Management 10: Semco Case Study Analysis on Leadership and Culture

This report provides a critical analysis of the Semco case study, examining its transformation from an autocratic to a more democratic management style. The report delves into the concepts of culture, leadership, and strategic human resource management (SHRM) within the context of Semco's operations. It discusses the evolution of Semco's corporate culture, highlighting its impact on employee participation, decision-making processes, and overall organizational success. The report also explores different leadership styles, contrasting the initial autocratic approach with the participative leadership implemented by Ricardo Semler. Furthermore, it examines the significance of SHRM in aligning human resource practices with organizational goals, emphasizing flexibility, competitive advantage, and innovation. The analysis incorporates relevant academic theories and concepts to provide a comprehensive understanding of Semco's management strategies and their implications for the company's growth and employee relations.

Running head: MANAGEMENT
Managing People and Organization
Name of the Student:
Name of the University:
Author Note:

1MANAGEMENT
Introduction:
The report aims at providing a critical analysis into the case study of Semco based on
culture, leadership and strategic human resource management. Semco has been one of the most
successful manufacturing companies of Brazil (semco.com.br 2019). The company had initially
been autocratically styled that undertook experimentation with principles of democratic
management where people were put before the process. In other words, Semco built a newer
management style that was not dependent on any theory. It was also the first company to include
employee participation in the process of decision making. The company maintained a growth
rate of about 46.5 percent and a lower turnover rate close to around 2 percent. Culture is defined
as developing set of the cooperative values, attitudes and beliefs. Culture represents the means of
the business that an influence on the strategic direction of the business. Culture is believed to
influence management, decision and all the business functions from the accounting to the
production. The influence of the cultural factors on the business has been extensive and it
impacts the ways in which the employees are managed based on priorities and values. Culture
also has an impact on the functional areas of sales, distribution and marketing. It also has an
impact on the decision and analysis on the best ways in which the company might enter a newer
market. Leadership on the other hand represents the action that leads the people within
organization towards achievement of organizational goals. Leaders often do this through
influencing the behavior of the employees in various ways. A leader is believed to set a clearer
vision for organization, motivate employees and guide the employees through work process and
by building morale. Strategic human resource management include components of human
resource such as discipline, hiring, payroll and working with the employees in collaborative
manner for boosting retention, improve quality of work experience and maximizing mutual

2MANAGEMENT
benefit of the employment for both the employees. In other words, strategic human resource
management represents the connection between the human resource of the company and the
objectives, goals and strategies. The aim of the strategic human resource management lies in
advancing flexibility, competitive advantage and innovation.
Discussion:
According to Guiso, Sapienza and Zingales (2015) corporate culture represents the
behaviors and beliefs which determines how management and employees of the company not
only interacts but at the same time handles the outside transactions of a business. The aspect of
corporate culture remains implied since it is not explicitly defined and developed naturally over
time from growing traits of employees hired by the organization (Hickman and Silva 2018). The
culture of the company is reflected in the business hours, dress code, and employee benefits,
office set up, hiring decisions, turnover, client satisfaction, and client treatment.
In this context, it can be said that the culture of Semco is autocratically styled, powerful
ruled and wisely obeyed. They had a fixed hierarchy, massive power distances and lack of room
for the use of creativity. Besides, the company had been bureaucratic with load of confidential
information that enabled playing power games with privileged few.
Achtenhagen, Melin and Naldi (2013) stated put across that awareness about the
organizational or corporate culture in business and organizations had an emergence in the year
1960s. However, the concept of ‘corporate culture’ was introduced in 1980 that became widely
known in 1990s. During these times, corporate culture has mostly been used by the sociologist,
managers and the other academics for describing the characteristics of the company. This
involved that the generalized behaviors and beliefs, value systems, employee communication,

