term budget. The company often does not have a
fixed CEO. There are no vice presidents or chief officers for information
technology or operations. There’s no human resources department. There are no
career plans or job descriptions. No one approves reports or expense accounts.
Supervision or monitoring of workers is rare indeed. Most importantly, success
is not measured only in profit and growth.” Despite this amoebic structure,
democratic control, and the Brazilian economy’s rollercoaster ride, Semco grew much
better than its peers. When SDW was published in 2003, Semco businesses
operated in areas such as marine pumps and industrial mixers, cooling towers
for commercial properties, property management for commercial customers and
hospitals, airports, hotels, and huge factories, environmental site
remediation, risk management, incubation of hitech ventures, outsourcing of
HR, and inventory control. Most companies are not publicly listed.
Dissent is the bedrock of Ricardo’s world. As an extreme
example, he tells us the story of Marly dos Reise Leite during a period when she
had grown cantankerous and a pain in the neck for everyone around her. She
complained constantly about her situation and quickly got into personal fights
with her director of operations at Semco Johnson Controls. He could have easily
fired her, but that would have meant a lot of explaining to the employees. Finally,
even her colleagues began to find her disruptive. While there was pressure to
fire her, the leadership felt, “If she wants to quit, that’s up to her, but we
can’t fire her for dissent.” So, they did what they always did when there was
dissent: nothing. After a few job changes within Semco businesses, Marly
eventually settled down. Her complaining subsided and eventually stopped. In
fact, she recommended Semco to her 23-year-old daughter, who joined ERM, another
Semco business. “To date, I don’t know what changed in her,” Ricardo admits.
Ricardo explains the situation using a loaded gun analogy, “The
system at Semco does not allow me to impose my will on the company, even if I
wanted to. Sure, I’m the main shareholder, so I always have a loaded gun in a
drawer and the right to fire it. Worker self-management can’t stop me. But I
know that there is only one bullet in that gun, and if I fire it off in a fit
of pique, I’ll get one shot. One shot at overriding a popular decision, after
which I’ll be disarmed. I’ll have lost everything I have worked for. People
will know that democracy at Semco was fleeting, insincere, and unreliable. That’s
too high a price to pay.”
Transparency is the oxygen of democracy. At Semco, shop
floor workers, machinists, clerks, and cleaning people get invited to the
all-hands meeting held once a month. If cleaning staff are to make informed
voting decisions and raise concerns, they need to understand the financials.
Semco went at length to simplify the books and got the simplified format
validated by Walter Barelli, who at that time led the Inter-union department of
study of economics and statistics. Based on the simplified format, an
instruction guide with cartoons was prepared. The union at Semco conducted
training sessions based on the cartoon booklet. And soon the quality of
interactions improved during the all-hands meetings.
The most critical test of self-management came in the early
1990s when the Brazilian government enacted several emergency plans that
wreaked havoc on the economy. Semco lost many contracts and couldn’t meet
payroll for two consecutive months. Banks failed, and times were desperate. Workers
gathered at company meetings in the cafeteria. Many took turns at a microphone
for long, arguing over the fate of Semco – the same cafeteria where many had
collectively interviewed their CEO, and machine tool operators had shouted
technical questions to gauge their future boss’s knowledge.
They tried everything they could think of to avert layoffs
and closures – they’d left machines to sell spare parts on the road, had
severed contracts with maintenance, cleaning, and even security providers to
take those jobs on themselves, they’d driven company trucks in shifts, and had
taken turns doing kitchen duty. The employee committee studied the numbers
carefully and concluded that there was just enough money left in the till for a
generous severance package. The workers in the cafeteria voted. They shut down
the factory. Two hundred souls lost their jobs. They elected to distribute the
remaining cash between them. Throughout
this process, Ricardo opposed closing the plant. But in the end, workers’
self-interest won – they chose a course of action that they knew best for
themselves. “Employees must be reassured that self-interest is their foremost
priority, one they must take care not to replace with company or other
interests,” says Ricardo in SDW.
