INTRODUCTION: In this assignment, firstly we are going to discuss the concept of classical school of management, Motivation Theory and Theory of Empowerment. Secondly, we will be interpreting the relevance of Semco with the above given management issues. Finally, there will be a critical evaluation in context of a company with the same philosophy of Semco. All issues will be supported with the relevant references. To study about Managing people has a very critical role, as it tells regarding the modern problems faced by managers in managing people, organization and involving change theoretically and practically.
It also involves the better understanding of relations between the manager and employees; moreover it also details the complexities of human behaviour which is very important in terms of managing diversity and to get better organisational performance and effectiveness (Mullins L. J, 2007). Mullins L. J, 2007 also adds that the shifting nature of modern organizations has significantly increased the need of new management philosophy, where level of trust and teamwork is promoted and employees are seen as a responsible resource.
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This new concept also focuses on continuous learning and personal career development. However, despite the emergence of new moral contract Furnham and Taylor (Mullins L. J, 2007) has stated that majority of the employees are patently violated by their employers. That is why; there is a serious need to learn from the successful models of managing people of the companies like Semco and Best Buy to be able to understand the underlying theory and practical applicability, which will make us better managers in future: 1. EVALUATION OF SEMCO’S RELIANCE ON THE CLASSICAL SCHOOL OF MANAGEMENT:
The classical school of Management: To find out the “one best way” to perform and manage tasks the classical management theory developed. The classical scientific branch arose because of the need to improve efficiency and increase productivity . The classical scientific school owes its roots to several major contributors, including Frederick Taylor, Henry Gantt, and Frank and Lillian Gilbreth. The theorists of Classical management thought there was one way to solve problems of management in the industrial organization.
Generally, their theories assumed that people could make rational and logical decisions while trying to maximize personal gains from their work situations. The classical school of management is based on scientific management which has its roots in Henri Fayol’s work in France and the ideas of German sociologist Max Weber. Henri Fayol is known as the father of modern management. He developed 14 principles of management based on his management experiences. These principles provide modern-day managers with general guidelines on how a supervisor should organize his/her department and manage his/her staff.
Although later research has created controversy over many of the following principles, these principles are still widely used in management theories. (Lucey. T, 1991) About Semco: Ricardo Semler is the CEO of Semco, a Brazilian company. When he started, SEMCO was a traditionally structured and struggling industrial pump manufacturer. Young Semler proceeded to fire most of the top managers in an effort to perform emergency surgery on the foundering company. As Semco grew, Semler gradually made innovations, such as doing away with dress codes, introducing flex time, and encouraging employees to take more ownership of their work.
These are all areas that many companies have experimented with over the last fifteen years. In Semco the system is transformed into a self regulating system in which only the stuff important to the future of the business (as opposed to future of an individual bent on covering his/her tracks) was retained. Everyone takes on a responsibility for determining what gets stored and what gets thrown away (Mann, 2003). Evaluation of Semco’s Reliance: According to Fayol’s principle about Remuneration of personnel, salaries should be fair and provide satisfaction both to the employee and employer in an organisation.
Salaries should be accordingly the position and experience of the employee, but in SEMCO the employee decide among themselves what their salary will be. Some people with particularly valuable skills make higher salaries than their bosses without having to be in the management track. Fayol’s principle on authority explained that authority and responsibilities are directly proportional of each other. Authority creates responsibilities. The more responsibility one has, the more in authority one is. As one goes down the organisation, authority reduces and so does responsibility.
But in the case of Semco Most of the important corporate decisions are made by employees. Supervisory people are interviewed and evaluated by their future subordinates, when they are hired. There is a complete openness of information. Company provide special classes to employees on financial analysis to make them understand the financial condition of the company and share the financial data with the workers. (Robbins, et al. 2000) explains that “Centralisation refers to the degree to which subordinates are involved in decision making.
Whether decision making is centralised (to management) or decentralised (to subordinates) is a question of proper proportion. The task is to find the optimum degree of centralisation for each situation”. There is no any traditional organizational hierarchy in Semco for decision making and control. Every employee has fully freedom to involve themselves in every decision the company deals with, such as the purchase of plant site , location for plant , type of uniform they like to wear, lunch committee to choose the food available at the cafeteria even they are free to set their own working hours and schedules.
In organisation, equity is a combination of kindliness and justice. Both equity and equality of treatment should be considered when dealing with employees. Semler states that, “Semco is not one of those companies that believe anyone is irreplaceable; everyone should take their 30 days of vacation every year. It is vital for your health and the company’s welfare. No excuse is good enough for accumulating vacation days for “later” (Semler, 1993). In SEMCO not only every employee has freedom offered but also power.