3MANAGEMENT
management strategies, work attitude and ambience. By the year 2015, corporate culture was
created by the founders, management and employees of the company and influenced by national
traditions and culture, international and economic trends, company product and size (Büschgens,
Bausch and Balkin 2013).
In regard to this, Pieterse (2019) put forward that there are various terms that relate to the
company being influenced by the multiple cultures under the influence of globalization and an
enhanced interaction at the international level in the present day business ambience. Cross
culture represents interaction of people from varied backgrounds of the business world while
culture shock is anxiety or confusion that is experienced by people while conducting the business
with the society instead of its own (Thomas and Peterson 2017). The reverse culture shock has
been realized by people spending lengthier times abroad and having difficulty in readjustment
once they return Presbitero (2016). Nevertheless, for creating cross cultural experience and
facilitating a productive and cohesive culture, companies are seen in devoting in depth resources
that includes specialized training for the improvement of the cross cultural business transactions.
Some of the examples of contemporary corporate culture in the 21st century in some of
the top companies like Apple, Netflix and Google involves introduction of lesser amount of
traditional strategies of management that involved fostering of creativity, problem solving and a
greater amount of freedom of the employees that contributed to the business success. Some
prominent examples of alternative strategies of management that notably affects the corporate
culture included holacracy that have been used at companies like Zappos while agile techniques
of management have been applied at the music streaming company known as Spotify. Holacracy
refers to the philosophy of open management that helps in eliminating job titles and other
traditional hierarchies (Golden, Pandey and O’Rourke 2017). Agile management is focused on

4MANAGEMENT
the deliverables with trial and error, flexible strategy that group employees in environment
approach of startups for creatively tackling issues of the company at hand (Meredith et al. 2017).
Barrett (2013) mentioned that the characteristics of the successful corporate culture lies in
whether it is organically grown or intentionally shaped for reaching the ideology and practice of
the company that impacts each facet of the business right from every employee to the business
to the community image. The six key characteristics of the successful corporate culture is vision,
values, practice, narrative and place (Grayson and Hodges 2017). As far as vision is concerned, it
acts as a powerful tool in determining the culture of the company. Values on the other hand
represent a broader concept that embodies perspectives and mentalities vital for the achievement
of the vision of the company. Practices on the other hand refer to the tangible methods with the
help of which company implement values. People refer to the recruitment and employment in a
manner that enhances and reflects the overall culture. Narrative refers to the original story
necessary for public image and growth while place refers to either the office architecture or
design or the city that acts as the advents of corporate culture.
In this context, it can be said that when Ricardo Semler took over Semco, the
characteristics of culture at the workplace did not portray the six characteristics instead it seemed
like people came here to get crushed as if they have been carrying weight. According to him,
they sat on the table, kept performing the tasks counted minutes till the lunch time and then
keeping a count on the minutes until they left. He realized that people had more to contribute to
the company and leaders required to discover ways of reversing the present situation. This
happened to be an astute observation in the 70s and the early 80s.

5MANAGEMENT
In contrast to this, Dempsey (2015) stated that if corporate culture does not portray
flexibility then it can result in greater disadvantage in adapting to the change. Employees might
feel trapped and controlled. A wrong decision made by the director greatly affects the entire
company. A negative culture has opposite impact on an organization. Organizational cultures
that do not value the quality of the work give the employees no reason in striving for quality. A
culture that is meant for tolerating bad behavior gives the employees’ license in behaving in the
similar manner. An unhealthy culture also makes the employees feel miserable thereby
increasing the employee turnover.
In this regard, it can be said that although Semco had been autocratic and never allowed
people to use their creativity but its culture never acted as a hindrance to the company in
adapting to change under Ricardo Semler.
According to Rosenbach (2018), Leadership in business refers to capacity of the
management of the company in setting and achieving challenging goals, fast and decisive action
when necessary, outperforming competition and inspiring others in performing at highest level. It
is however hard in valuing leadership or any qualitative aspects compared to the quantitative
metrics for comparison between the companies. Leadership can however portray a holistic
approach set by the culture of the company. Individuals with stronger leadership skills often rises
to the executive positions like COO, CEO, CFO, chairman and president.
Leadership helps in providing direction for the company and the workers. It is vital for
the employees to identify the direction towards which the company needs to head and the people
that needed to be followed for reaching the destination. Leadership puts across the ways of
effectively performing the responsibilities and carry on supervision on a regular interval for the