While studying management of innovation, I came across
workers’ democracy employed while managing the production process. For example,
Toyota’s
idea management system enables 95% of the shop-floor workers to contribute and
implement over two million ideas every year. Through the TQM movement, this kaizen
process was deployed in
India, especially in the manufacturing sector. In the Internet era, organizations ' Employee Stock Option Plan (ESOP) is common, and some
organizations also have the twenty
percent rule, or the right to experiment, for example, at 3M, Google, etc. However,
idea management systems, ESOPs, or the right to experiment don’t translate into employee
participation in making key decisions. Such decisions are made by a small team
in leadership positions behind closed doors. Of course, absence of evidence is
not evidence of absence. Perhaps I have not looked hard enough. So, I went
looking for some examples exhibiting workplace democracy.
I realized a better place to look for is worker cooperatives.
Cooperatives come in
different flavours – worker cooperatives, consumer cooperatives, producer (or farmer)
cooperatives, etc. India has had a long history of cooperatives, mostly of
consumer (or user or member) type and producer type. A couple of thousand
cooperative banks in India belong to the consumer cooperative category, while a couple
of lakh village dairy cooperatives would belong to the producer type. The
hospital I visited earlier this year is a consumer cooperative, and its staff
had almost no say in its operations or strategy. The Amul brand is owned by Gujarat
Cooperative Milk Marketing Federation (GCMMF), the most successful dairy cooperative
in India, with over 3.6 million milk producers as co-owners.
Self-Employed
Women’s Association (SEWA) is a trade union that governs a network of
cooperatives, including worker, consumer, and producer types across several
states in India. SEWA has nearly two million workers as members which are
divided into (a) home-based workers, (b) vendors/hawkers, (c) manual labourers,
and (d) service providers/producers. SEWA cooperatives are likely to be worker-centric and involve a lot of community education programs.
Outside India, Spain, Italy, and France each have 20, 10, and
3 thousand employee-owned firms. Industrial Commons movement (Molly Hemstreet’s TED talk
in April 2025) exhibits a growing interest in creating employee-owned community-centric
firms in the US. Uruguay has over 700 worker cooperatives. In short, workers’
democracy exists across the world in pockets as a feeble movement.
Apart from cooperatives, there are noteworthy self-managed
organizations as well. Dutch home care organization Buurtzorg, with 14,000
employees, consists of over
900 self-managed teams with nurse autonomy. Buurtzorg has no middle
management. Haier, the world’s number one home appliance player, with 70,000 people, recently broke
its organizational structure into over 4000 self-organizing micro-businesses.
For the past twenty years, they have been developing a model known as RenDanHeYi.
Haier CEO Zhang
Ruimin says, “With the RenDanHeYi model, we move away from being something
like an empire (with *the traditional closed pyramid*) to be more like a
rainforest (with *an open networked platform*). Every empire will eventually
collapse. A rainforest, on the other hand, can be sustained.”
Workplace democracy, like Semco, is certainly not mainstream.
But it is not as uncommon as it sounds. And, Ricardo may be right. You can’t
have both: the joy of a seven-day weekend and the luxury of firing a loaded
gun. When you are under pressure to deliver quarter-on-quarter results, it is
extremely difficult to resist the temptation of the loaded gun. It is as if you
are constantly under a line of fire, and you pass on the pressure by executing the “my
way or highway” dictum. This behaviour gets extended in the family setting as
well. Seven-day weekenders remain a minority. At least for now.
Sources:
- Ricardo Semler, “The seven-day weekend: A better to work in the 21st century,” Arrow Books, 2003
- Dr. Vrajlal Sapovadia and Akash Patel, “What works for workers’ cooperatives? An empirical research on success and failures of Indian Workers’ Cooperatives”, Jan 2013. Sapovadia, Vrajlal K., and Patel, Akash, What Works for Workers' Cooperatives? An Empirical Research on Success & Failure of Indian Workers' Cooperatives (January 15, 2013). Available at http://dx.doi.org/10.2139/ssrn.2214563
- Fathi Fakhfakh, Nathalie Magne, Thiabult Mirabel, Virginie Perotin, “Employee-owned firms in France,” Journal of Participation and Employee Ownership, July 19, 2023
- Frank Martela and Sharda Nandram, “Buurtzorg: scaling up an organization with hundreds of self‑managing teams but no middle managers,” Journal of Organization Design, January 2025.
No comments:
Post a Comment