Research

Research Design

Case Summary

The case studied in this research is about a paradigm of participative management, represented by the company of Semco Group in São Paulo, Brazil, owned by Ricardo Semler. Semco is well known for its progressive implementation of participative management ideas, which abandon most of the well-received managerial theories. Participative management values the creativity and ingenuity (Fisher, 2005) of the employees and puts faith in their self- direction and self-control (Fisher, 2005).

One important feature of the participative management in Semco is the extremely democratic decision-making process. From the leadership of the company, to various kinds of operation strategies, employees make their decisions through voting. The reason of this choice, according to Mr. Semler, is that self-governance is the best way to build up flexibility and resilience that is essential for organizations during turbulent times (Fisher, 2005). Besides, he believes that participation provides more motivation to employees than orders do, and pleasure also provides more productivity than strict rules.

With all these theoretical and even idealistic principles, Semco was transformed stepwise. From involving employees in the improvement of company cafeteria, to modifying and personalizing working hours, and customizing their own salaries, the whole process took five years to accomplish, with setbacks and bumping periods (Fisher, 2005).

However, despite all the skepticism and difficulties, Semco has achieved marvelous progress in terms of its values of investment, an investment of $100,000 made in Semco 20 years ago would be worth $5.4 million today (Fisher, 2005).

Research Question

The case of Semco is interesting, intriguing as well as hard to believe. A company without implementing any of the common managerial principles miraculously demonstrates a performance in its management and profitability that is way above the average. In the case introduction, some key notions were noted, including democratic decision-making, resilience, and flexibility. According to Ricardo Semler, participative management adopts democratic decision-making, which brings about resilience and flexibility to the company, thus advancing its performance, especially during difficult times.

However, this is not entirely in accordance with most of our common sense. Does higher level of democracy in corporations really lead to better performance, by bringing resilience and flexibility? What is the actually relation or correlation among these factors? Therefore, my research question would be:

Do corporations with more democratic decision-making processes have higher level of resilience and flexibility, thus having better market performance?

There will be two sub-questions:

1. In the context of corporations, what is the relationship between democracy and resilience/flexibility?