Semco Company is not a dictatorship, it is a co operates democracy where positions are forgotten and unions are welcome with mutual understanding, respect and dialogue. In this company surveys are made regularly. It is a place where an employee has power to dismiss their boss or force their hire. 2. EVALUATION OF MOTIVATION THEORIES AND THEIR RELEVANCE TO SEMCO : Mayo’s Theory of Motivation: Elton Mayo (1880 – 1949) ignored the theory of Taylor and believed that employees are not just anxious with money but could be better motivated by having their social needs met during work.
He introduced the Human Relation School of thought, which determined on managers taking particular interest in the employees, treating them equally and considering their views and ideas and realise that employees enjoy interact together (www. tutor2u. com). He conducted a series of experiments at the Hawthorne factory of the Western Electric Company in Chicago. From the experiment Mayo concluded that workers can be best motivated by: a. Better communication between the managers and the employees. b. Greater manager involvement in employees working lives
By working in groups or Teams Thus actually businesses should re-organise production to encourage greater use of team working and introduce personnel departments to encourage greater manager involvement in looking after employees’ interests. His theory most closely fits in with a paternalistic style of management. (www. wikipedia. org) Hertzberg Theory of Motivation: Frederick Hertzberg (1923) believed in a two-factor theory of motivation. According to him, if a business could introduce certain factors which directly motivate the employees to work harder for the organisation (Motivators).
However certain factors could de-motivate an employee if not present but would not in themselves actually motivate employees to work harder (Hygiene Factors). (www. businessball. com) Motivators – a. Concerned with the actual job itself. b. Giving responsibility, recognition for good work, sense of achievement, opportunities for promotion Hygiene factors – a. Pay, working conditions, job security b. Motivate by using motivators plus ensuring hygiene factors are met. c. Employees could be motivated by approaching a democratic style of management. (www. tutor2u. om) Factors which ‘surround the job’. As for example an employee will work only if the company provides him sufficient amount of pay and safe working conditions. But this will not make to work more or extra for its company. Motivational Theories That Relavance To Semco: SEMCO has no particular boss that could make decisions on their own and that followed to the employees. According to me, he followed the Mayo theory of Motivation. As told by Mayo, In SEMCO money is not the main factor but the employees are better motivated by their social needs to be met.
In SEMCO there was no control on travel expenses and inventory goods or other needs of employees. He gave Freedom to his Employees. The offices had no walls so that better communication could be achieved between the employees and managers as per suggested in the Mayo’s theory of motivation. All the information of the company was made available to each and everyone and all memos must be kept on one page without exception. The motivation provided to the employees in Semco was also relevant to the Hertzberg theory of motivation. According to me, it followed the Democratic Style of Management (Hertzberg Motivational theory).
In Semco, the managers had trust on their employees and employees were encouraged to make decisions on their own. In Semco major decisions were need to be taken by democratic vote, while other decisions were taken up the employees. The executive team is of six counsellors and form as chairperson every six months. The members of the Semco decide among themselves what their pay would be. As per the part of company each employee shares the wide profit sharing program which pays 23% of business unit’s profits per quarter to the employees.
Actually the payout ratio of 23% was decided by the employees (Empowerment). All the employees were given appropriate training so they work efficiently on the given task. Everyone was trained to read financial statements of the company and their business unit. They were given responsibility to handle the financial matters (Motivators – Hertzberg theory of motivation) Members of Nucleus of Technology Innovation also receive Recognition and Praise on achievements of their projects (Factors of motivators). The managers of Semco have adopted some of the methods like job enlargement.
The employees of company were given different types of tasks to perform which were challenging and make the work more interesting. There was an involvement of methods like Job Enrichment and Job enlargement as suggested by Hertzberg. The employees are focused on different tasks such as some kind of business Improvement project, launch of new product, a cost reduction program or formation of new business plan. According to me, the company did not follow the Taylor theory of motivation. As per suggested by Taylor the employees did not like to work and there is need of close supervision.
SEMCO was against this theory and the employees were enjoying the work within itself. No close supervision was needed. 3. CONCEPT OF EMPOWERMENT AND ITS RELEVANCE TO SEMCO Empowerment is one of the complicated factors in the process of building an organization. Empowerment is explained the process of allowing employees freedom, self-control over their work with responsibility for decision making. Empowerment can be defined as the process, by which we can increase the capability of an individual employee or a group to make their own idea which will lead to increased profitability in an organization.
True empowerment there is a need for a new theory of management – theory E-which that manager are more effective as facilitators than as leaders, and that they must devolve power, not just responsibility, to individuals as well as groups (Stewart). Empower people is a real part of leadership as opposed to management, empowerment can actually set people free to do the jobs they are capable of (Morris, will cocks and knasel) however that true empowerment in much more than conventional delegation. It makes an opportunity to their skills and knowledge to take complicated decisions in order to organizational objectives.
