Bottom-up management | Managing Leadership

No hands management

You may have heard of an industrial conglomerate called SEMCO in Brazil. The current owner/manager, Ricardo Semler, is famous for having turned complete control of the firm over to its employees.

Complete control.

There are literally no rules or policies that aren’t established by the employees and that aren’t maintained solely by their consensus support. The company has gone from $4 million in annual revenue when Semler took over to over $200 million just a couple of decades later.

And so, of course, his managerial philosophy is roundly criticised.

The basic criticism of Mr. Semler’s style is twofold: 1) What on earth do you think you’re doing? and 2) What difference does it make to me?

Mr. Semler’s approach of relinquishing decision-making authority over everything from issues in Human Resources to Information Technology is extremely frightening to managers from the individualistic Anglo-Saxon managerial culture. It’s not particularly favored in collectivist cultures like Brazil’s, either, where paternalistic authoritarianism is often the rule. But it is in such a culture that Mr. Semler’s insight was possible, and where it was able to survive its first test.

People want to participate meaningfully in collaborative efforts toward aims larger than those bound by their individual lives. This gives them purpose both in the pursuit and in the collaborative effort. This is Theory Y looked at from outside the box.

But even if you accept that it is a real phenomenon that has done well at SEMCO, it is too tempting to argue that it is irreproducible, at least in “traditional” business cultures. So, it makes no real difference.

Of course, if you don’t understand and are unable to apply it, it won’t. But many do, including right in the heartland of America. They may modify it more or less, but they build their managerial regimes on its basic insight, and productivity shows it. If it doesn’t make a difference to you, someone to whom it does is going to eat your lunch.

You would be surprised where the basic insights of this approach to management are to be found in action, from commercial enterprises to the military. It does make a difference.

I suspect that criticism of Mr. Semler’s managerial approach reflects more of the critics than of his approach. Certainly, there are fiduciary concerns, and even ethical ones, behind turning over too much decision-making to non-owners and to people other than the managers specifically hired by those owners. And it should be noted, in this light, that Mr. Semler is still SEMCO’s controlling owner, and thus can legitimately engage in such experiments to a degree that managers can’t.

But the bias is right.

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