BACKGROUND

Semco Group is a company that is located in Brazil, in particular Sao Paulo, the organization is known for
being the company that has happy employees, the company was originally founded by Antonio Semler
in 1953, at that time the company was called Semler & company, it also followed a traditional autocratic
concept of management and leadership that leads it to achieve around four-million-dollars revenue
yearly with almost 110 employees, besides, Semler son Ricardo Semler graduated from Harvard
University at the age of 21 and started to work in his father company, Ricardo didn’t like the old
traditional style of leadership that his father was following, since that he had a completely different
viewpoint than his father management style and because of that, Ricardo started to have lots of
conflicts with his father as the company was slowly collapsing in the economic market until he took over
the company ownership at the beginning of 1980.

Ricardo decided to radically transform his father’s hierarchical company into a democratically led, self-
managing entity and put some radical changes in management such as, he renamed the company to
Semco group and he fired 60 percent of the managers also he discovered that the employees had no
motivation to come to work and lack of confidence, ignorance, so Ricardo thought of setting new rules
to improve the employee's performance besides having flexibility, for instance, setting democracy,
means giving the employees a chance in the decision-making, like most of the employees, can set their
office hours and salaries and choose who would be their boss plus no dress code, furthermore this idea
led to having very active employees, coming to work with inspired and creative minds as a result of this
decision the profit reached around 37-million dollars by 1988, becoming one of the fastest-growing
companies in Brazil.

Furthermore, Ricardo's decision on making the company management based on three values, which are
democracy, profit sharing and information had effected the employees specifically in positive ways that
led the company's reputation and financially to grow significantly.

This outcome surprised many people and especially business people who conclude that Semler way of
managing will lead the company to bankrupt, but Ricardo proved them wrong with much more
successful and profitable results, thereafter trust relationship was built between Ricardo and his
employees, resulting in Semler not having an office in his own company, employees having all the access
to the financial information of the company.