6MANAGEMENT
completion of the task (Daft 2014). In fact, leadership represents setting of positive example for
the staffs to follow, by being excited about work, being motivated in learning things and
providing the required help for both the individuals and the team activities.
. Bauman (2013) stated effective leadership implies exhibition of a stronger character
where leader exhibit integrity, honesty, ethics and trustworthiness. Leaders acts in line with the
manner in which they speak and earns right of being responsible for the success of others in
company. Stronger leadership implies clarity in the communication skills since leaders speak to
the staff members, responds to their concerns and questions and remain empathetic. Most often it
has been found that leaders make use of effective skills of communication for moving company
forward and ensure the achievement of newer levels of success. Hassan et al. (2013) said that
true leadership oversees where a company heads and accordingly plans required steps.
Visualizing the possibility, following the industry trends and taking the risk for growing the
business are necessary for a leader. In contrast to this, Collinson (2014) stated it is productive
leadership that matters the most since it portrays optimism and provides the required energy for
the staff. Good leaders are often found to not only supportive but concerned truly for the well
being of the others. Leaders find the answers to the challenges and are found to inspire and
reassure workers when things go haywire. Leaders also find ways for the staffs in working
together and achieving the maximum results in an effective and efficient manner.
According to Keating, Roschn and Burgoonn (2014), there are various types of leadership
which includes autocratic or authoritarian, democratic or participative, free reign leadership or
laissez faire and paternalistic leadership. An autocratic leader centralizes the power and the
decision making. He not only gives order, assigns duties and task without the consultation of the
employees and undertakes full authority and assumes complete responsibility.

7MANAGEMENT
Democratic or participative leaders decentralize authority and remain characterized by
the consultation with subordinates and the participation in formulation of policies and plans.
These types of leaders are found to encourage participation in the decision making.
The laissez faire or the free rein leadership pass on responsibility of the decision making
to subordinates and undertake minimum amount of initiative in matters of administration. He
gives no direction and allows the group in establishing its goal and sort out their problems. While
a paternalistic leadership represents a managerial approach that involve dominant authority
figure acting as matriarch or patriarch and thereby treating the partners or the employees in a
manner that they are the members of the extended and large family.
In this regard, Semco initially had followed an autocratic style of leadership where the
powerful ruled and wise obeyed. It had fixed hierarchy, massive power distance and no option
for people in using creativity. The company had been highly bureaucratic and had loads of
confidential information which were used by the privileged few in playing power games.
It was under the leadership of Ricardo Semlar that a new chapter of transformation and
daring action started for Semco. It was under him that the company introduced a distinctive style
of management where it adopted simple, day to day common sense. The company also
experimented with the democratic leadership principles that gave preference to the people before
the process. Besides, Ricardo Semlar made it a point to recruit the most motivated employees
into the managerial positions. It was found that the power of participation in the process of
decision-making acted as the key for motivation.

8MANAGEMENT
In contrast to this, Ja’afaru Bambale (2014) said that one limitation of leadership is that
the training and resources provided does not represent productive activity. Managers are mostly
found to spend time leading and instructing the workers in performing their duties. In fact, the
managers acting as leaders are not productive. An entrepreneur hiring fewer employees in
managerial post might find that the time he spends in performance of leadership might be
utilized in communication with the clients and increasing sales. It has often been found that the
business owners handle the limitation of the leadership through hiring administrators in handling
tasks. Higher quality administrators are not expensive but also create a dent on the budget of the
company.
It has been also found that there have been disagreements between the employees and the
managers that have resulted in the disputes that not only reduces productivity but leads to
wastage of time. It is also necessary for the managers to have excellent skills and adapt the
leadership styles in meshing with personalities of the different employees.
Jackson, Schuler and Jiang (2014) however stated that strategic human resource
management represents the practice of development, attraction, reward and retaining of the
employees for benefit of the employees and the organization. The human resource department
that practices strategic human resource management does not independently work within silo but
interacts with the other departments within organization for understanding the goals and thereby
creating strategies in aligning with the objectives and the organization. Thus, the goals of the
human resource management support and reflect the goals for the entire organization. Strategic
human resource management on the other hand utilizes the opportunity and the talent within
human resource department for not only making the other department effective and stronger.

