The archive · Work & Ways of Doing · Operational decision · 1980s–2004
Semco lets workers set pay and review bosses — revenue climbs 700% in a decade
Ricardo Semler runs Semco as a democracy: staff set salaries, choose hours, and rate their bosses every six months.
Semco
What it had to solve
Ricardo Semler took over his father's São Paulo manufacturing business in his early twenties and inherited a conventional, rule-heavy company operating inside Brazil's erratic economy. He concluded that corporate command structures — time clocks, dress codes, executive perks and closed books — produced compliance, not contribution.
How it works
Semco became the world's most-cited experiment in workplace democracy from an unlikely base: a Brazilian manufacturing and services conglomerate. Ricardo Semler inherited the company from his father in his early twenties and decided that the factory's command-and-control culture was the real problem. His diagnosis was that most companies run on rules written for people who cannot be trusted — and that employees respond by acting exactly that untrustworthy.
The redesign gave power away. Time clocks, dress codes, reserved parking and executive dining rooms disappeared. Worker committees took over the running of manufacturing plants, profit sharing was extended to everyone, and every employee could see the company's books. People set their own wages, which were published on the intranet, and managers were reviewed anonymously by their own teams every six months.
The results made the case for the idea rather than the theory. Within a decade Semco's revenue climbed 700%, reaching roughly $200 million with 3,000 employees, through a period when Brazil's economy swung violently. CNN reported the numbers in 2004 as evidence that the democracy experiment had survived contact with reality, and later coverage pointed to annual staff turnover of just 1–2%.
Semler argued the whole point was simple: growth and profit are products of how people work together, so a company should stop buying hours and start releasing capability. Skeptics warned the model could not scale everywhere, but even they conceded that Semco's principles — self-set pay, open books, reviewed bosses — had filtered into mainstream management thinking.
Why it lands
- Open books turned salary decisions from guesses into judgments grounded in what the company could actually pay.
- Anonymous six-month boss reviews created upward accountability that titles alone never produce.
- Removing clocks, dress codes and perks signaled that contribution mattered more than appearance or presence.
- Worker-run plant committees moved decisions to the people closest to the work.
- Universal profit sharing gave everyone a direct stake in the numbers they could now see.
What it did
Within a decade, Semco's revenue climbed 700% to about $200 million with 3,000 employees, through Brazil's volatile economy; annual employee turnover ran around 1–2% — and the model turned the company into a global reference for workplace democracy.
What you can take
Give people real information and real power — over pay, hours and their bosses — and they behave like owners; treating adults like children is what produces childlike work.
Since then
Semler turned the experiment into management literature — Maverick and later The Seven-Day Weekend — and spent the following decades spreading the model, including a widely watched TED talk on running a company with almost no rules. CNN noted that Semler's principles had seeped into the management establishment, and the company evolved into Semco Partners. His core inventions — self-set salaries, open books, reviewed managers and worker-run units — remain the standard examples cited whenever companies attempt self-management.
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