There is no doubt that a well-organized structure prevents chaos, ensures smooth-running of operations and an easy flow of communication and ideas within large systems. Nevertheless, introducing too many management layers and especially maintaining too rigid procedures often results in too much time being wasted on an organization dealing with itself rather than doing business. That is why some companies took to re-engineering: radical change of an organization’s processes to enable them to be truly customer-oriented rather than self-oriented.
One man has tried out most ways of structuring a business mentioned in the previous issue. And in the end he did it his way: Ricardo Semler, the head of a Brazilian company Semco ‘abdicated his throne’ by undertaking changes that took away his power and authority and thus created an empowering environment where employees could innovate continuously. The workers set their own wages and productivity targets and select their managers. He put into practice what management theorists call adhocracy: a type of organizational structure which is, among other things, characterised by absence of hierarchy, work through project teams and low standardization of procedures. The organization is bound together by the three interdependent core values: Employee Participation, Profit Sharing and Free Flow of Information. These three values stem from the belief that participation in design and implementation of work procedures will give employees control over their work; profit sharing will bring in a sense of ownership; and the availability of information as, and when, needed will help the employees understand and improve their work practices.