9MANAGEMENT
Purce (2014) stated that the importance of strategic human resource management by
mentioning the fact that when human resource department develops plans strategically for
training, recruitment and compensation based on the organizational goals there is a higher
chance of success within the organization. It is believed that an organization wins when the team
wins and the members support one another in working towards common goal. In order to ensure
this, the strategic HR department must work with the different departments of the organization. It
is necessary to run the plays planned beforehand, provide assistance whenever required and
compensate for the weakness of a team member thereby ensuring the creation of a strong team. It
has been found that when the entire team works together towards a common goal then they are
able to become successful. Strategic human resource department requires the human resource
department in analyzing the changes that needed to take place with each of the department
thereby assisting them in strengthening the weakness. Therefore, the strategic human resource
management represents the process of using the HR techniques like recruitment, training,
employee relations and compensation for the creation of a strong organization.
Marler and Fisher (2013) mentioned that strategic human resource helps in providing
newer innovations through adding smoothness in the workforce capabilities and morale. There
are four aspects of the strategic human resource management in all workplaces. These include
motivated employees, flexible workforce, employee empowerment and creation of positive work
ambience. It is necessary to motivate the employees through annual increment, employee
acknowledgement, promotions and appreciation of loyalty. To ensure flexibility within the
workforce it is necessary to ensure include policies that include flexibility in the employee
schedules, shifts and work location thereby allowing them in working freely. Such relaxations
help in generating quality work as well as performance. Employees can be empowered through

10MANAGEMENT
development of training sessions, short courses and lectures that would change the employees
into increasingly skilled assets that might be used in future against the business competitors.
Strategic human resource management is able to encourage a positive work ambience which
would not only make the employees progressive but also ensure a productive work graph.
In this regard, it can be said that the management theory Semco built was not dependent
on any theory. It implied that it is not something dogmatic or static but represented live
framework that needed to be updated with newer practices across the world. In other words, it
can be said that Semco built a framework suited to its own needs by drawing in experiments
from real life. The style adopted only addressed specific problems and there was a need to guard
against rigidity that creeps in silently. In other words, the need revolved around building
something that coexisted with the other management models that have been people centric. It is
here that the strategic human resource management needed to come into play by shifting the
leadership style towards building transparency and trust, bursting the silly bureaucracy with the
common sense and ensuring minimum controls, creating spaces for the self management and
providing autonomy, fostering stakeholder alignment with all the players and by allowing
creative innovation and continuous learning.
Bratton and Gold (2017) stated that strategic management to be a complex process that
involves repeated assessment of the complex components like the internal and the external
environment, long term and the short term objectives, strategic control and organizational
structure. These components are often interrelated and hence change in a single component
might impact the other areas. In addition to this, the process is difficult to implement, time
consuming and requires planning skillfully.

11MANAGEMENT
Conclusion:
On a concluding note, one can see the impact of culture, leadership and strategic human
resource management in an organizational setting. The report portrays how culture imposes a
positive and negative impact for the organization along with a discussion of Semco in this
regard. The report also discusses how leadership plays a significant role in shaping an
organization along with its own challenges. There is also a discussion in regard to Semco which
faced a massive transformation under its new leadership. As far as the strategic human resource
management is concerned it is found to enlighten the firm with consistent and newly planned
work framework as per the strategies and the business needs. In other words, one can see how
the strategic human resource influences the organization in the various aspects. It further
discussed how Semco can adopt the strategic human resource management in building a
management style that coexisted with other people centric management models.