LangLion Management Series. Part 2: Should employees determine the level of their salaries? [CASE STUDY]

Imagine a language school whose employees have access to all financial data, know how much everybody in the company earns, they determine their work schedules, the number of days off is unlimited, and the owner does not know where they are during working hours. Sounds like a recipe for total disaster and bankruptcy in just one month? You’re all wrong.

Where does this idea come from?

Let me present to you Semco, a Brazilian company following the aforementioned rules. For successive 25 years it has recorded average annual growth at the level of 27 per cent. During the most severe recession in the history of Brazil, lasting 10 years, Semco recorded revenues growth by 600 per cent and profit growth by 500 per cent. Presently the company hires 3000 employees and records revenues at the level of USD 250 million.

Ricardo Semler, the owner of Semco, who inherited from his father the declining business (it hired 100 people and incurred losses), decided to turn everything upside down and started experimenting.

He swiftly concluded that the power of his company was embedded only and exclusively in people. He recognised the fact that people who are appreciated, trusted and happy will make for much better employees. He started by laying off a majority of top-tier managers in recognition of the fact that people do not need to be constantly controlled and checked. In a nutshell – if we start treating employees like adult people, they will start behaving like ones.

From that moment on, he started asking himself more and more questions, challenging the status quo. The first questions he asked himself were:

Why do we build the headquarters?
Why do we set annual budgets?
Why do we have a hierarchy?
Why do we give so many titles?
Why do we wear suits for work?

Answers to those trivial questions were the fundamental needs of a happy man at work. Semler did not want hard-working but unhappy employees because he came to a conclusion that such approach is unsustainable in the long run and sooner or later it has to affect adversely the company’s standing.

Additionally, he proposed complete transparency, e.g. the possibility to learn all financial data of the company, including Board’s wages. This built unprecedented level of trust for the employer. He introduced flexible work schedules, so that employees did not have to spend many hours every day in dreadful Brazilian traffic jams.

He removed several tiers of management, assuming that adult people in proper work positions are able to manage themselves and do not need a nanny and constant finger-pointing. Similarly, he also assumed that adult and responsible people know what to wear depending on the occasion, and consequently that a dress code was redundant. Those are just a few of the revolutionary solutions he introduced. Life and financial results confirmed he was right.

How does this post relate to language school management?

I believe it can become the source of inspiration and demonstrate what direction modern organisations embark on regardless of their size. Authoritarian management, which was effective in the times of industrial development when the number of working hours directly translated into attained results, completely fails in the times of new technologies’ development, where the greatest role is played first of all by creative problem-solving  and the team-work ability.

Our team will increasingly become our sole competitive advantage.

I am not urging you to make a revolution in your school right now, but I think that for a start you might reflect upon those considerations and check out how many things can be done differently, counter-intuitively, with equal or even greater success (but certainly less stressfully). In particular i will argue that most of the changes can be introduced via an evolution, checking instantly what works in our case and adjusting it to our realities.

In conclusion, to find an answer to the questions contained in the title, I am encouraging you to watch a brief TED lecture of Ricardo Semler himself, who talks in a forthcoming way about his approach to life and business. Additionally, he talks on how in his opinion the education system should operate; one that does not end up in words only, but translates into active actions in this area.

At the same time I am encouraging you to read his bestsellers titled “Maverick” and “The Seven-day Weekend”, where he put together over 20 years of experiences that have become the foundations for many most innovative companies all over the world (including also some from the Silicon Valley).

What do you think about it? Would you be able to introduce similar rules in your language school?

Read the Part 1. of Management Series

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