Empowerment makes the employee to come out of their hidden intelligence and skills with allowing applying. (Rappoport, 1984) has noted that it is easy to define empowerment by its absence but difficult in action as it takes on different forms in different people and contexts. Even defining the concept is subject to debate. Employee empowerment is a major and significant strategy for seeking a change in the organizations to make more competitive organizations. Importance of empowerment: a. Creativity and productivity. b. Greeter motivation. c. Team work and participation. Impact of Empowerment Concept on Semco:
According to (Bowen and Lawler, 1992) focused on empowering management practices including delegation of decision making from higher to lower organizational levels, increasing access to information and resources from higher to lower levels. As follows in Semco main decisions affecting the whole organization and it has no conventional organizational chain of command for decision making and control. While other decisions are taken consensually by all employees involved. Empowerment also implies the freedom and ability to make decision and commitment; it is all about power, enhancing and trust.
Crucial to the success of empowerment is a high level of trust. Semco also believe this philosophy because in Semco there are no internal audit groups, storerooms stay unlocked, all memos kept to one page without exemption but all information is made available to everyone. Semco got success without having a CEO. Semco’s management is made up of four concentric circles. Here it shows the delegations of responsibility and decentralization. According to Buchanan and Huczynski, Empowerment is considered as the current term for decentralization.
As stated by Lashley there are four managerial initiatives and meanings which state to be empowering. Semco’s managerial formation has also followed these initiatives: a. Empowerment through participation. b. Empowerment through involvement. c. Empowerment through commitment. d. Empowerment through delivering. In Semco there are Nucleuses of technology innovation which are “no boss” temporary project teams. They just focus on some kind of business improvement project. As for strategy, Semco has no planning and vision. They believe on opportunities which identified by employees close to the market.
It means potting employee indirect contact with either internal or external. So they can receive direct feedback. According to (Peiperi) Empowerment says that employees at all levels of an organization are responsible for their own actions and should be given authority to make decisions about their work. Its popularity has been driven by the need to respond quickly to customer needs, to develop cross- functional links to take advantage of opportunities. Empowerment is independence where one can personally takes any important decisions without the higher level’s consent.
This would play an affirmative motivation, increases performances and profession fulfilment and more significantly lowers the non-attendance (Hack man and Oldham, 1976). It is highly supported Semco’s success parameter. An important work context variable important for empowerment is a reward-incentive system. Individual performance based rewards are found to be important for empowerment. The members of Semco are participating in salary survey and every member is part of the company – wide profit sharing program and member of nucleuses of technology innovation get royalties on the achievements of their project.
Semco gives award as money and time to employees for their achievement thus it bring them to fulfilment. Like any difficulties of implementation, in Semco there may be some conflict among the employee or through the entire organization. Semco has a high level of faith and expectation among their employee. That may be creating some abuse of power by the employees and may create question of loyalty. In Semco there has no unity of command for decision making and control which may lead to huge gaps in communication. Moreover all employees cannot be committed with all decision or with company’s philosophy.
Though it has some complexity but Semco pumping company is a perfect empowered company who follows the concept of empowerment appropriately which may play a significant strategy of their success. 4. CRITICAL EVALUATION OF BEST BUY CO. IN TERMS OF ITS SUCCESS/ FAILURE: Best Buy Co. , Inc is a multinational retailer of electronics in the USA, Canada, Europe, Mexico, Turkey and China, which accounts for 19% of the market with a commitment to growth and innovation (http://en. wikipedia. org). The brand of entertainment products with other partnerships collectively generated more than $49 billion in annual revenue (www. by. com). Best Buy employees at the corporate level, are under a human resource management strategy of ROWE (Results-Only Work Environment), which was originally piloted at Best Buy and co-created by Jody Thompson and Cali Ressler. To understand Results Only Work Environment, in the ROWE practice each employee is free to decide where and when they want to work as long as the work gets done. The employees are paid for output (result) rather than working hours. Employees control their own calendars and are not required to be in the office if they can complete their tasks elsewhere (http://en. ikipedia. org). Best Buy has got ROWE, which is an experiment which aims to reform the corporate workplace and achieve incomparable degree of work and life balance. Best Buy’s employee relations manager Steve Hence explains the situation that at Best Buy no one really knows where he is, nor do the employees really care. He also adds that previously he had to plan his life around the work but now he schedules his work around his life and is free to decide his schedule to work in terms of place like it may the office desk or a table in a coffee shop (http://www. workforce. com).
