Emp 1Ricardo Semler has revolutionized business in Brazil with his company, Semco.

– Revenue has grown from $4M in 1982 to $212M in 2003
– 65% reduction in inventories
– Labor force growth from 90 workers in 1982 to 3,000 in 2003
– One of the few companies to thrive through Brazil’s hyperinflation
– Workers agreed to wage cuts, providing their share of profits was increased to 39%
– Product delivery times and a product defects rate have fallen to less than 1%
– CIO Magazine selected Semco as one of the most successfully re-engineered companies in the world

Here’s what Semco did to accomplish the previous:
– Employees were given the right to approve every item of expenditure
– Employees were able to choose their own salaries
– Employees could work from home or from whatever office they wanted
– Employees did not have a set time when they have to come into work
– Gave employees the option to take Wednesdays off for 10% of their salary
– Anyone could have a vote in company board meetings
– No Human Resources department
– Once employees finish their work quota for the week, they could take the rest of the week off

Emp 2Semco has an employee-focused, no-rules environment which has allowed the company to prosper for many years. Does this only apply to Semco’s equipment manufacturing?

Apparently not.

Bar Marco, a Pittsburgh eatery, has instituted similar changes with very similar results. Here’s a breakdown of what this eatery has achieved since 2011:
– After one month of opening, revenues exceeded expectations by 26%
– Overhead cost decreased from 40% to 32% in two months
– “Our water bill was cut in half, our linen bill was cut in half, our liquor inventory was lean”
– Weekly profits of about $3,000 (after $26,000 in sales) have now climbed to $9,000 (after roughly $33,000 in sales)

Emp 3

Here’s what Bar Marco did to accomplish this:
– Completely eradicated tipping
– Retooled menu comprising cheaper, local ingredients, and portions slashed into shareable platters

Every employee receives:
– Base salary of at least $35,000 (plus bonuses based on profits)
– Health care from date of hire
– 500 shares in the business
– Paid vacation

Every employee participates in:
– A weekly financial meeting where employees
– each of whom has access to all of the restaurant’s earnings figures
– can offer suggestions about how to improve day-to-day operations
– Company carpools to renovate company locker rooms and showers for the employee’s liking for
greater employee satisfaction

Eh. Maybe those are just 2 random cases…?

A 3rd company, Zappos, might show us the pattern.

Zappos, an online shoe retailer, empowered their employees and became a seemingly overnight success as well. Here’s a breakdown of what Zappos has achieved since their start in 1999:
– $1 billion in annual sales for 2008 after starting up in 1999
– 6th on Fortune Magazine’s list of best companies to work for
– Amazon bought Zappos for $1.2 billion in November 2009
– In the first quarter of 2010, net sales at Zappos were up almost 50%
– Average delivery time for shoes to customers decreased by 71%
– Ranked #1 for customer service for online retailing in 2010

Emp 4This success cannot be random though, and as we’ll see from the pattern, Zappos’s success was not.

To start, Zappos eliminated “micromanaging” bosses.
Let’s explain:
– In the Zappos reorganization, “circles” are being organized by areas of responsibility
– Employees within those circles take responsibility for and head-up initiatives that match their interests and
– Pay is determined by democratic means within those circles
– Higher pay for folks with a management title is gone…as is the title of manager….
– The company offered anyone three months’ severance pay if they felt this new (potential) worker’s paradise
didn’t jive with their views or management style. About 14% of the Zappos workforce opted for the buyout

– The company regularly offers workers $2,000 to quit, “to make sure that employees are here for more than just a paycheck”
– Zappos maintains an on-site library to encourage employees to read
– In its early days, Hsieh kept the company alive by using his own $265 million
– A Zappos culture book, which is given to all new employees, describes the ethos of the company, featuring 100- to
500-word essays by current employees
– Employees are invited to post questions for the monthly “Ask Anything” newsletter
– Zappos employs a life coach
– Zappos ranks their employees by how well they know their colleagues
– When Amazon bought Zappos in 2009, Hsieh and a colleague personally bought Kindles for all current Zappos
– Moving Zappos’ warehouse from California to Kentucky allowed shoes to reach East Coast customers in two days
instead of a week

Emp 5Many organizations are unwilling to change and have silos of information, but Zappos, Bar Marco and Semco all:
– Have transparent financials
– Ask for suggestions to improve and innovate current operations
– Implement employee recommendations
– Allow employees to use company money to increase happiness at work
– Decant traditional business practices
– Make their employees their primary focus
– Are willing to change and eliminate silos of information

Their “radical” approaches to the business world have created a great wave of change for businesses that hopefully catches on. “The culture of (Bar Marco) is we’re never going to stop improving,” Bar Marco’s 30-year-old founder, Bobby Fry, says. “The second you want to stop getting better at what you do is the second it’s time to try something else.”

Emp 6



Joint-Venture Catalysts for expansion in Brazil



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