Best Buy started ROWE in 2002, when 60% of the employees at headquarters campus have changed to the new way of working. According to Cali Ressler and Jody Thomson, (who now run Culture Rx, a consulting firm which manages the process of ROWE) ROWE has had a significant impact. Employees who convert to ROWE report in surveys that they feel more loyal, focused and energized about their work moreover they have better relationships with their family and friends. Moreover, more importantly from a business point of view they have also stated that when workers switch to ROWE, their productivity jumps by 35 percent (http://www. orkforce. com). There are some obvious pros and cons in ROWE practice. To discuss the positives it gives high employee satisfaction as there are no set working hours and emphasis is on bottom line results. On the other Hand, it can be destructive for individuals who do not have the discipline to hold themselves accountable for what they should work on and for some jobs (overhead, administration) output measurement can be harder (http://www. ted. com) Outcomes not Appearances:
To discuss, it may be a good idea to experiment non traditional work arrangements by rewiring of peoples brain and getting rid of an old system which is from 1950’s, which is no longer relevant to the advanced technology world (Mullins, 2002). Moreover, it offers flexibility with accountability where employees can start at a different time and can work outside the office, but ultimately they are judged on results only. That is why basically they are keeping to a schedule. This will make people to start thinking of something you do and stop of thinking of work as a workplace you go to five days a week.
To discuss the applicability of ROWE, it is most suitable for some branches or jobs like graphic designers or writers etc, where the person is not evaluated on the basis of capacity to deliver but to deliver something unique on daily basis. That is why it is required that the person is free to think and explore solutions which require another type of environment. On the other hand, It would be difficult to apply the philosophy of Semco & Best Buy to the task oriented jobs, where flexible work arrangements may turn out to be a con game.
To, summarize, we need to recognize some personalities in our business who need different environment to excel and also our business practices where we may need to apply to our supervisors in terms of task oriented jobs. CONCLUSION: To summarize, in this assignment we have discussed the theories in terms of different managerial issues and critically evaluated their relevance to Semco. In the fourth section we have analysed the Best Buy, which follows the same theory of managing people as Semco. The CEO of Best Buy believes that the successful management requires a commitment to develop and facilitate the expression of employee capabilities.
The same applies to Semco, where “trust” and “delegation” are in to practice. The only real rules at both companies are huge peer pressure and self- discipline. These companies believe that employees bring their talents and to utilise the company to develop themselves in a way they see suitable, and in return they expect them to be self disciplined to perform. In my opinion, this is the basic concept of the ROWE, where people are treated as an adult which is basically a demand of modern era where flexibility as a part time work has been significantly increased and shown its significance as well.
On the other hand, there is an argument related to diversity as this model can only work with the people who are passionate and dedicated. It may be difficult to practice this model with the harder headed people. To explain, there may be some people who can adopt the changes very well and some who only feel relaxed and comfortable with what they have been doing and do not want to change, like traditionalists. In brief, the manager has to deal with diversity always and where the real challenge is, and the only thing which is important is the work itself.
That is why before deciding to adopt any model a manager needs to analyse its business practices and capabilities of people in context of the requirement. REFERENCES: 1. Bowen, D. E. and Lawler. (1992) the empowerment of service workers: what, why, how and when? Sloan Management Review, 33(3):31-9. 2. Hackman, j. R. and Old ham, G. R (1976). Motivation through Design of work: Test of theory . Organizational Behavior and Human Performance. (16) Pp. 256. 3. Lucey, T. (1991), Management Information Systems, 6th Edition, London: DP Publications. Page no. 8 4. Mann, D. 2003), Article on Ideality And Self-X, Part 3: Business context and Case Studies 5. Mullins, L. J. (2002). Management and organization behavior. Six edition, England, Pearson education limited, ch-16, pp. 590, 592. 6. Rapport, J. (1984). Studies in empowerment: introduction to the issue prevention in humanservice, 3, 1-7. 7. Robbins, et al. (2000) Management. , 2nd Edition, Prentice Hall, Australia. 8. Semler, R. (1993). Maverick: The Success Story Behind The World’s Most Unusual Workplace. New York: Warner Books. P. 299 9. Stewart,R.
The Reality of Management, Third edition, Butterworth Heinemann (1999),p. 74 Publication: Kiger, Patrick J. “Flexibility to the Fullest: Throwing out the rules of work – part 1 or 2; Best Buy frees corporate e” Workforce Management, Sept 25 2006 Issue Internet Links: http://www. bby. com/about/ http://en. wikipedia. org/wiki/Best_Buy#cite_note-smashing-31 http://en. wikipedia. org/wiki/ROWE http://www. workforce. com/section/09/feature/24/54/28/ http://www. ted. com/talks/dan_pink_on_motivation. html http://www. tutor2u. com http://www. answers. com/topic/brad-anderson